The electrical contractor was doing $4.2M in commercial new construction — mostly lump sum with T&M service and change order packages layered on top. The field crews were executing. GC relationships were solid. But the LOC had been near its limit for six months, and every month the owner was moving money around to cover payroll.
The CPA said the books were clean. The bookkeeper said everything was reconciled. Nobody had looked at what was actually billed versus what had been approved in the field.
The root cause: T&M change orders were getting verbal approval from the GC's superintendent. The crew would do the work. The cost would hit the account. Then the formal write-up would wait until the PM had bandwidth — or until closeout. By then the work was 60–90 days old and the cash had been borrowed against the LOC.
T&M underbilling is the most common cause. Change orders approved verbally don't hit the invoice until the PM has time to write them up — or until closeout. Meanwhile the labor and material costs are immediate. At $4M revenue with several active T&M jobs, unbilled work accumulates to significant amounts fast, and it's invisible until someone audits it.
The crew does the work. The cost hits the account. The formal write-up waits for the PM to have time or for written GC confirmation. Across multiple active jobs, that wait turns into weeks — and weeks of unbilled T&M across three or four jobs turns into $100K+ sitting in the field waiting to be asked for.
SPM builds a T&M billing process with a 48-hour change order documentation rule — every verbal direction gets a written confirmation within two business days. Underbilled T&M gets audited at onboarding. The job costing structure is aligned to how electrical contractors estimate: by phase, labor category, and material package so variance is visible while jobs are running. Schedule a call if this situation sounds familiar.
Most electrical contractors have five figures sitting unbilled right now. Let's find it.
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