What Is "Over/Under" In Aspire?

If you're an Aspire user, you've likely at least heard of or seen the "over/under" terminology. You may even understand its purpose a bit. And if you're a long-time user of Aspire or deal in the financials of an Aspire-using company, you may even understand it better than I. This particular article is for those just being exposed or wanting to know a little more about it.

Very simply put, your over/under is the difference between your invoiced revenue and your earned revenue. In construction, you know this as your WIP. Traditionally, we would call this your "unearned revenue" (invoiced minus earned) or "unbilled revenue" (earned minus invoiced). Honestly, we wish Aspire would revert to this nomenclature because it's more clear on which side of that coin we're dealing with, but that's out of our control.

In short, every job caries an over/over balance until the job is complete. Throughout the job, at any given time, we may be over-billed or over-earned. Simply illustrated, that looks like the following:

In this scenario, we have over-billed the client until about June, once we've likely performed our mulch, flowers, and slew of other spring services, that gets us caught up, and even over-earned.

The sum of the various jobs' over/under values makes up the sum of the company's over/under balance. What we want to ensure is that the balance of each individual job's over/under reaches zero by the end of the job, like that seen in the graph. This, in other words, would mean that we earned the same amount as we invoiced. If not, that over/under remaining balance will need to be written off. In Aspire, we call this Revenue Variance. Revenue Variance does serve a purpose, but ideally, we'd like to earn AND invoice ALL the revenue for the job, right? You wouldn't want to do all that work estimating, bidding, planning, and performing a job just to lose out on some of the revenue when it's all said and done.

For some companies (I might even say many), the red line in the chart can look much more aggressively on the positive side of zero, meaning the client owes us a lot more than what we've billed. For these companies, it underscores the importance of servicing our clientele faithfully and making sure we get caught up and collected on what we're owed. Understanding this may make you consider the importance of structuring your contracts. For example, if you're in an extremely seasonal market where you do deliver a slew of spring services towards the beginning of the year, you'll want to try start billing those clients as early as possible, before you start servicing even, to pull that red line further down. This will help your cashflow as well. If you're in a southern climate where the spread of revenue is pretty consistent by month, you likely don't have to worry about this.

It takes a masterclass to fully understand the ins and outs of Over/Under and Revenue Variance, which maybe we will do some day, but for now, we'll leave it at this.