Understanding where clients prefer change order details, whether listed separately or built into existing costs, is fundamental to avoiding billing errors and Accounting for Churches delays in payment. While customization is possible, this form is often kept unchanged due to its straightforward nature. Adjustments are made depending on the project’s requirements, such as when the need for an architect’s approval is waived in design-build scenarios.
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Most Contractors tell us that AIA Payment Applications are frustrating and difficult to fill out. To fill one out correctly, you must ignore change orders that have been approved, but not processed. You must ignore receivables still outstanding from previous applications. Basically, you have to forget about basic accounting principles. Many people write down payments received to date on Line 7 and ignore pay requests being processed. In the blank next to the dollar sign, you need to write down the dollar value of retention that applies to your completed work.
What is retainage in construction? #
AIA forms and instructions may be purchased from your local AIA chapter office. Go back to your immediately preceding Payment Application and write down the value from Line 6 Total Earned Less Retainage on that application. @iqraharrison48 We ran into this same issue during our implementation and were told by our Acumatica support team that there was absolutely no way we could get AIA retention billings.
Should You Embrace AIA Billing?
This guide will examine the nuances of AIA billing, discuss how technology has influenced document customization and address common challenges in preparation and submission. The AIA offers two ways to purchase the G702 Application and Certificate for Payment — a one-time use and via an annual subscription. The Continuation Sheet (G703) and Change Order (G701) are priced separately. This is where the Continuation Sheet comes in handy; you’ll need to complete it in order to get the total for line 4. A positive number means that you added more work than the original contract required.
Most jobs will have change orders, timing delays and other challenges. Because of the ever-changing nature of retainage in construction construction, it can be difficult… So be sure to provide all additions and deductions caused by the approved change orders.
Mishandling change orders
- Errors can cause the architect or owner to “redline” your application, or reject it.
- This means that retainage is reduced or paid out once a certain percentage of the contract is completed.
- Bankruptcies in the construction industry are unfortunately very common.
- In those years has come the addition of federal laws and regulations that set timelines and limit the amount of money that can be withheld.
- You can do this by going to the invoices tab of the project and select release retainage.
- GCs or owners will need supporting documentation to show that billing is in alignment with the schedule.
This withholding is regulated by contract terms, serving to ensure work quality, provide leverage for project completion, and cover potential costs if any issues arise post-completion. The retainage amount is usually set between 5-10% of each payment but can vary depending on contract specifics. 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 that’s used. It can expedite payments and reduce the possibility of errors, while helping to ensure that you’re fully compliant with industry standards. Being able to follow AIA billing standards opens opportunities to work on larger projects and bid on government-funded projects.
Construction Equipment Rental Insurance: How & Where to Get Coverage
Next time you’re filling out a payment application, be sure to include and accurately calculate the retainage. The contractor will put retainage in line 5 of the application for payment. This line has separate amounts for retainage on completed work, and retainage on stored materials (materials that you have purchased but not used in the project yet). That way the contractor can calculate the two separately in case they are working under variable retainage. The contractor should fill in the percentage and multiply it by the value of work or materials, respectively.
AIA G702-1992 Application and Certificate for Payment
So before you sit down to fill out the G-702, have the following info handy. Empower your PMs to improve billing efficiency and increase project profitability. Increase billing volume and enable role redundancy without adding headcount. Reduce invoice aging by 30% with billing, collections, and reporting tools. Manual Errors in CalculationsRelying on manual processes increases the risk of mistakes. Digital tools can automate calculations, reducing errors and speeding up approvals.
ConsensusDocs 710: Application for Payment
Our all-in-one platform is proven to streamline invoicing and payments, saving you time and money. Always double-check that you are including all required paperwork and documentation before sending out a payment application. GCs or owners will need supporting documentation to show that billing is in alignment with the schedule. Ensure such documentation is included to keep the process moving forward bookkeeping and to avoid rejection. This new regulation aims to shorten the time it takes to release retainage for private building projects that have complied with significant completion conditions. According to the law, when a private commercial construction project is valued at $150,000 or more, the owner may withhold retainage of no more than 5% of the total contract amount.
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