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A zero-balance account (ZBA) is a financial tool commonly used in construction accounting where the account balance is maintained at or near zero. Funds are transferred to the ZBA as needed to cover expenses or payments, typically from a parent account. Once a transaction has been made from the ZBA, that amount spent is automatically transferred from the parent account, so the ZBA balance returns to zero.

In the complex world of construction projects—where multiple subcontractors are involved—ZBAs allow the general contractor (GC) to closely monitor and manage cash flow for each subcontractor on the project. This system prevents excess funds from sitting idle in numerous accounts—and potentially forgotten as the project progresses. It also provides a clear audit trail for each subcontractor’s expenses, making it easier to track costs against budgets to identify any discrepancies or unusual spending patterns. Additionally, ZBAs can help reduce the risk of fraud or unauthorized spending, as funds are only transferred on an as-needed basis.

ZBAs provide a level of control and visibility that is crucial for maintaining liquidity and profitability—much like Siteline. Siteline allows subcontractors to easily track their inflows and outflows, providing a clear financial picture of each project and the company overall. Interested in learning more? Schedule your personalized Siteline demo here.

Lump Sum Billing in the construction industry refers to a fixed contract price for the completion of all work required for a specific project. This means that the contractor agrees to complete the whole project at a specific set cost irrespective of the amount of resources and time spent on the project. The contractor bears all the risk and is responsible for any cost overruns. Lump sum billing is commonly used in construction due to its simplicity, as the entire project is billed one time for one set amount.

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A mortgage, within the framework of the construction industry, is essentially a loan secured by a real property through the use of a mortgage note to evidence the existence of the loan and the encumbrance of that realty. This serves a crucial financial function during the building process as it allows homeowners or builders to purchase land or property without needing the full amount upfront. In most cases, a banking institution or lender offers the borrower a certain sum to buy a property, the borrower then repays this sum, typically monthly, with added interest, over a defined period. The mortgage ties the obligation of repayment to the property itself. Hence, when a mortgage loan is used for construction of a new property, the funds are dispersed to the borrower as work on the construction project proceeds. In the event that the borrower defaults on their mortgage payments, the lender has the right to take possession of the property, in a process known as foreclosure.