Contractor Finance Glossary
What is Backlog?
Also called: work on hand, signed backlog
Backlog is the total value of signed, contracted work that has not yet been performed, and it is a contractor's clearest forward view of revenue and crew demand.
Backlog answers the question a P&L cannot: how much work is already sold but not yet done. Lenders, bonding companies, and buyers read it as the health of the pipeline, because it shows whether the crew has months of committed work ahead or is about to run dry.
Size alone is misleading. A large backlog full of low-margin or stale jobs is worse than a smaller one full of profitable, current work. Backlog quality (margin, age, and the odds each job actually proceeds) matters more than the headline number, and aging backlog is often the first sign a job is dying.
How it is calculated
Backlog = total contract value of signed work minus revenue already earned (recognized) on that work. Backlog months = backlog divided by average monthly revenue, giving a rough runway of committed work.
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