Define: Costs in Excess of Billings
Costs in Excess of Billings, sometimes called unbilled revenue, refers to the amount of work a contractor has performed and costs incurred on a contract that exceed what has been invoiced to the client so far. It appears in construction and long-term project contracts to track revenue recognized under accounting rules before billing catches up.
Legal accuracy standard set & glossary spot-checked by Imad Mohammed Nazar , Skadden-trained M&A lawyer, Legal Engineer at GenieAI
What Costs in Excess of Billings Means in a Contract
Costs in Excess of Billings describes a situation, common in long-term or milestone-based agreements, where a party performing work has incurred costs and recognized revenue that outpaces the amount it has actually invoiced the counterparty. In practical terms, the contractor or service provider has done more work than it has been paid, or even billed, for at a given point in the contract's life. This concept becomes especially relevant in Relevant Circumstances