Lesson 5: Invoice and Progress Claim Flashcards
Vendor
VENDOR NAME
VENDOR ADDRESS
PAYMENT REMITTANCE DETAILS
GST AND BUSINESS NUMBERS
KEY CONTACT INFORMATION (FOR DISPUTE, CHANGES, AND QUESTIONS)
TERMS
Vendor name
FULL LEGAL NAME OF A SUPPLIER / SUBTRADE
IT MAY OR MAY NOT BE THE SAME AS WHAT SHOWS ON THE LETTERHEAD.
Vendor address
BUSINESS ADDRESS
MAILING ADDRESS
PAYMENT ADDRESS
Payment remittance details
WIRE / CHEQUE / EFT DETAILS
GST and business numbers
BUSINESS NUMBER IS A NINE-DIGIT UNIQUE NUMBER
GST NUMBER IS USUALLY THE SAME NINE - DIGIT NUMBER BUT ENDS IN RT0001
GST NUMBER IS A KEY
Key contact information
GENERIC BILLING OR ACCOUNTING CONTACT INFORMATION
Terms
PAYMENT DUE DATE
LATE PAYMENT INTEREST AND PENALTIES
Project (Key elements of an invoice)
PROJECT NAME
PROJECT NUMBER
SERVICE ADDRESS / DELIVERY ADDRESS
PO NUMBER
SUBCONTRACT NUMBER
PROJECT DESIGNATED PERSON CONTACT
NATURE OF INVOICES (QUANTITY, SERVICES, UNIT PRICE, DELIVERY FEE)
Project name
MANY PROJECTS SHARE SIMILAR NAMES.
IT PROVIDES A QUICK REFERENCE FOR EVERYONE WHEN GOING THROUGH THE INVOICES.
Project number
IT PROVIDES A UNIQUE REFERENCE TO THE RIGHT PROJECT IF THE VENDOR CAN USE YOUR PROJECT NAME.
IT PROVIDES A QUICK REFERENCE TO THE EXACT PROJECT, LOCATION, OR PHASE.
Service address / Delivery address
THIS CONFIRMS THE EXACT LOCATION OF THE SITE AND OR SITE RECIPIENT.
PO Number
THE UNIQUE NUMBER THAT TIES TO A PO NUMBER FOR QUICK REFERENCES FOR THE SITE SUPERVISOR’S CONFIRMATION.
Project designated person contact.
THIS IS THE KEY CONTACT PERSON WHO PLACED THE ORDER OR ORDERED THE SERVICES.
Company (Key elements of an invoice)
COMPANY COMPLETE LEGAL NAME
COMPANY ADDRESS
CUSTOMER NUMBER
Company complete legal name
WHEN SERVICES HAVE BEEN PROVIDED OR GOODS HAVE BEEN DELIVERED, THE COMPANY HAS LEGAL OBLIGATION TO PAY THE VENDORS.
THE COMPANY CAN CLAIM THE EXPENSES AS COSTS.
THE COMPANY CAN CLAIM BACK THE GST AMOUNT.
Customer number
THIS VENDOR’S ASSIGNED NUMBER.
IT PROVIDES CONSISTENCY / REFERENCES FOR BILLING PURPOSES.
Invoice (Key elements of an invoice)
INVOICE DATE
SERVICE DATE
TAX-GST AND PST
HOLDBACK
PROGRESS CLAIM SCHEDULE
INVOICE / CREDIT / REFUND
Vendor accounting system generated unique number.
INVOICE DATE
Service performed date / good delivery date.
SERVICE DATE
Invoice / Credit / Refund
DEPENDING ON THE SYSTEMS OF EACH COMPANY. REFUND AND CREDITS CAN SHOW SIGNIFICANTLY DIFFERENT.
REVISIONS OF INVOICES CAN BE HANDLED DIFFERENTLY PENDING ON THE VENDOR’S SYSTEM.
The significance of an invoice approval
INVOICE APPROVAL IS A FULL APPROVAL OF ALL THE KEY ELEMENTS OF AN INVOICES
AN INVOICE APPROVAL IS THE VERIFICATION OF PURCHASES MADE AND OR WORK COMPLETED ON SITE.
