Illustrative examples using hypothetical figures from the linked articles.
A contractor’s numbers can be correct and still leave the owner unsure what to do. Three views show how the same kind of information answers different questions: what a job is really earning, which numbers could still change, and when cash runs short. The job in views 1 and 2 is the example in Fractional Controller for Contractors; the 13-week cash view is the example in Contractor Cash-Flow Forecasting. Each view comes with what it cannot establish, because a report supports a decision and does not make it.
View 1. Job margin and work in progress
What the owner is looking at. One job’s contract, estimated cost, costs to date, revenue earned, billings and gross profit, compared at the close, once with the subcontract cost accrued, and again after the project manager revises the estimate.
The question it helps answer. What is this job actually earning, and is it billed ahead of or behind the work?
What it helps the owner decide. Whether the job’s margin is reliable enough to act on, whether billing needs attention, and which estimate to ask the project manager to revisit.
What it cannot establish. Whether the estimate is right (it is the project manager’s current figure), how much cash the job has produced, or whether the job will finish at the estimated margin. A billing position of $22,500 under is revenue earned and not yet billed. Whether it is a receivable or a contract asset depends on whether the right to payment is unconditional (only the passage of time required), which an invoice does not by itself decide; it is not cash.
Which service typically supports the work. Fractional Controller, with job costing kept on the accounting side (Outsourced Accounting).
| Measure | Closed without the $42,000 accrual | Closed with the accrual | Estimate also revised to $520,000 |
|---|---|---|---|
| Estimated total cost | $480,000 | $480,000 | $520,000 |
| Estimated gross profit at completion | $120,000 (20.0%) | $120,000 (20.0%) | $80,000 (13.3%) |
| Costs to date | $240,000 | $282,000 | $282,000 |
| Percent complete (cost to cost) | 50.0% | 58.75% | 54.23% |
| Revenue earned to date | $300,000 | $352,500 | $325,385 |
| Gross profit earned to date | $60,000 | $70,500 | $43,385 |
| Billed to date | $330,000 | $330,000 | $330,000 |
| Billing position | $30,000 over | $22,500 under | $4,615 over |
| Backlog (contract less revenue earned) | $300,000 | $247,500 | $274,615 |
Read across: nothing about the job changed between the first two columns, yet the close without the accrual shows it $30,000 billed ahead of the work and the close with it shows it $22,500 behind. The revised estimate lowers expected profit by $40,000, from 20.0% to 13.3%.
View 2. Monthly-close exception list
What the owner is looking at. The open items at the cutoff for the same job, with what each would change and who takes the next step.
The question it helps answer. Which of this month’s numbers could still move, and by how much?
What it helps the owner decide. Which open items to resolve before relying on the month’s numbers, and who needs to supply what.
What it cannot establish. That the list is complete. It lists what the close found; items not found are not on it. It also does not say who is at fault, and the amounts shown for items 1 and 2 depend on the cost-to-cost assumption.
Which service typically supports the work. Fractional Controller (the close and its review), with the records behind it from Outsourced Accounting. If the records are far behind, the first step is a catch-up (Cleaning Up Contractor Books).
| # | Exception | Amount | What changes if it is resolved | Next step |
|---|---|---|---|---|
| 1 | Subcontractor work performed in the month, invoice not yet received | $42,000 not accrued | Gross profit to date goes from $60,000 to $70,500 once accrued (up $10,500); billing position goes from $30,000 over to $22,500 under | Accrue the cost at cutoff; confirm with the project manager what was performed |
| 2 | Estimated total cost not updated since the bid | Estimate $480,000 against the project manager’s $520,000 | Estimated gross profit goes from $120,000 (20.0%) to $80,000 (13.3%), down $40,000; gross profit to date goes from $70,500 to $43,385; position goes from $22,500 under to $4,615 over | Ask the project manager for the current estimate; record the date it was last revised |
| 3 | Credit-card account not yet reconciled to the statement | No amount shown | Not computed here; cost cutoff and coding cannot be final until it is | Reconcile; list anything unidentified |
| 4 | Costs sitting on a general or uncoded job | No amount shown | Not computed here; job margins are misstated until costs are assigned | Assign costs to jobs and cost codes |
| 5 | Retainage receivable not agreed to the pay application | No amount shown | Not computed here; affects the balance sheet and cash timing, not the margin | Agree to the application and the contract |
View 3. Thirteen-week cash view
What the owner is looking at. Weekly cash in and out for the next quarter for a company as a whole, starting from the reconciled bank balance of $120,000, with a $68,000 reserve (one payroll) marked.
