Heavy Highway Contractor

We do work for PADOT.  Typically, we process a subcontractor pay app based on what is being processed for payment by PADOT only.  We don't use our subcontractor's invoices for this reason exactly.  When or if a subcontractor invoice is received, we attach it to our sub pay app, if it matches what we processed.  If there is a discrepancy, once it is reviewed and verified, we will add it to the next month's application.

Chris,

We accrue the costs at 11/30 and then reverse 12/1, and post the invoice to December if we have already closed November. For reference, we are a DOT paving contractor and we use Vista for our ERP.

Thanks Steven, we use Spectrum so that process is a bit more manual for us. My understanding is that with Vista there is a specific period end module/feature to handle these - is that correct. 

Chris Graham

Cone & Graham, Inc.

Office: 813-623-2856

CGraham@conegraham.com

Chris,

We accrue the costs at 11/30 and then reverse 12/1, and post the invoice to December if we have already closed November. For reference, we are a DOT paving contractor and we use Vista for our ERP.

I do not use what Vista provides for an extra period. When doing JC Adjustments, I can select it as an Auto Reverse and then initiate those reversal entries in the next month.

Thanks Steven, we use Spectrum so that process is a bit more manual for us. My understanding is that with Vista there is a specific period end module/feature to handle these - is that correct. 

Chris Graham

Cone & Graham, Inc.

Office: 813-623-2856

CGraham@conegraham.com

I'd push for option A, this is the common practice and what I'd call best practice to truly be accrual accounting and provide more accurate and reliable WIPs/forecasting. The over/under whiplash with option c is rather tiring and can become a point of frustration amongst the exec team. The flipside is educating your PM team to properly accrue (conservative leaning) and have a process in place to ensure the sub is actually invoicing you, because it can become a challenge when they don't invoice for a month or 2 (which I have never understood this kind of invoice lag from subs but it happens all the time). 

(Sidebar, tell Robbie an old colleague says hello!)

We don't do any highway work but do have a lot of subcontracts. We use GCPay to manage their AIA's, which they usually submit by the 25th and GCPay has a 'no later than' setting which we set as the 30th. So on the 1st we're ready to export of of GCPay and right into Vista SL module.

We don't do any highway work but do have a lot of subcontracts. We use GCPay to manage their AIA's, which they usually submit by the 25th and GCPay has a 'no later than' setting which we set as the 30th. So on the 1st we're ready to export of of GCPay and right into Vista SL module.

As mentioned earlier, we work for PADOT.  We post a sub payment application in AP based on what we are billing out to PADOT and make any adjustments in the next period for any discrepancies between our calculated sub payment application and the invoice that is subsequently received, assuming that the discrepancies are approved for payment.  While an accrual for job cost will get you the amounts you need for your WIP, it will not accurately reflect your true AR to AP ratio.  Not showing the accrual in AP can adversely affect cash flow projections.

As mentioned earlier, we work for PADOT.  We post a sub payment application in AP based on what we are billing out to PADOT and make any adjustments in the next period for any discrepancies between our calculated sub payment application and the invoice that is subsequently received, assuming that the discrepancies are approved for payment.  While an accrual for job cost will get you the amounts you need for your WIP, it will not accurately reflect your true AR to AP ratio.  Not showing the accrual in AP can adversely affect cash flow projections.

We don't do any highway work but do have a lot of subcontracts. We use GCPay to manage their AIA's, which they usually submit by the 25th and GCPay has a 'no later than' setting which we set as the 30th. So on the 1st we're ready to export of of GCPay and right into Vista SL module.

It would be an adjustment to the AP sub pay app entry, directly in AP.  We use Viewpoint Spectrum.  To clarify, this is our process:  

• Get approved pay quantities from DOT for the period.
• Create all related subcontractor pay apps for the period, based only on the pay quantities from DOT.
• Receive the sub's invoice (late or never sometimes).
• Review the sub's invoice against what was already processed in AP in 2nd step. 
• If there are differences between what we entered in step 2 versus their submitted invoice, the discrepancies are reviewed by a PM, and either approved or rejected.
• If the differences are approved, we create an additional sub pay application to bring the amount we already entered in line with their submitted invoice.  (If we used pay app #25035-02 as the invoice # in step 2, then this additional sub pay app would be posted in the next period as #25035-02A.)

This ensures that not only are we capturing the costs in the proper period, but that our AP is not understated either.  This helps to maintain accurate cash flow projections.  

As mentioned earlier, we work for PADOT.  We post a sub payment application in AP based on what we are billing out to PADOT and make any adjustments in the next period for any discrepancies between our calculated sub payment application and the invoice that is subsequently received, assuming that the discrepancies are approved for payment.  While an accrual for job cost will get you the amounts you need for your WIP, it will not accurately reflect your true AR to AP ratio.  Not showing the accrual in AP can adversely affect cash flow projections.