What is Cloud-Based Software?

Cost in excess of billings (CEB), or underbilling, refers to a cost incurred by a subcontractor for work performed that has yet to be billed to the general contractor at any point in time. This is a somewhat common scenario that can arise when the cost of work expenses (labor, materials, subcontractors, etc.) hit before billings go out.

There are a few factors that can create this timing gap and lead to underbilling. These include:

• Progressive billing schedules: Many construction projects have billing schedules that are based on predefined milestones or stages of completion. However, costs are being incurred continuously as work progresses. This causes costs to build up ahead of invoices between billing cycles.
• Upfront and early-stage mobilization: Significant upfront costs go into things like materials, equipment, permitting, and mobilizing job sites before physical work even begins—especially for subcontractors. These costs typically accumulate before clients are billed.
• Pending change orders: Costs related to change orders often hit weeks or months before details are finalized and approved for billing. Diligently tracking pending change orders is crucial to ensure you ultimately collect on all revenue owed from approved changes.
• Project delays: In construction, delays are inevitable. If and when delays push out project milestones, billable events can slide further out from when the costs were incurred. These timeline gaps widen the difference between accrued expenses and billings-to-date.

CEB is reflected on financial statements as assets because it represents an unbilled receivable for revenues that will later come. Therefore, regularly monitoring CEB is critical to maintaining healthy business operations as it helps subcontractor accounting teams:

• Understand true project economics: CEB helps reveal the full profitability picture by linking incurred costs with unbilled receivables, which in turn supports more accurate revenue forecasting and job costing projections.
• Gain greater cash flow visibility: Because CEB tracking shows how much money is flowing out that’s tied up in work completed but not yet paid for, it helps them better plan and manage their cash for future expenses.
• Monitor project health: Unexpected CEB spikes could signal problems like cost overruns. Regularly comparing CEB status with the original budget is key to assessing a project’s overall health.
• Collect revenue in full: No one wants to work for free. Tracking CEB ensures that all pending receivables are ultimately invoiced and collected.
• Stay compliant: CEB reporting is required for percentage-of-completion revenue recognition, which is an important accounting standard for billing teams to adhere to.

Effective CEB oversight is much simpler with the right tools in place. With Siteline, you can easily track costs in excess of billings on each project to ensure no completed work goes unbilled. Siteline monitors all pending change orders through a project's lifespan, too, helping teams get approval quicker and convert unbilled work into invoiced revenue. If you're interested, schedule a personalized demo of Siteline here.

A Performance Bond is a type of surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. In the construction industry, a Performance Bond is often required to protect the client if the contractor fails to complete the contract or does not meet the agreed standards or time frame in performing the project. It is essentially a safeguard tool that ensures the project owner will not incur financial loss due to the contractor's inability to fulfill the contract. This bond provides assurance that the contractor has the necessary resources and competencies to execute the project according to the stipulated terms.

A payment application (or pay app) is a comprehensive collection of documents that construction contractors submit to request progress payments throughout a project. Rather than just a simple invoice, payment applications include multiple forms and supporting documentation that prove what work was completed, which materials were used, and what payment is due. The typical pay app package includes: 

• an application for payment form, 
• a continuation sheet with schedule of values details, 
• lien waivers, and 
• often backup documents like material receipts and payroll reports. 

Payment applications are submitted on predetermined schedules—whether monthly, at project milestones, or when specific percentages of work are completed—and serve as the primary billing mechanism for longer, higher-budget construction projects.

For subcontractors, mastering payment applications is critical because they directly impact cash flow and project profitability. The process involves coordinating between accounting teams, project managers, and vendors to gather all required documentation before submission deadlines. Common mistakes—like using incorrect forms, missing documentation, math errors, or late submissions—can delay payments and disrupt cash flow. Many GCs have their own custom forms and specific requirements, making attention to contract details essential. 

For detailed guidance on navigating the entire pay app process, check out our payment application guide. Or better yet, check out Siteline—built specifically for commercial subcontractors to streamline the entire payment application process. Siteline handles any custom pay app form, assembles all required lien waivers for you and your lower tiers, and tracks change orders to ensure accurate, on-time submissions. Subcontractors using Siteline get paid up to three weeks faster than with traditional manual processes. Request a demo here and see how Siteline puts your pay apps on autopilot so you can focus on the work that matters most.