When a contractor bills for more work than has actually been completed, collecting money ahead of their progress.
Overbilling occurs when a contractor bills the owner for a greater percentage of contract value than the percentage of work actually completed, resulting in a billing in excess of costs. It is the opposite of underbilling. While overbilling improves short-term cash flow, it creates a liability on the contractor's balance sheet and may indicate front-loading. Auditors and sureties watch for overbilling as a sign of financial distress.
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