When a contractor bills for less money than they have earned for work completed, as determined by the WIP schedule or the over/under billings report, underbillings occur. For example, the project is underbilled if a contractor has only billed 25% of the job's projected revenue but has already experienced half of the estimated costs. Construction CPAs and sureties often regard underbillings to be unacceptable. Significant or ongoing underbilling can result in negative cash flow and signal a variety of additional problems. Poor accounts receivable administration, imprecise estimating, or a significant number of unapproved modification orders are examples.
iscover the top construction industry organizations to join in 2025. From AGC and ABC to NAHB and CFMA, this guide breaks down the benefits of each group, helping contractors, subcontractors, and professionals grow their network, stay informed, and gain industry support.
Read MoreDiscover the top 10 accounting practices every homebuilder needs for profitability and growth, from stable Charts of Accounts to automated AP processes. RedHammer provides expert guidance and customized solutions to streamline your financial operations and enhance profitability.
Read MoreRedHammer helps homebuilders stabilize their financial operations, implement accurate job costing, streamline subcontractor and billing processes, and integrate financial and project management systems to improve visibility, reduce risk, and drive long-term growth.
Read MoreThe construction industry faces a persistent labor shortage in early 2025, with an estimated 439,000 additional workers needed. Contractors struggle to find skilled labor, leading to rising wages, project delays, and cost increases. Workforce development and immigration policies will be key to addressing this challenge.
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