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Billings in Excess of Costs, also known as overbillings, is a term predominantly used in the construction industry. It pertains to the scenario where a construction contractor has billed a client more than the work that has been completed to date. This condition occurs due to the timing difference between the recognition of costs incurred and revenue on contracts for long-term projects. The amount that is billed but not yet earned is represented as a liability on the contractor's balance sheet until the associated work is completed. This concept is a key part of construction accounting and helps manage cash flow throughout the life of the project.

The percentage-of-completion method is an accounting method used in the construction industry to recognize revenue and expenses for long-term projects as they progress—rather than waiting until the project is completed. Under the POC method, a contractor or subcontractor estimates the total contract revenue, total contract costs, and the percentage of work completed during a specific accounting period.

Revenue is recognized based on the percentage of work completed multiplied by the total estimated contract revenue. Expenses are recognized based on the percentage of work completed multiplied by the total estimated contract costs. This method aims to provide a more accurate representation of a construction project's financial performance over its duration rather than recognizing all revenue and expenses at the end.

For subcontractors and their accounting teams, understanding the POC method is crucial for three reasons:

1. It directly impacts their revenue recognition and financial reporting, enabling them to assess profitability throughout project lifecycles. 
2. It affects their cash flow projections and management, as progress payments are typically tied to the POC. 
3. Understanding this method ensures compliance with accounting standards and regulations, minimizing the risk of audits or penalties.

Siteline supports the POC method, ensuring accurate financial reporting and cash flow management. With Siteline, you can:

• AGÕæÈËÓÎÏ· custom pay applications using real-time POC calculations
• Integrate with general contractor (GC) payment portals to ensure timely and accurate submissions
• Gain real-time insights into project financials with intuitive dashboards
• Centralize all documentation for improved field-to-office collaboration

Book a demo today to discover how Siteline can enhance your accounting processes, strengthen your cash flow, and ultimately contribute to your company's financial success.

Cash accounting is a financial accounting method often used within the construction industry. It is characterized by recognizing revenue and expenses only when cash is received or paid out. This means that transactions are only recorded when the business physically sees the money. For instance, if a construction company performs a job in June but doesn't receive payment until July, the income will be registered in July's financial statements, not in June's. This method works well for smaller construction businesses as it allows them to track cash flow accurately and in real-time. Furthermore, cash accounting in construction provides a straightforward representation of how much actual cash the business has at any given moment, allowing for better financial management and planning.