What is AIA® billing?

Overbilling (or billing in excess of costs) occurs when you’ve invoiced your client for more work than you’ve actually completed or incurred costs for. In other words, it represents getting paid ahead of your work schedule.

Here’s how it works: If you’re a concrete subcontractor on a $100,000 job and you bill 50% upfront ($50,000) but have only completed $30,000 worth of work, that $20,000 difference is your billings in excess of costs. You owe your client that work, and until you complete it, that $20,000 remains as a liability on your balance sheet.

For subcontractors, understanding billing in excess of costs is essential because it can be a strategic cash flow tool when used carefully. For example, when bidding on a job, you can be smart about how you structure your schedule of values (SOV)—breaking work down into more detailed line items that allow earlier billing. However, this strategy requires regular monitoring to ensure:

• Your billing somewhat aligns with your actual percentage complete, and 
• The remaining contract value will still cover your remaining costs.

The biggest risk of overbilling is thinking your margins look better than they are, simply because you’re collecting cash faster. Surety companies and lenders also scrutinize overbillings closely, as excessive amounts can signal poor project management or potential cash flow problems down the road.

With Siteline, you can easily track whether you’re billing in excess of your costs by pulling your month-to-month incurred costs and comparing them against your billing progress. This real-time visibility helps ensure you’re billing appropriately while maintaining realistic profitability expectations. If you’re interested in seeing for yourself, schedule a personalized demo of Siteline here.

Long-term liabilities, also known as noncurrent liabilities, in the construction industry are obligations that are due more than a year from the current date. They are an important part of a company's financial structure and may include bonds payable, long-term loans, deferred tax liabilities, lease obligations, and pension obligations. For example, a construction company might have long-term liabilities in the form of a multi-year loan taken to acquire new heavy machinery or land for future projects. These liabilities have a significant impact on a company's liquidity and overall financial health, so it's critical that construction companies manage them effectively. Depending on how these are managed, they can influence a construction company's creditworthiness and its ability to secure future funding for expansion or for carrying out large projects. Hence, understanding long-term liabilities is vital for sustainability and growth in the construction industry.

An Automated Clearing House (ACH) within the construction context refers to an electronic fund transfer system primarily used for direct deposit payments, including for construction services. It's a method universally used by many businesses in the industry for its convenience and speed. This system provides an efficient platform for moving funds from one account to another in a collective and prioritised manner, aiding greatly in the financial management of a construction project, including payroll and paying suppliers. The benefits include prompt payment, less risk of cheque fraud, and streamlined bookkeeping. It's an integral part of the financial mechanism in the construction industry.