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294 The Complete DESIGN BUILDER

Accounts Payable:

Accounts Payable will require a method of checks and balances to ensure proper amounts,
dates, allocation and payment terms on all purchases.

A simple method that is widely accepted and extensively used would involve one copy of
all numbered Purchase Orders placed in an indexed Payable Holding File after being recorded or
noted as being used from a pre-numbered list. Upon receipt of the supplier invoice the relevant
purchase order would be retrieved and matched up with this invoice, including any field back-up
copies and proof of delivery. This would result in three separate pieces of paper identifying this
purchase, which would then be entered into your payable system, after internal approval and Job-
Cost coding.

On subcontractor payables the method would be similar with the additional steps of
deducting and recording Statutory Holdbacks. Due to the progress invoice nature of some
ongoing Subcontractor Payables it may be necessary to have a cover sheet indicating the full
subcontract amount, Holdback sum and any previous approved progress amount. This method
will allow for easier reconciliation of account discrepancies and be very helpful when preparing
your monthly progress billings on your prime Contract. Internal approval with necessary back up,
proof of delivery and job-cost coding will then permit entry into your payable system.

Direct costs are identified, as payable items that are covered by a corresponding project
budget amount while indirect costs are overhead expenses and covered in your annual budget.

A key element of any accounting method would be the ability to identify the aging of your
Accounts Payable into 30,60,90 day categories and also a separate listing for Statutory Holdback
amounts being retained.

An Accounts Payable system that is fully integrated with your other accounting needs
including a Job-Costing system will be the most advantageous.