A progress payment statement needs to show what was executed during the period, how it was valued, and what amount corresponds after applicable deductions. KOSAN allows you to work with contracted quantities, previous and period advances, accumulated amounts and balances., in addition to advance payment recovery of advance payment and retentions.
That organization helps prepare reviewable documents and distinguish execution from the collection process. Submitting an payment statement, authorizing it, invoicing it and collecting it are stages that should be followed separately.
What information do you need to prepare an payment statement?
The basis is the catalog related to the contract: line item, unit, quantity and unit price. Then you need to measure the work for the period and keep the backup that allows you to review those quantities.
Among the work data are:
- Identification of the project, contract, folio and period.
- Contracted quantities and applicable prices.
- Previously claimed quantities and reporting cut-off quantities.
- Measurements, sketches and supporting documents depending on the job.
- Advance payment recovery conditions, retention and other deductions.
The percentages and documents required depend on the contract and the applicable rules. The values of the examples in this article are didactic.
Example of quantities and amounts
Suppose a contracted line item of 1,000 m² to $250 per m². Before the reporting cut-off, 300 m² have been estimated and during this period additional 200 m² are presented. All amounts are expressed before VAT.
| Reference | Quantity | Amount |
|---|---|---|
| Hired | 1,000 m² | $250,000 |
| Dear previously | 300 m² | $75,000 |
| This payment statement | 200 m² | $50,000 |
| Accumulated after reporting cut-off | 500 m² | $125,000 |
| Balance to be executed | 500 m² | $125,000 |
The accumulated amount is 300 + 200 = 500 m² and the advance of the line item, 500 ÷ 1,000 = 50%. The amount of the period is obtained with 200 × $250 = $50,000.
This separation avoids confusing the accumulated with the work of the period. If you resubmitted the 500 m² as a new quantity, you would again be including the 300 m² already estimated.
How advance payment and retention affect
For the same case, let us assume advance payment recovery of advance payment of 20% and retention of 5%, both applied to the period amount. They are hypothetical conditions and not universal percentages.
Advance payment recovery = $50,000 × 20% = $10,000.
Retention = $50,000 × 5% = $2,500.
If there are no other deductions, the amount after those operations and before taxes is:
$50,000 − $10,000 − $2,500 = $37,500.
Advance payment recovery recovers part of a previously delivered advance payment. The retention responds to the agreed condition and needs to be monitored, including its release when appropriate. That is why it is useful to distinguish both in the document and in the analysis of the collection.
The treatment of VAT and other deductions is reviewed according to the operation and the contract; This example excludes them to show only the mechanics of quantities and percentages.
What you can organize at KOSAN
In the module Progress billing you can enter the quantity of each line item in the period column. The screen calculates amounts, accumulated amounts and balances, and shows the progress with respect to the contracted amount.
KOSAN includes fields of advance payment recovery of advance payment and retention, as well as deductions for the period. When linking a contract, you allow the use of its registered conditions. The system also shows warnings when a capture exceeds the contracted quantity, to review the data before saving.
The view distinguishes amounts presented, authorized, invoiced and collected. This separation helps to talk with administration and with whoever reviews the payment statement: an executed amount may still be under review or pending payment.
The module has document configuration to identify work, client, contractor, contract and signatures, and tools to prepare your report. The project identification data can be used as a basis for completing the document.
A sequence for closing the payment period
- Confirm that the catalog corresponds to the contract you are going to payment statement.
- Review the above amounts to avoid duplications.
- Measure the work of the period and retain its support.
- Capture only new quantities in KOSAN.
- Check accumulations, balances and possible surpluses.
- Review advance payment recovery, retentions, deductions and taxes.
- Prepare the report and follow authorization, billing and collection separately.
If a new line item or additional quantity appears, document the change and its contractual treatment. KOSAN also has additive, deductive and updated catalog to organize movements of the project.
Frequently asked questions
Does a submitted payment statement already count as money collected?
You must check its status and payment date. The presentation is a stage of the process; the collection record represents another.
Can I payment statement more than the contracted amount?
First review the measurement, the catalog and the authorizations that correspond to the change. The surplus notice helps detect the difference; The origin of additional work is determined with its documentation.
Does the retention have the same percentage in all works?
It depends on the agreed conditions and the applicable rules. Record the percentage that corresponds to the analyzed contract.
KOSAN allows you to relate the progress of the period with its amount and with the collection stages, to prepare payment statements that you can revise line item by line item.
If you need to prepare the catalog base, please consult how to make a construction budget.