--- title: How to Deal with Unbilled Receivables and Contract Revenue Calculations description: Government Contractors may have Unbilled A/R for a variety of reasons. Unfortunately, auditors view Unbilled A/R with scrutiny and so do lending institutions. Here are some of the most common Unbilled A/R scenarios as well as some tips to help you deal with them. image: https://sql.sympaq.com/hubfs/Accounting%20Calculations.jpg --- [Contact: 800-437-8151](tel:18004378151) [Help Desk](https://aldebaron.assist.com/portal) [![DCAA Compliant Accounting System | SYMPAQ](https://sql.sympaq.com/hubfs/crop-trans-logo.png "Government Contract Cost Accounting")Project Cost Accounting Software for Government Contractors](https://www.sympaq.com/) - [PRODUCTS](https://www.sympaq.com/) - [SYMPAQ Accounting](https://www.sympaq.com/sympaq-sql/) - [SYMPAQ Time & Expense](https://www.sympaq.com/sympaq-etx/) - [SYMPAQ DEMOS](https://www.sympaq.com/demos/) - [PRICING](https://www.sympaq.com/sympaq-pricing/) - [SERVICES](https://www.sympaq.com/services/) - [AUDITS](https://www.sympaq.com/dcaa-audits/) - [DCAA Audits](https://www.sympaq.com/dcaa-audits/) - [Single Audits](https://www.sympaq.com/a-133-audits/) - [RESOURCES](https://www.sympaq.com/#) - [Events / Webinars](https://www.sympaq.com/events-schedule/) - [SYMPAQ Demos](https://www.sympaq.com/demos/) - [Useful Links](https://www.sympaq.com/useful-links/) - [BLOG](https://sql.sympaq.com/blog) [![REQUEST DEMO](https://no-cache.hubspot.com/cta/default/2695973/fa292e59-f01d-4acf-b907-53fc989efa07.png)](https://cta-redirect.hubspot.com/cta/redirect/2695973/fa292e59-f01d-4acf-b907-53fc989efa07) [![DCAA Compliant Accounting System | SYMPAQ](https://sql.sympaq.com/hubfs/crop-trans-logo.png "Government Contract Cost Accounting")Project Cost Accounting Software for Government Contractors](https://www.sympaq.com/) - [PRODUCTS](https://www.sympaq.com/) - [SYMPAQ Accounting](https://www.sympaq.com/sympaq-sql/) - [SYMPAQ Time & Expense](https://www.sympaq.com/sympaq-etx/) - [SYMPAQ DEMOS](https://www.sympaq.com/demos/) - [PRICING](https://www.sympaq.com/sympaq-pricing/) - [SERVICES](https://www.sympaq.com/services/) - [AUDITS](https://www.sympaq.com/dcaa-audits/) - [DCAA Audits](https://www.sympaq.com/dcaa-audits/) - [Single Audits](https://www.sympaq.com/a-133-audits/) - [RESOURCES](https://www.sympaq.com/#) - [Events / Webinars](https://www.sympaq.com/events-schedule/) - [SYMPAQ Demos](https://www.sympaq.com/demos/) - [Useful Links](https://www.sympaq.com/useful-links/) - [BLOG](https://sql.sympaq.com/blog) [![REQUEST DEMO](https://no-cache.hubspot.com/cta/default/2695973/fa292e59-f01d-4acf-b907-53fc989efa07.png)](https://cta-redirect.hubspot.com/cta/redirect/2695973/fa292e59-f01d-4acf-b907-53fc989efa07) [![DCAA Compliant Accounting System | SYMPAQ](https://sql.sympaq.com/hubfs/crop-trans-logo.png "Government Contract Cost Accounting")Project Cost Accounting Software for Government Contractors](https://www.sympaq.com/) menu close close - PRODUCTS - [SYMPAQ Accounting](https://www.sympaq.com/sympaq-sql/) - [SYMPAQ Time & Expense](https://www.sympaq.com/sympaq-etx/) - [SYMPAQ DEMOS](https://www.sympaq.com/demos/) - [PRICING](https://www.sympaq.com/sympaq-pricing/) - [SERVICES](https://www.sympaq.com/services/) - RESOURCES - [Events / Webinars](https://www.sympaq.com/events-schedule/) - [Useful Links](https://www.sympaq.com/useful-links/) - [BLOG](https://sql.sympaq.com/blog) ## Blog ### Subscribe to our Blog # How to Deal with Unbilled Receivables and Contract Revenue Calculations [Business Tips](https://sql.sympaq.com/blog/topic/business-tips), [Accounting](https://sql.sympaq.com/blog/topic/accounting) 11/14/2018 [G. Chris Brown](https://sql.sympaq.com/blog/author/cbrown) ![Accounting Calculations](https://sql.sympaq.com/hs-fs/hubfs/Accounting%20Calculations.jpg?width=300&name=Accounting%20Calculations.jpg)Contractors may have unbilled receivables for a variety of reasons. Here are some examples, as well as a few tips on how to deal with them. When unbilled receivables occur, it is because they cannot be billed yet under the terms of a contract. Having unbilled accounts receivables (A/R) results in revenue that is recorded but not billed, so it should be analyzed and reconciled as part of a month-end process. Unfortunately, auditors view unbilled A/R with scrutiny and so do lending institutions. Understanding your unbilled A/R will help you justify and support your revenue position as well as the collectability of the outstanding receivables to your banker. Contractors may have unbilled A/R for a variety of reasons. Here are some of the most common unbilled A/R scenarios so you can plan for, and reconcile, them efficiently. 