What is Billings in Excess of Costs?

Billings in excess of costs in the construction industry refers to a situation where a contractor invoices a client for work completed on a project before actually incurring the costs associated with that work. This often occurs when a contractor uses a method of accounting known as the percentage of completion method, which recognizes revenue based on the percentage of work completed rather than the actual costs incurred. In this scenario, billings in excess of costs can lead to an increase in accounts receivable and revenue on the contractor's financial statements.While billings in excess of costs can provide a contractor with a positive cash flow in the short term, it can also present risks if the actual costs of completing the project end up exceeding the amount billed to the client. This can lead to financial