![]() It actually means billing $8,000 (100% of the remaining total). For example, let’s say your scheduled value for an item was $10,000 and your first application billed for $2000 in stored materials, Later, an application that shows 100% complete for that line item wouldn’t mean billing $10,000 that time. If you bill for stored materials, you’ll need to remember not to double-bill. What About Stored Material and Retainage? ![]() In addition, you’ll need to update the “previous applications” amount every time you bill and add the new application amount. You’ll need to keep track of the amounts you originally applied for, what you actually billed, and what you got paid for. ![]() This gets more complex as the job continues, because your estimated percentage of completion may vary from the project owner’s each time. If you had “posted” the original application as accounts receivable in your accounting system, you’re going to need to deal with the change there. You’ll need to make adjustments to your billing system, produce another version of the application, and re-submit it. In red lining, they’ll make adjustments to your amounts and return the forms to you. If not, they may “red line” the AIA form. The project owner (or architect or GC, etc.) gets to take a look at those percentages of completion and make sure that they agree with your estimation. Essentially, you’re asking for permission to invoice them the amount indicated on the G702. Remember, you’re not technically invoicing your client at that point. Where AIA billing gets more complex is after that first application. You enter those percentages of completion, do some quick math, and get a total. Afterward, you purchase some materials for the job and complete some of the work. The schedule of values was created during contracting. What’s All the Fuss About?Ĭompleting the first AIA billing form on a job is really pretty simple with the right tools. ![]() Those costs - and the billings for them - are referred to as “stored material.” Sometimes retainage is held on stored materials at a different percentage than the rest of the job. In AIA billing, you can bill for materials you’ve purchased for the job even if they haven’t been used yet. You need to have the materials on site when they’re needed, but you don’t want to order them too early and tie up cash unnecessarily. Ordering materials is a tricky part of budgeting. Progress billing in any form requires quite a bit more math and accounting. The downside is that it’s not as simple as printing a deposit invoice and billing the remainder at the end of the job. It forces regular communication on the progress of a job, and requires you to have a good understanding of what might be going wrong. Paying in smaller installments is often easier on the customer and allows you to increase the likelihood you’ll be able to collect. ![]() That allows you to more easily control budgets, pay laborers and subcontractors, purchase materials, and manage other debts.īut there are other benefits. Instead, you bill to receive cash on a regular basis. The biggest benefit of progress billing is that you don’t have to wait for arbitrary milestones (or even the end of the job) to bill. In other words, if you’re 25% done with the job, you bill 25% of the contracted amount. It’s calculated using a simple formula of: The amount you bill is generally related to the percentage of completed work. “Progress billing” simply means that you bill based on your progress on the job. ![]()
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