AN INVOICE APPROVAL ALSO SUGGESTS THAT THE PURCHASE WAS AUTHORIZED, WITHIN BUDGET, AND IS GOING TO BE EXACT COST CODE AGREED UPON
AN INVOICE APPROVAL SUGGESTS GIVES ACCOUNTING DEPARTMENT A GREEN LIGHT ON PAYMENT. THERE SHOULD BE NO COMMENTS, ADDITIONAL INSTRUCTIONS OR ANY DOUBT. ONCE APPROVED, CONSTRUCTION SHOULD ASSUME IT IS PAID WITHOUT ANY FOLLOW UP.
AN INVOICE APPROVAL BECOMES PART OF THE PROJECT COSTS. IT IS RECORDED IN THE JOB COST REPORT AND WILL HAVE TO STAND BY REVIEW OF MULTIPLE STAKEHOLDERS, INTERNAL OR EXTERNAL.
Key elements of a progress claim.
HOLDBACK
PROGRESS SCHEDULE
SUBCONTRACT NUMBER
STATUTORY DECLARATION
WCB
INSURANCE CERTIFICATE (IF EXPIRED / OR NEW VENDOR )
Common challenges with invoice / progress claims
MISSING SUBCONTRACT / PO NUMBER
MISSING STATUTORY DECLARATION
MISSING WCB
PROGRESS CLAIM NOT CORRECT
HOLDBACK / TAX CALCULATION
Missing subcontract / PO number
ACCOUNTING IS NOT ABLE TO START DATA PROCESSING
Missing Statutory Declaration
LEGAL IMPLICATION / CONSISTENT MISSING COULD BE A SIGN OF TRADE FINANCIAL DIFFICULTY
Missing WCB
TRADE COULD BE HAVING ISSUES OBTAINING WCB CLEARANCE / SAFETY WARNING
Progress claim not correct
OVERPAYMENT TO SUB TRADE
Holdback / tax calculation
OVERPAYMENT AND OR NOT ENOUGH HOLDBACK IS RETAINED
Post invoice approval
TYPICALLY A TWO LEVEL APPROVAL IS REQUIRED - SITE SUPERINTENDENT - PROJECT MANAGER
DEPENDING ON THE LEVEL OF THRESHOLD, A DIRECTOR’S APPROVAL MAY BE NEEDED.
APPROVED INVOICES ARE ENTERED BY ACCOUNTS PAYABLE INTO JOB COST REPORT.
THE PAYMENT WILL BE QUEUED FOR PROCESSING AT THE NEXT CYCLE
IF THE PAYMENT CANNOT WAIT TILL THE NORMAL CYCLE, AN URGENT CHEQUE REQUEST WILL BE MADE TO ACCOMMODATE A SPECIFIC PAYMENT DATE / FORM.
PROJECT ACCOUNTANT CAN PRODUCE AR BILLING BASED ON ALL THE COSTS OCCURRED TO DATE. PM CAN ADJUST THE FORECAST FOR THE PROJECT.
Estimate
BUDGET
Change of estimate
CHANGE OF BUDGET
Commitment
PO / SUBCONTRACT
Change orders
CHANGE OF ESTIMATE
Cost control and overall profitability
BUDGET
Monthly cashflow forecast
COMMITMENT
Billing and payment
JOB COST TO DATE
Analysis on job progress.
CHANGE TO BUDGET
Project management and indication of potential issues
CHANGES TO COMMITMENT
Commitment report review
MONTHLY REVIEW OF COMMITMENT REPORT BETWEEN PROJECT ACCOUNTANT AND PROJECT MANAGER SHOULD BE CONDUCTED.
NUMBERS BETWEEN THE SYSTEMS CAN HAVE DISCREPANCIES
PROJECT MANAGER MAY DISCOVER ADDITIONAL ISSUES SUCH AS CODING, INSUFFICIENT COMMITMENT BALANCE, OVER/UNDERPAYMENT
CERTAIN INVOICES MAY BE APPROVED/CODED WITHOUT PO OR SUBCONTRACT.
