California’s New SB 440 Just Changed How You Track Change Orders—Here’s Why It Matters

If you’re a contractor in California, SB 440 took effect in 2026 and most of you don’t realize what it means for your books.
New rule: Change orders must include a detailed response timeline. If the project owner doesn’t respond in 30 days, you get automatic 2% monthly interest on the disputed amount.
Sounds legal. But here’s the accounting nightmare: your GL now has to track: Change order date. Response deadline. Interest accrual date. Payment status.
One mistake in categorization and you lose the interest deduction *or* overpay taxes on interest you’re entitled to.
SF and LA are also rolling out SB 79 (July 1, 2026)—densified zoning near transit. This means faster project timelines, compressed schedules, and tighter change order tracking.
Translation: Your bookkeeping complexity just doubled.
The contractors winning are updating their GL systems *now*—before projects hit the ground.
If your books still use basic “materials/labor” buckets, you’re behind.
Get ahead of it.
#SB440 #California #Construction #ChangeOrders #Accounting

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.