Lesson 5: Invoice and Progress Claim Flashcards

1
Q

Vendor

A

VENDOR NAME

VENDOR ADDRESS

PAYMENT REMITTANCE DETAILS

GST AND BUSINESS NUMBERS

KEY CONTACT INFORMATION (FOR DISPUTE, CHANGES, AND QUESTIONS)

TERMS

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2
Q

Vendor name

A

FULL LEGAL NAME OF A SUPPLIER / SUBTRADE

IT MAY OR MAY NOT BE THE SAME AS WHAT SHOWS ON THE LETTERHEAD.

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3
Q

Vendor address

A

BUSINESS ADDRESS

MAILING ADDRESS

PAYMENT ADDRESS

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4
Q

Payment remittance details

A

WIRE / CHEQUE / EFT DETAILS

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5
Q

GST and business numbers

A

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

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6
Q

Key contact information

A

GENERIC BILLING OR ACCOUNTING CONTACT INFORMATION

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7
Q

Terms

A

PAYMENT DUE DATE

LATE PAYMENT INTEREST AND PENALTIES

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8
Q

Project (Key elements of an invoice)

A

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)

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9
Q

Project name

A

MANY PROJECTS SHARE SIMILAR NAMES.

IT PROVIDES A QUICK REFERENCE FOR EVERYONE WHEN GOING THROUGH THE INVOICES.

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10
Q

Project number

A

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.

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11
Q

Service address / Delivery address

A

THIS CONFIRMS THE EXACT LOCATION OF THE SITE AND OR SITE RECIPIENT.

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12
Q

PO Number

A

THE UNIQUE NUMBER THAT TIES TO A PO NUMBER FOR QUICK REFERENCES FOR THE SITE SUPERVISOR’S CONFIRMATION.

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13
Q

Project designated person contact.

A

THIS IS THE KEY CONTACT PERSON WHO PLACED THE ORDER OR ORDERED THE SERVICES.

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14
Q

Company (Key elements of an invoice)

A

COMPANY COMPLETE LEGAL NAME

COMPANY ADDRESS

CUSTOMER NUMBER

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15
Q

Company complete legal name

A

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.

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16
Q

Customer number

A

THIS VENDOR’S ASSIGNED NUMBER.

IT PROVIDES CONSISTENCY / REFERENCES FOR BILLING PURPOSES.

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17
Q

Invoice (Key elements of an invoice)

A

INVOICE DATE

SERVICE DATE

TAX-GST AND PST

HOLDBACK

PROGRESS CLAIM SCHEDULE

INVOICE / CREDIT / REFUND

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18
Q

Vendor accounting system generated unique number.

A

INVOICE DATE

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19
Q

Service performed date / good delivery date.

A

SERVICE DATE

20
Q

Invoice / Credit / Refund

A

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.

21
Q

The significance of an invoice approval

A

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.

22
Q

Key elements of a progress claim.

A

HOLDBACK

PROGRESS SCHEDULE

SUBCONTRACT NUMBER

STATUTORY DECLARATION

WCB

INSURANCE CERTIFICATE (IF EXPIRED / OR NEW VENDOR )

23
Q

Common challenges with invoice / progress claims

A

MISSING SUBCONTRACT / PO NUMBER

MISSING STATUTORY DECLARATION

MISSING WCB

PROGRESS CLAIM NOT CORRECT

HOLDBACK / TAX CALCULATION

24
Q

Missing subcontract / PO number

A

ACCOUNTING IS NOT ABLE TO START DATA PROCESSING

25
Q

Missing Statutory Declaration

A

LEGAL IMPLICATION / CONSISTENT MISSING COULD BE A SIGN OF TRADE FINANCIAL DIFFICULTY

26
Q

Missing WCB

A

TRADE COULD BE HAVING ISSUES OBTAINING WCB CLEARANCE / SAFETY WARNING

27
Q

Progress claim not correct

A

OVERPAYMENT TO SUB TRADE

28
Q

Holdback / tax calculation

A

OVERPAYMENT AND OR NOT ENOUGH HOLDBACK IS RETAINED

29
Q

Post invoice approval

A

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.

30
Q

Estimate

A

BUDGET

31
Q

Change of estimate

A

CHANGE OF BUDGET

32
Q

Commitment

A

PO / SUBCONTRACT

33
Q

Change orders

A

CHANGE OF ESTIMATE

34
Q

Cost control and overall profitability

A

BUDGET

35
Q

Monthly cashflow forecast

A

COMMITMENT

36
Q

Billing and payment

A

JOB COST TO DATE

37
Q

Analysis on job progress.

A

CHANGE TO BUDGET

38
Q

Project management and indication of potential issues

A

CHANGES TO COMMITMENT

39
Q

Commitment report review

A

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

40
Q

Credit card expense

A

CREDIT CARD POLICY

CREDIT CARD LINKAGE TO PO AND COMMITMENT

CREDIT RECONCILIATION

LOST RECEIPTS / APPROVAL DELAY ON JOB COST AND BILLING

41
Q

Credit card policy

A

USAGE

APPROVAL

TIME

RECEIPTS

42
Q

Progress claim approval (in detail)

A

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.

43
Q

Holdback release process

A

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.

44
Q

Review of retainage report

A

DETERMINE THE AMOUNT

TROUBLE SHOOTING DISCREPANCIES

ASSESS THE IMPACT ON FINANCIAL STATEMENT

WALK THROUGH THE WORK FLOW OF A HOLDBACK RELEASE

45
Q

Work flow of a holdback release

A

TRADE REQUEST

PM VERIFICATION

RECONCILIATION OF RETAINAGE

FINAL SIGN OFF AND RELEASE