How to avoid late subcontractor invoices



How to avoid late subcontractor invoices: a question that we get hit with from clients/customers a lot of time and a bugbear of ours when we had our own company as well, was that late invoice coming in and disrupting cash flow.

The first thing that needs to be clearly defined about what agreements we have in place with subcontractors and where we are at any given stage so we can clearly see what was on the original agreement, payments received today from the agreement and what’s left on that payment, or should that payment have already been completed, i.e. the work on site has been completed, we should have closed this body of work off.

It needs to be easy to track. So, when we structure our project, we can structure this in a couple of different ways. When we click into our project, we can have all the subcontracts allocated under one section, or we might have a divisional phase set up and we might have something like the electrical phase underneath the construction heading.

Here will be the budget that was in place against that and this total cost will be the allocated agreement we have in place with the subcontractor. If we click in on that cost, we’re going to be able to see all the action points of who in the company, what company we’re dealing with and what has been the original agreement that was sent out, including any documentation that needs to go up with that. What we’re going to have is a simple process then to allocate costs against that as they’re coming in, which is going to make these deductions and clearly show what was approved and paid versus what is left to pay. So, as an invoice now appears, we can use scanning technology to find the contract. That’s one option. We can also just come into an ordering section here, find the ordering that’s of reference and we can add an invoice to that. And what happens is we can add in the invoice amount by just literally popping that in. So, say today we have a five grand claim, I can reference that as payment three, four, whatever the case might be. In this case, three. I can pop in the invoice number, I can approve. And what we’re doing is linking up invoices, this is the new invoice we’ve just linked up here. These are the other two that have come in to date and they’re clickable invoices. And what we have here is the original amount agreed by this person in our company. Every action now from a financial point of view that’s come in so far to date and what’s remaining on the balance on that particular agreement. But it means we also won’t close off that project. So, if I click in on the project, I click in on any subcontract agreements on the project, you’re going to see this nice amber status sitting there. Meaning if this body of work is complete on site, I’m not going to mark that off as complete. I’m going to wait until that’s basically fully complete with green invoices. Meaning I’m not waiting on that invoice to come in. I can clearly see, although that body of work is done on site, it’s not financially complete because I’m still waiting on an €18k invoice from that particular subcontractor.

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