What Are Costs in Excess of Billings?

Costs in excess of billings happen when you’ve spent more on a project (materials, labor, etc.) than you’ve billed your client. In accounting, it shows up as an asset because it’s money you’re expecting to recover soon!

For instance, say you are building a treehouse for a friend. You have already bought the wood and started making the treehouse, but your friend hasn’t paid yet.