When a contractor bills for less work than has actually been completed, leaving money on the table.
Underbilling occurs when a contractor bills less than the value of work actually completed, resulting in costs in excess of billings on the balance sheet. It can result from billing conservatively, being behind on paperwork, or not submitting timely change order billings. While underbilling is not immediately harmful to cash flow (the owner has not paid), it suppresses reported revenue and can mask a project's actual financial health.
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