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Accrued Revenue
What is Accrued Revenue?
Accrued revenue is the income a subcontractor has earned for work performed or in progress but has not yet billed (the general contractor or client) or received payment for. This typically happens due to the nature of construction contracts, where payments are often tied to milestones or project completion.
Example: An electrical subcontractor working on a large commercial building is paid based on completed milestones, with invoices due at the end of each month. By June 30th, they've finished 75% of the $100,000 job, but can't invoice until month-end. The $75,000 earned but not yet invoiced is their accrued revenue.
Tracking accrued revenue is crucial for accurate financial reporting, as it reflects the subcontractor’s economic activity for the period—even before invoicing or receiving payment. To gain even deeper financial insights, many subcontractors turn to Siteline. Our tool is tailored to help track pay application statuses and amounts owed, empowering subcontractors to make more informed, strategic decisions. Experience the benefits firsthand by scheduling a Siteline demo today.
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Other construction terms
What is an Unconditional Lien Waiver?
An Unconditional Lien Waiver in the construction industry is a signed document from a contractor, subcontractor, materials supplier, laborer, or other party involved in a construction project, which gives up their right to place a lien on the property unconditionally, typically after they have received full or partial payment for their work or materials. It serves as a guarantee to the property owner that they will not face a lien, or legal claim against their property, for this party's unpaid work or supplies, regardless of whether the party is subsequently paid in full or not.
What is an Owner?
An owner, in the context of the construction industry, refers to the individual or entity who has legal rights and control over a property or project. This can include land, buildings, or a construction project that is under progress. The owner has the authority to make crucial decisions such as who to hire for construction, what materials to use, or how the architectural design should be. The owner primarily funds the project and is usually the one to initiate the construction project. They may be private individuals, corporate businesses or even government entities. The responsibility of the owner extends from conceptualization until the completion of the project, and can also stretch to the maintenance and operation of the completed facility. It's crucial for owners to have a solid understanding of the construction process to ensure the successful completion of a project.
What are Back Charges?
Back Charges are bills sent to subcontractors or vendors for unforeseen work that a general contractor or project manager had to complete on their behalf within the construction industry. This generally occurs when the subcontractor or vendor fails to complete their work scope to the specified standards, misses deadlines, or omits parts of their contracted responsibilities, and someone else must step in to rectify the issue. Therefore, the party who had to complete or redo the work sends 'back charges' to the original contractor, expecting reimbursement for labor, services, materials, or other costs involved in the completion of the task. They serve as a form of financial protection for the companies against contractual breaches in the construction projects.
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