EXAMPLES - CELLPHONE; CAR ALLOWANCE / MILEAGE; MISC. SUPPLIES
Credit card expense
CREDIT CARD POLICY
CREDIT CARD LINKAGE TO PO AND COMMITMENT
CREDIT RECONCILIATION
LOST RECEIPTS / APPROVAL DELAY ON JOB COST AND BILLING
Credit card policy
USAGE
APPROVAL
TIME
RECEIPTS
Progress claim approval (in detail)
HOW TO RECONCILE THE PROGRESS CLAIM?
CLAIM TO DATE PROGRESS
PAID TO DATE AMOUNT RECONCILE TO LAST DRAW
HOLDBACK CALCULATION ON GROSS AMOUNT
GST HOLDBACK
WHERE AND HOW MUCH WILL SHOW UP IN JOB COST / FINANCIAL STATEMENT?
WHAT’S THE FINANCIAL STATEMENT IMPACT ONCE PAYMENT IS RELEASED?
CONTRACT AMOUNT AND CHANGE ORDER WILL SHOW UP ON COMMITMENT REPORT.
THESE SHOULD RECONCILE BETWEEN ACCOUNTING SYSTEM AND CONSTRUCTION OPERATING SYSTEM.
PREVIOUS PAYMENT AMOUNT IS ALSO SHOWN ON BOTH SYSTEMS FOR VERIFICATION. ACCOUNTING IS ABLE TO TRACK COSTS PAID UP TO DATE TO CONFIRM THIS AMOUNT.
ONCE AN PROGRESS CLAIM IS APPROVED, THE GROSS AMOUNT (PRIOR TO HOLDBACK) WILL SHOW UP IN JOB COST REPORT.
THE HOLDBACK AMOUNT WILL NOT SHOW UP IN THE JOB COST REPORT, BUT LIABILITY ACCOUNT ON FINANCIAL STATEMENT. IT SIGNIFIES A FUTURE COMMITMENT AT THE HOLDBACK RELEASE STAGE.
GST ON THE PROGRESS CLAIM SHOWS UP IN A SEPARATE GST ITC ACCOUNT.
GST ITC MEANS THAT WE CAN CLAIM IT BACK FROM CRA.
GST ON HOLDBACK PORTION IS TRACKED IN A SEPARATE ACCOUNT UNTIL THE HOLDBACK IS RELEASED.
REVISION ON PROGRESS CLAIM AND OR REDUCTION OF PROGRESS CLAIMS.
A RECALCULATION OF GROSS AMOUNT, HOLDBACK, NET AMOUNT, GST IS REQUIRED FROM PROJECT MANAGER.
THE REDUCED AMOUNT WILL IMPACT THE NEXT PROGRESS CLAIMS’S “PREVIOUS PAID” AMOUNT.
Holdback release process
REVIEW SAMPLE POLICIES
WHILE IT IS PROJECT MANAGER’S RESPONSIBILITIES TO ENSURE THE WORK IS DONE PROPERLY, ACCOUNTING IS TO PROVIDE THE RETAINAGE REPORT TO SUPPORT THE NUMBERS.
DISCREPANCIES OCCUR OFTEN BECAUSE OF THE TIMING OR INVOICES.
HOLDBACK CAN BE RELEASED BEFORE THE RELEASE OF LAST SEVERAL INVOICES. THEREFORE, SOME TRADES’ INVOICES MAY NOT HAVE A HOLDBACK COMPONENT AFTER THE HOLDBACK IS RELEASED. BOTH OPERATIONAL AND ACCOUNTING STAFF NEEDS TO PAY EXTRA ATTENTION.
WCB AND STATUTORY DECLARATION ARE THE KEY FOR RELEASING ANY PAYMENTS.
LIEN SEARCH SHOULD BE CONDUCTED PRIOR TO THE RELEASE OF PAYMENTS.
Review of retainage report
DETERMINE THE AMOUNT
TROUBLE SHOOTING DISCREPANCIES
ASSESS THE IMPACT ON FINANCIAL STATEMENT
WALK THROUGH THE WORK FLOW OF A HOLDBACK RELEASE
Work flow of a holdback release
TRADE REQUEST
PM VERIFICATION
RECONCILIATION OF RETAINAGE
FINAL SIGN OFF AND RELEASE