1. **Rate variances** occur when the [actual indirect rates](https://sql.sympaq.com/blog/indirect-rate-structures-do-yours-need-to-change) differ from provisional or target rates. When actual rates are greater than the target ones, a positive unbilled A/R balance occurs, which indicates that you are not billing as much as you can. And, when actual rates are less than target rates, a negative unbilled A/R balance occurs, showing that the company may owe money back to the government during the contract closing process. 2. **Retainage** happens in contracts that have a fee withhold per [FAR 52.216-8, Fixed Fee](https://www.acquisition.gov/content/52216-8-fixed-fee). This occurrence gives the contracting officer the option of withholding up to 15 percent of the fixed fee on cost-type contracts. Additionally, [FAR 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts](https://www.law.cornell.edu/cfr/text/48/52.232-7), gives the contracting officer the option of withholding up to five percent of amounts due. The government keeps a portion of the amount due to the contractor until the contract is completed successfully. 3. **At risk work** occurs when your company begins to perform on a project without a signed contract or before the actual start date of the contract. Projects are also considered at-risk when the contractor works on the contract beyond the current funding level for the period of performance on a contract or task order. 4. **Milestone billings** refer to being able to bill only for specific portions of the statement of work that are completed, such as delivery and acceptance milestones. All work done before completing a milestone is considered an unbilled receivable. 5. **Award or incentive fee unbilled A/R** refers to when the contractor is unable to bill for an award or incentive fee until the government has awarded that fee through a formal contract modification. When dealing with unbilled receivables, it helps to have a [reliable accounting system](https://www.sympaq.com/sympaq-sql/) that has been tailor-made for the intricacies of government contracting. In general, most systems just won't cut it when you have to answer to DCAA and its auditors. Many accounting systems have contract revenue recognition capabilities, but their complexity and improper utilization can create contract revenue postings to the GL that are difficult to reconcile. And, it's no surprise that unbilled receivables and contract revenue numbers are subject to [scrutiny by CPA firms.](https://sql.sympaq.com/blog/checking-your-cpa-firms-independence) Contract revenue recognition capabilities should be carefully considered not only in terms of the methods, but also for the complexity of setup. You should also assess the potential impact of calculating revenue and unbilled receivables for when there is a [good chance user error will occur](https://sql.sympaq.com/blog/accounting-work-basis-of-incorrect-executive-decision). The main issue to pay attention to is realizable revenue. A/R billed amounts should be the base method of revenue recognition with adjunct features and proper accounting procedures to ensure the basic accounting principle of matching contract revenue with the costs of that revenue. Indirect Costs variances, where increases and decreases of revenue are automatically posted can create results that are misleading. As mentioned above, an accounting system designed specifically for government contractors can help you deal with a range of issues your commercial sector counterparts don't have to face. Contract revenue recognition should be an administrative function that properly trained users should manage and reconcile each month so you are never left with unbilled receivables you can't account for. [![SYMPAQ cost accounting software](https://sql.sympaq.com/hs-fs/hubfs/SYMPAQ%20728X90%207.21.jpg?width=728&name=SYMPAQ%20728X90%207.21.jpg)](https://www.sympaq.com/sympaq-sql/) ### Recent Articles & Key Opinions February, 07 2025 ## [Strong Headwinds Ahead for Federal Government Contractors in 2025](https://sql.sympaq.com/blog/5-challenges-federal-government-contracting-0) [Government Contractor](https://sql.sympaq.com/blog/topic/government-contractor) [Accounting Software](https://sql.sympaq.com/blog/topic/accounting-software) [SYMPAQ Benefits](https://sql.sympaq.com/blog/topic/sympaq-benefits) [Business Tips](https://sql.sympaq.com/blog/topic/business-tips) [Headwinds](https://sql.sympaq.com/blog/topic/headwinds) Poised to bid on contracts with the Federal Government? you will likely encounter challenges with procurement regulations and bureaucracy.