Costs in excess of billings is the balance-sheet line that shows how much work you have earned on open jobs but not yet billed. It is an underbilling — a current asset that comes straight off your WIP schedule. Its twin, billings in excess of costs (sometimes written "billings in excess of costs and estimated earnings"), is the opposite: you have billed ahead of the work, and it sits on the balance sheet as a liability. If you own a construction company and read your own financial statements, these two lines tell you more about job health and cash than almost anything else on the page.
This page is written for owners reading their balance sheet, WIP report, or a CPA-reviewed statement and asking, "What is this number and should I be worried?" For the full mechanics of calculating over and under billing job by job, see over/under billing. For the earned-revenue method behind it, see percentage of completion. Stay here when you need the financial-statement language in plain English.
Want your WIP and balance sheet to tell the same story every month? Call (480) 617-2664, or book the DIG Diagnostic.
The full phrase you will see on financial statements is often "costs and estimated earnings in excess of billings on uncompleted contracts." That is a mouthful. In practice it means:
On your open jobs, the revenue you have earned so far (based on how far along each job is) is more than what you have billed the customer.
Because you are owed that money once you bill it, accountants carry it as a current asset, next to accounts receivable. It is not cash, and it is not yet a receivable — nothing has been invoiced. It is earned value waiting on a bill.
A simple example with made-up numbers: a job has a $500,000 contract and $400,000 of estimated total cost. You have spent $200,000 so far, so the job is 50% complete on a cost-to-cost basis. Earned revenue is 50% × $500,000 = $250,000. If you have billed only $210,000, you are underbilled by $40,000 — and that $40,000 shows up as costs in excess of billings.
The twin phrase is "billings in excess of costs and estimated earnings on uncompleted contracts." It means:
On your open jobs, what you have billed the customer is more than the revenue you have earned so far.
Accountants carry this as a current liability, because you still owe the customer the work they have paid for (or been billed for). Using the same job: if you had billed $290,000 instead of $210,000, you would be overbilled by $40,000, and that amount would sit as billings in excess of costs.
Owners, CPAs, and software all use slightly different wording — "cost in excess of billings," "costs in excess of billings," "CIEB," "underbillings," "contract assets." Same idea: earned but not billed. On the other side: "billings in excess of costs," "BIEC," "overbillings," "contract liabilities." The labels your CPA uses on reviewed or audited statements are their call; the bookkeeping habit is the same.
The WIP schedule is where these numbers are born. For each open job, a typical WIP row carries:
| Column | What it means |
|---|---|
| Contract value | Original contract plus approved change orders |
| Estimated total cost | Cost to date plus estimated cost to complete |
| Cost to date | What job costing says you have spent through the period |
| Percent complete | Usually cost to date ÷ estimated total cost |
| Earned revenue | Percent complete × contract value |
| Billed to date | Everything invoiced on the job, including retainage billed but held |
| Over / (under) billed | Billed to date minus earned revenue |
Jobs where billed to date is less than earned revenue are underbilled. Their total becomes costs in excess of billings on the balance sheet. Jobs where billed to date is more than earned revenue are overbilled. Their total becomes billings in excess of costs.
Two things owners often miss:
If your books do not have a WIP adjustment at all, you probably will not see either line on your balance sheet — which does not mean you have no over or under billings. It means you cannot see them.
Some underbilling is just timing. Some of it is a warning. Common causes:
Overbilling usually comes from front-loaded schedules of values, aggressive early billing, or costs that have not been posted yet (an AP backlog). A healthy overbilling can mean you are funding the job with the customer's cash. A large one can mean you have spent the cash on something else and still owe the work. Either way, it is a liability — the work has to be done.
Banks and bonding companies read these lines closely. The general pattern most contractors hear:
How a specific bank or surety weighs these numbers is their call, and how they are presented on reviewed or audited statements is your CPA's call. Blackline's role is keeping the underlying books, job costs, and WIP clean enough that those conversations go smoothly. See bonding financials for the bookkeeping side of surety readiness.
Use this when your monthly financials land:
For the job-by-job calculation and examples of fixing over and under billing, go to over/under billing.
Blackline is a construction-only bookkeeping, monthly close, and fractional CFO firm for contractors doing roughly $1M–$30M in revenue. We do not do tax prep — tax questions go to your CPA — and we do not give legal advice. What we do is keep the books, job costs, and WIP clean enough that costs in excess of billings and billings in excess of costs mean something.
Every engagement starts with a DIG Diagnostic, and every package is custom-quoted — see services and packages, or the month-end close page for the monthly rhythm.
We work with contractors throughout the Phoenix metro from our Mesa office:
An asset. Costs in excess of billings (underbilling) is earned revenue you have not billed yet, so it is carried as a current asset. Billings in excess of costs (overbilling) is the liability.
Costs in excess of billings means you have earned more on open jobs than you have billed (underbilled). Billings in excess of costs means you have billed more than you have earned (overbilled). Both come from comparing earned revenue with billed to date on the WIP schedule.
Not automatically. Short-term underbilling from billing timing is normal. Large, growing, or persistent underbilling often points to unbilled change orders, stale cost estimates, cost overruns, or slow billing, and it is worth reviewing job by job.
From the WIP schedule. For each open job, earned revenue (percent complete × contract value) is compared with billed to date. Underbilled jobs roll up to costs in excess of billings on the balance sheet.
Usually because no WIP adjustment is being booked. Without a monthly WIP schedule and adjusting entry, your books recognize revenue as billed, and over or under billing stays invisible.
Typically they are presented separately: underbilled jobs total to the asset line and overbilled jobs total to the liability line. How they are presented on reviewed or audited statements is your CPA's call.
Yes. Blackline builds and maintains monthly WIP schedules and over/under billing reviews for contractors, typically starting with the DIG Diagnostic. Tax treatment and statement presentation stay with your CPA.
If your balance sheet has a costs in excess of billings number you can't explain — or doesn't have one at all — start with the DIG Diagnostic. We'll look at your job costing, WIP, and billing habits and tell you what's driving the number.
Book the DIG Diagnostic →Call (480) 617-2664
Blackline Financial
4320 E Brown Rd Suite 103
Mesa, AZ 85205
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