Subscribe to the Learn to use QuickBooks in your construction business RSS feeds. Subscribe to free eNews: weekly, quarterly or both! The bad news: it requires AIA billing, and you haven’t a clue where to start. Remember, you’re not technically invoicing your client at that point. © Foundation Software, LLC. So, in the meantime, congratulations on winning that job that requires AIA billing software! Retainage is a bit more complicated. 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 … The downside is that it’s not as simple as printing a deposit invoice and billing the remainder at the end of the job. Download your item before leaving this page! Afterward, you purchase some materials for the job and complete some of the work. Thank you for your time and hvae a great day! If you were to bill another 10% of that line item on each application, another $50 would be held in retainage each time. . Remember: The whole point of the AIA billing process is to make it crystal clear to the owner or GC what work you’ve completed to date, both in this period and in prior periods. Keep current on payroll changes, new and easing restrictions, and other news affecting the construction industry. That doesn’t seem so hard, right? Paying in smaller installments is often easier on the customer and allows you to increase the likelihood you’ll be able to collect. Typically, the AIA Billing System consists of two forms or pages: These forms serve as both the contractors application for current payment due and the architect’s certification that payment is due to the contractor. Using Analytics to Harness the Power of Your Accounting Data, Maximizing Deductions with the Tax Cuts and Jobs Act: Section 179 vs. 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. How do you allocate construction overhead? 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. This gets more complex as the job continues, because your estimated percentage of completion may vary from the project owner’s each time. Nancy Smyth, Sunburst Software Solutions, Inc.QuickBooks Construction & Payroll Expert. The amount you bill is generally related to the percentage of completed work. If not, they may “red line” the AIA form. Essentially, you’re asking for permission to invoice them the amount that the G702 indicates. Browse AIAU’s expansive library of online courses. Even though you don’t bill retainage until the very end, you should recognize it as a separate receivable amount while the job progresses. 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You get paid. It forces regular communication on the progress of a job, and requires you to have a good understanding of what might be going wrong. 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. !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? That means that you’re “holding” retainage on an ongoing basis. Learn About AIA Billing & how to fill out an AIA G-702/G-703 so that you can be paid on time! It’s just an application detailing the amount you’d like to invoice. 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. gets to take a look at those percentages of completion and make sure that they agree with your estimation. If you work with forms G702 and G703, there are a few important terms you’ll hear. If you bill for stored materials, you’ll need to remember not to double-bill. This site uses Akismet to reduce spam. The schedule of values on an AIA form is the detail of work that you plan and complete. Bonus Depreciation. This gives the customer recourse in case they aren’t satisfied with the work. In addition, you’ll need to update the “previous applications” amount every time you bill and add the new application amount. Therefore, the form isn’t technically an invoice. I hope you find resources available here to be helpful. “Progress billing” simply means that you bill based on your progress on the job. All Rights Reserved. Quite frequently, in the construction industry, it is a requirement that you submit your progress billings on AIA Forms G-702/G-703. It actually means billing $8,000 (100% of the remaining total). In this three-part series, we’ll provide all the answers you need for handling your first AIA job. Learn to use QuickBooks® in your construction business - QuickBooks® for Contractors Bookkeeping Tips & Training - Copyright ©2012 - 2017. You’ll need to make adjustments to your billing system, produce another version of the application, and re-submit it. 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. One of those standards is a set of forms contractors use for a specific style of progress billing, plus the practices around them. For example, let’s say your scheduled value for an item was $10,000 and your first application billed for $2000 in stored materials. 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. 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. Instead, you bill to receive cash on a regular basis. 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. Ordering materials is a tricky part of budgeting. QuickBooks® for Contractors Bookkeeping Tips & Training. Obviously, you don’t usually go from 0% to 100% on a single billing, so that same principle applies regardless of what percentage of completion you are using. Welcome | About | Privacy Policy | Contact Us. If they do, great! Most anyone will tell you that completing the AIA G-702 and G-703 forms by hand is frustrating and difficult. But there are other benefits. While AIA billing might seem intimidating at first, it’s very manageable with the right tools and processes. If you’re 10% complete with that item, you would bill $950 and hold $50 in retainage. 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. Its use can expedite payment and reduce the possibility of errors. The good news: you’ve landed a huge contract with a ton of potential for profit and growth. In AIA billing, you can bill for materials you’ve purchased for the job even if you haven’t used them yet. 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. Explore education tracks and courses that will help you accelerate your practice and find inspiration. As a form of progress billing, AIA billing is especially helpful because it standardizes how you bill, what … You might think of it the same way you’d think of the line items on a detailed invoice. There are lines for each task or type of work involved.