Jayna,
We run into this exact question with contractors all the time, and your instinct is right. Forcing short service work through the same percent complete routine you use for new construction usually costs more in admin hours than it adds in statement accuracy.
The good news is you don't have to pick between compliant and practical. ASC 606 already gives you room here.
For jobs that close inside a single billing cycle, generally under 30 days, control transfers to the customer so fast that recognizing revenue at completion and billing lands you in basically the same place as completed contract, while staying fully compliant. If you bill based on work performed, the right to invoice practical expedient (ASC 606-10-55-18) lets you recognize revenue in the amount you have the right to invoice. For most facilities and service work, that is clean and defensible.
A few things that have worked well for contractors we have helped set this up:
Set a clear threshold. Pick a dollar amount or duration, say anything under 10K or under 30 days, and route those automatically to Service Revenue recognized at completion. Everything above the line goes into your formal POC backlog. Once the threshold is written down, your team stops making case by case judgment calls, which is where the hours disappear.
Separate the revenue streams in your GL. Keep facilities revenue and direct costs in distinct accounts from your long term projects. It keeps your service margins visible on their own, and it makes year end far smoother. Your auditors can test the two streams differently instead of untangling them.
Document the policy once. A short written rev rec policy memo describing the threshold and the method for each bucket is usually enough to satisfy your CPA and keep everyone consistent if staff turns over.
One caution worth flagging: watch for any service jobs that straddle a period end or carry meaningful unbilled costs at month end. Those are the few that can still distort the picture if they are material, so it is worth a quick look before you finalize the threshold.
Hope this helps.
Best,
Raphael
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Raphael Merlo
Fractional CFO
Bond CFO
Birmingham MI
(313) 566-3254
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Original Message:
Sent: 05-27-2026 15:25
From: Jayna Bertholf
Subject: Accounting for Facilities Department
We are evaluating revenue recognition practices for our Facilities division and I would be interested to hear how other contractors are handling this from a GAAP and practical standpoint.
Our Facilities department primarily performs smaller service and repair-type jobs, most of which are completed in less than one week. These jobs are different in nature from our larger new construction and remodel projects, where we use percent-complete accounting.
For those of you with similar Facilities or Service divisions:
- Are you using percent-complete accounting for these short-duration jobs?
- Has anyone elected to use completed contract (or effectively recognize revenue upon completion/billing) for these types of jobs?
From a practical standpoint, we are finding that applying the percent-complete method to small, short-term jobs creates significant administrative effort with limited value to the financial statements. We are considering whether a completed-contract approach may be more appropriate for these jobs, while continuing percent-complete for larger construction projects.
I would appreciate hearing how others in the industry are handling this.
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Jayna Bertholf
Director of Finance
Zernco, Inc.
Wichita KS
(316) 775-9991
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