IndustriesConstruction and contracting
A contractor's accounts are not a trading business with longer invoices. Revenue is estimated rather than invoiced, a tenth of it cannot be collected for two years, and the profit on a job is a forecast until the day it closes.
Delivered in Saudi Arabia
Last reviewed
The accounting problem
01
Five to ten per cent of every certificate is withheld — half released at practical completion, the rest after the defects liability period, often two years later. It is revenue you have earned, recognised in a period whose profit already counted it, sitting as a receivable nobody is chasing. Left in the normal AR ageing it makes the debtor book look catastrophic and hides the invoices that genuinely are overdue.
02
The engineer instructs a change, the crew builds it, and the commercial team argues the rate for three months. The cost lands in this period. The revenue lands whenever it is agreed, if it is agreed. A contractor that recognises only certified revenue reports losses on jobs that are profitable, then a windfall in the month the variation settles — the margin swings are an artefact of the accounting, not the project.
03
Percentage of completion is only as good as the estimate to complete behind it, and that estimate lives with the project manager, not the accountant. Every contract also has to resolve to over- or under-billing at period end — billed ahead of work done is a liability, work done ahead of billing is an asset — and both have to be computed per contract, not netted across the portfolio.
04
Mobilisation advances are recovered pro-rata against each certificate until the advance is extinguished, frequently at a different percentage from the retention. The advance also carries a bank guarantee that reduces as it is recovered. Booked as a simple customer prepayment, the recovery has to be remembered manually on every application, which is where it stops happening.
05
Retention is held from subcontractors on back-to-back terms, payment is frequently pay-when-paid, and performance bonds sit against each package. The subcontract ledger has to answer what is certified, what is retained, what is released and what is disputed, per package per project — and it has to agree with the main contract position it mirrors.
06
A contractor with fifteen live jobs has fifteen P&Ls, and the group figure is the least useful of the sixteen. Plant hire, site overhead, staff time and preliminaries all have to reach the project that consumed them, or every job looks the same and none of them is right.
What NetSuite does about it
Retention is split off the invoice at certification and posted to a retention receivable, out of the normal AR ageing and into a schedule keyed on release date. Collections chase what is actually collectable; the retention balance is a report the commercial team can work rather than a residue in the debtor book.
Instructed, submitted, approved and rejected variations are carried against the contract with their own values and status, so the cost incurred on unpriced work is visible next to the revenue position it will eventually create. The contract value a report shows is the original plus approved variations, not a number typed at award and never revised.
NetSuite computes revenue from cost-to-cost or from a physical progress measure, with the estimate to complete maintained on the project where the person who knows it works. Over- and under-billing fall out per contract at period close as contract assets and contract liabilities, rather than being assembled in a spreadsheet after the fact.
The advance recovery percentage and the retention percentage sit on the contract and apply themselves to each application for payment. The certificate arithmetic — gross valuation, less previous, less retention, less advance recovery — is produced by the system rather than rebuilt in Excel every month.
Each package carries its own commitment, certified value, retention held and release schedule, linked to the project it serves, so committed cost appears in cost-to-complete before an invoice arrives. Committed but uninvoiced cost is exactly what makes a job look profitable in month nine and not in month ten.
Every transaction carries the project, so labour, plant, materials and site overhead land on the job that consumed them. The company P&L becomes the sum of fifteen project P&Ls that each stand up on their own.
Compliance · Saudi Arabia
Progress certificates are e-invoices under the ZATCA regime and clear through the integration phase like any other document, including credit notes when a valuation is revised downward. Site labour drives GOSI registration and the Saudization band, both of which move with headcount on projects rather than with revenue.
ZATCA e-invoicing in NetSuite →A scoping call, not a sales qualifier. Bring the report you cannot produce today and we will tell you what it takes to produce it.