You enter those percentages of completion, do some quick math, and get a total. One of those standards is a set of forms contractors use for a specific style of progress billing, plus the practices around them. Also called “retention,” retainage is a percentage of a contract, often 5-10%, that can’t be billed until the entire project is complete and the client has approved the work. Payroll, Bookkeeping & Accounting Task Checklist, VIDEO: How To Make Your QuickBooks Customer:Job List More Meaningful, Welcome to Learn to use QuickBooks in your construction business, eBook: Getting Equipment Costs into QuickBooks Job Costing Reports, Get 20% Off QuickBooks Pro Small Business Accounting Software + Free Shipping, Save 20% Off QuickBooks Premier Accounting Software + Free Shipping, Buy QuickBooks Enhanced Payroll and Save 20%, G-702 Contractors Application for Payment, forget about any basic accounting principals you’ve ever learned, ignore change orders that have been submitted or approved, but not processed, ignore money that is still outstanding from previously submitted applications for payment. The AIA billing system is a standardized method of construction percentage of completion contract billing (IE: Progress Billing) developed by the American Institute of Architects (AIA) in 1992. When your payment applications get screwed up – -bad things happen; none of which put you in “good standing” with the General Contractor or Project Owner, and can ultimately damage your  company’s overall cash position. In AIA billing, you can bill for materials you’ve purchased for the job even if you haven’t used them yet. gets to take a look at those percentages of completion and make sure that they agree with your estimation. I've been using and supporting QuickBooks products since the early 1990's. This gets more complex as the job continues, because your estimated percentage of completion may vary from the project owner’s each time. Therefore, the form isn’t technically an invoice. You’ll need to keep track of the amounts you originally applied for, what you actually billed, and what you got paid for. That’s what we call “AIA billing.” More accurately, AIA billing is the use of forms G702 and G703 to provide detailed information about the progress on a job. For example, let’s say your scheduled value for an item was $10,000 and your first application billed for $2000 in stored materials. The schedule of values was created during contracting. Progress billing in any form requires quite a bit more math and accounting. Nancy Smyth, Sunburst Software Solutions, Inc.QuickBooks Construction & Payroll Expert. If you were to bill another 10% of that line item on each application, another $50 would be held in retainage each time. FOUNDATION® is a registered trademark of Foundation Software, LLC. If the application is properly completed and acceptable to the architect, the architect’s signature certifies to the owner that a payment in the amount indicated on Line 8 of the G-702 is due to the contractor. Each line item displays the “scheduled value,” (i.e., the cost for that line item agreed upon in the contract) along with how much work the contractor has done to-date on that line item. Learn to use QuickBooks® in your construction business - QuickBooks® for Contractors Bookkeeping Tips & Training -, Learn to use QuickBooks® in your construction business, VIDEO: How to Calculate Equipment Costs per Hour, Project Information Worksheet-Keep Your Contract Info Organized, Learn About AIA Billing & how to fill out an AIA G-702/G-703, How To Complete an AIA G-702/G-703 & Document Change Orders | QuickBooks for Contractors blog, #Freebie Friday - AIA Billing (G-702/G-703) Training Exercise | QuickBooks for Contractors blog, Sunburst’s Weekly Wrap-Up of Popular Posts 12/2 – 12/8/2013 | QuickBooks for Contractors blog, Sunburst’s Weekly Wrap-Up of Popular Posts 11/24 - 12/1/2013 | QuickBooks for Contractors blog, Sunburst's Weekly Wrap-Up of Popular Posts 11/16-11/22/2013 | QuickBooks for Contractors blog, The information provided is still relevant, FREE Webinar – QuickBooks Desktop vs Intuit Online Payroll, Year End Payroll Tasks for 2014 and year beginning 2015, How to Fulfill Your Certified Payroll Requirements – Webinar Recording, QuickBooks for Contractors-Job Costing Basics from A to Z Recording, Free Webinar – Stealing More Than the Secret Sauce, 4/9/2014 QuickBooks for Contractors hangout – Time & Materials Billings, 2/12/2014 QuickBooks for Contractors Hangout – A Tale of Two Certified Payroll Processes, WIP Calculator for Percentage of Completion Calculations, QuickBooks for Contractors Bookkeeping Tips & Training, eBook: Learn About AIA Billing & How To Fill Out an AIA G-702/G-703, Important Facts About Items Left as “Billable” in QuickBooks. In red lining, they’ll make adjustments to your amounts and return the forms to you. Where AIA billing gets more complex is after that first application. Later, an application that shows 100% complete for that line item wouldn’t mean billing $10,000 that time. The AIA billing system was developed to provide a standardized method of submitting job related paperwork to send to architects and others by a contractor in order for the contractor to be paid for work performed on a construction project. The schedule of values on an AIA form is the detail of work that you plan and complete. I currently work for a company that does residential and commercial billing but I would like to set my sights higher in the commercial side of things. Most anyone will tell you that completing the AIA G-702 and G-703 forms by hand is frustrating and difficult. You’ve got this! This gives the customer recourse in case they aren’t satisfied with the work. So, in the meantime, congratulations on winning that job that requires AIA billing software! 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. Ordering materials is a tricky part of budgeting. In part three, we’ll walk you through how to do it in FOUNDATION® and show you the benefits of using construction accounting software that has built-in AIA billing tools. Even though you don’t bill retainage until the very end, you should recognize it as a separate receivable amount while the job progresses. 38 pages. Learn About AIA Billing & how to fill out an AIA G-702/G-703 so that you can be paid on time! The bad news: it requires AIA billing, and you haven’t a clue where to start. Learn how your comment data is processed. As a form of progress billing, AIA billing is especially helpful because it standardizes how you bill, what the invoices look like, and the language the parties use. Welcome | About | Privacy Policy | Contact Us. To fill out one correctly, you pretty much have to: You need to realize that the payment applications that you submit are an important piece of your overall cash flow management. You’ll need to make adjustments to your billing system, produce another version of the application, and re-submit it. It’s not. As a form of progress billing, AIA billing is especially helpful because it standardizes how you bill, what … It forces regular communication on the progress of a job, and requires you to have a good understanding of what might be going wrong. !function(o,t,e,a){o._aoForms=o._aoForms||[],o._aoForms.push(a);var n=function(){var o=t.createElement(e);o.src=("https:"==t.location.protocol? Learn to use QuickBooks® in your construction business - QuickBooks® for Contractors Bookkeeping Tips & Training is part of the Sunburst Software Solutions, Inc. family of QuickBooks® related products and services. 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