[ Read the Blog](https://sql.sympaq.com/blog/5-challenges-federal-government-contracting-0) 0 Comments [Click here to read/write comments](https://sql.sympaq.com/blog/5-challenges-federal-government-contracting-0#comments-listing) January, 10 2025 ## [End of Year Tax Form Filing Has Never Been Easier!](https://sql.sympaq.com/blog/end-of-year-tax-form-filing-has-never-been-easier) [tax](https://sql.sympaq.com/blog/topic/tax) [2024](https://sql.sympaq.com/blog/topic/2024) As we learned last year when the paper filing threshold dropped from 250 for each tax form to 10 tax forms in aggregate (i.e., 1099-NEC plus 1099-Misc plus W2), one should no longer be contemplating t\[...\][ Read the Blog](https://sql.sympaq.com/blog/end-of-year-tax-form-filing-has-never-been-easier) 0 Comments [Click here to read/write comments](https://sql.sympaq.com/blog/end-of-year-tax-form-filing-has-never-been-easier#comments-listing) December, 04 2024 ## [Another Year, Another End-of-Year Update](https://sql.sympaq.com/blog/2024-year-end-of-year-update) [2024](https://sql.sympaq.com/blog/topic/2024) One thing we've learned over the years as a software publisher is that unless you are planning on sunsetting a legacy application, you are never "done" with development.[ Read the Blog](https://sql.sympaq.com/blog/2024-year-end-of-year-update) 0 Comments [Click here to read/write comments](https://sql.sympaq.com/blog/2024-year-end-of-year-update#comments-listing) ![](https://sql.sympaq.com/hs-fs/hubfs/crop-trans-logo.png?width=200&name=crop-trans-logo.png) We are focused on delivering reliable cost accounting, timekeeping and expense reporting solutions to labor-intensive federal government contractors and not-for-profit organizations in search of fully compliant, standards-based, project accounting software. ### Get In Touch [contact@sympaq.com](mailto:contact@sympaq.com) Local phone:[(301) 670-0858](tel:3016700858) Fax: (301) 840-1591 15839 Crabbs Branch Way, Rockville, MD 20855. [Privacy Policy](https://www.sympaq.com/privacy-policy/) [Cookie Policy](https://www.sympaq.com/cookie-policy/) [Terms & Conditions](https://www.sympaq.com/terms-and-conditions/) ### Subscribe to Our Blog Get the latest business resources on the market delivered to your inbox. Copyright © 2023 Aldebaron, Inc. All rights reserved. Website by [IMGdigitalAgency.com](https://www.imgdigitalagency.com/) [![](https://sql.sympaq.com/hubfs/blue-seal-bbb.png)](https://www.bbb.org/us/md/rockville/profile/computer-software-developers/sympaq-0241-236013238#sealclick) ![](https://px.ads.linkedin.com/collect/?pid=1997524&fmt=gif) × ### Speak to a Specialist Find out how SYMPAQ makes DCAA compliance a breeze. Fill out the form below to speak with a SYMPAQ team member. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "G. Chris Brown", "url" : "https://sql.sympaq.com/blog/author/cbrown" }, "dateModified" : "2024-10-10T23:15:25.826Z", "datePublished" : "2018-11-14T19:06:26.000Z", "headline" : "How to Deal with Unbilled Receivables and Contract Revenue Calculations", "image" : [ "https://sql.sympaq.com/hubfs/Accounting%20Calculations.jpg" ], "mainEntityOfPage" : { "@id" : "https://sql.sympaq.com/blog/unbilled-receivables-contract-revenue-calculations", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://sql.sympaq.com/hubfs/logo-2.png" }, "name" : "Aldebaron, Inc." } } ``` ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "G. Chris Brown" }, "dateModified" : "October 10, 2024, 11:15:25 PM", "datePublished" : "2018-11-14 19:06:26", "description" : "Government Contractors may have Unbilled A/R for a variety of reasons. Unfortunately, auditors view Unbilled A/R with scrutiny and so do lending institutions. Here are some of the most common Unbilled A/R scenarios as well as some tips to help you deal with them.", "headline" : "How to Deal with Unbilled Receivables and Contract Revenue Calculations", "image" : { "@type" : "ImageObject", "url" : "https://sql.sympaq.com/hubfs/Accounting%20Calculations.jpg" }, "mainEntityOfPage" : { "@id" : "https://sql.sympaq.com/blog/unbilled-receivables-contract-revenue-calculations", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "http://sql.sympaq.com/hubfs/sympaqlogo.png" }, "name" : "SYMPAQ" } } ```