How to better evaluate borrower performance – Understand the percentage of completion method

Description

Abstract: Gaining an understanding of the specific accounting methods borrowers use can help lenders better evaluate their borrowers’ financial status and whether they’re generating sufficient revenues over time. This article discusses one such method: percentage of completion. The article provides a brief example to illustrate how the percentage of completion method works in the context of industries that enter into long-term contracts, such as homebuilders, commercial developers, architects, creative agencies and engineering firms.