The question it helps answer. In which weeks will cash run short, and how large is the gap, while there is still time to act?
What it helps the owner decide. Whether, and when, to start conversations about timing of payments, commitments or financing before the gap arrives.
What it cannot establish. Whether financing is available or a lender would approve it (none is assumed), what to do about the gap, or the order of payments inside a week. It shows 3 consecutive weekly closing balances below zero (weeks 8, 9, 10) and a lowest weekly closing balance of −$98,800 in week 9; cash still rises by $96,800 over the 13 weeks.
Which service typically supports the work. Fractional CFO, which weighs the options with the owner; management keeps the decision. The forecast depends on the records and the close above.
| Week | Begins | Opening cash | Receipts | Payroll | Subcontractors, suppliers, other | Closing cash |
|---|---|---|---|---|---|---|
| 1 | Oct 19 | $120,000 | $60,000 | $0 | $30,000 | $150,000 |
| 2 | Oct 26 | $150,000 | $0 | $68,000 | $34,000 | $48,000 (below $68,000) |
| 3 | Nov 2 | $48,000 | $142,000 | $0 | $40,000 | $150,000 |
| 4 | Nov 9 | $150,000 | $0 | $68,000 | $45,400 | $36,600 (below $68,000) |
| 5 | Nov 16 | $36,600 | $96,000 | $0 | $38,000 | $94,600 |
| 6 | Nov 23 | $94,600 | $38,000 | $68,000 | $44,000 | $20,600 (below $68,000) |
| 7 | Nov 30 | $20,600 | $90,000 | $0 | $54,000 | $56,600 (below $68,000) |
| 8 | Dec 7 | $56,600 | $0 | $68,000 | $41,400 | −$52,800 (below zero) |
| 9 | Dec 14 | −$52,800 | $0 | $0 | $46,000 | −$98,800 (below zero) |
| 10 | Dec 21 | −$98,800 | $155,000 | $68,000 | $38,000 | −$49,800 (below zero) |
| 11 | Dec 28 | −$49,800 | $160,000 | $0 | $34,000 | $76,200 |
| 12 | Jan 4 | $76,200 | $121,000 | $68,000 | $49,400 | $79,800 |
| 13 | Jan 11 | $79,800 | $194,000 | $0 | $57,000 | $216,800 |
| Total | $1,056,000 | $408,000 | $551,200 | $216,800 |
How the views fit together
| Point | Result |
|---|---|
| Where the amounts come from | Views 1 and 2: the contractor job in Fractional Controller for Contractors. View 3: the 13-week example in Contractor Cash-Flow Forecasting. Nothing is rounded differently from those articles. |
| Same job in views 1 and 2 | Yes. Both use the $600,000 contract, the $480,000 estimate, $330,000 billed, $240,000 of recorded cost and $42,000 of unaccrued subcontract work; each exception’s effect is the difference between two columns of view 1. |
| Relation of view 3 to views 1 and 2 | Separate illustrations. View 3 is company-wide cash over 13 weeks; it is not built from the job, and the job’s amounts cannot be read out of it. Neither view uses the other’s numbers, so neither can contradict the other. |
| Shared assumptions | Accrual accounting; revenue recognized over time with the cost-to-cost measure (views 1 and 2); the job’s billing position compares revenue earned with billings and is not cash; cash (view 3) is shown by when money moves, with no borrowing or lender approval assumed. |
| Arithmetic | Every amount is either printed in those two articles or computed from their amounts with the formula shown in its row label. For example, backlog is the contract less revenue earned, which the controller article describes as the remaining contract value on open jobs. |
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Corey Roder, CPA is the founder of Corey Roder, CPA PLLC. He is a licensed CPA who founded a construction company and served as its COO and CFO, managing the financial and operational decisions of that business. Earlier in his career he worked as an auditor at Grant Thornton. More about the firm: Company & People.
Corey Roder, CPA PLLC does not itself perform audits, reviews, or other assurance engagements. This article is general information about accounting work and not advice about a specific business. Need an audit, review, or other assurance engagement? We can help coordinate it. Corey Roder, CPA PLLC maintains referral relationships with independent CPA firms that provide these services. The assurance engagement is separately contracted with and performed by the independent CPA firm.