Down Payment and Amortization

A down payment is used to fund the subcontractor and is the first transaction against the subcontract. The down payment does not establish any project earned value, so this must be tracked and amortized over the course of the specific subcontract against which the deposit has been made.

To accomplish this process, CMiC has developed the Down Payment and Amortization functionality.

Business Process Flow

The Down Payment and Amortization functionality is accessed using CMiC Field's Subcontract Entry and Payment Request screens. This feature is not applicable to the Enterprise versions of these screens.

  1. Create a Subcontracts using the Deposit Amount or Down Payment Percentage fields as required.

    1. Creating a Subcontract requires entering a bank cash amount and department value.

  2. Post the Subcontract. The posting program will also post an AP deposit payment, against the Subcontract. This can be verified using AP Checks.

  3. Create a Request For Payment. Enter the current amount and save.

    1. The Request for Payment SOV lines will display the Amortization Amount as the % complete of the deposit amount.

  4. Post the Request for Payment. An AP Invoice will be created for the remaining amount of the RFP. Users must pay the balance remaining on the invoice manually.

  5. Amortization will continue in subsequent payment requests until the deposit amount is fully applied.

  6. If there are any remaining RFP amounts, holdback/retention release postings must be manually paid to close them all.

NOTE: The amortization amount will not be applied against SOV lines from SCCO Modifications.

This feature involves the following screens:

Subcontracts

Accounting section

Deposit Amount - Enterable

Down Payment % - Enterable

Deposit Amount Remaining – Display Only

SOV section

Deposit Amount – Enterable

Down Payment Percentage – Enterable. This is defaulted from the header, but users may override if required.

Request For Payment

Percent Complete – Display Only

Amortization % – Display Only (This field can also be set to unrestricted)

Amortization Amount– Display Only (This field can also be set to unrestricted)

Manual Checks & Deposits (ADF)

‘Down Payment Related’ - Checkbox, Display Only

SC Contract field - Display Only

NOTE: Field security can be applied to all these columns. Users may enable or unhide them as required.

Field Security – Subcontract Entry

Field Security – Request For Payment Entry

Down Payment Calculation Examples

Entering RFP:

Example with 1 SOV on Subcontract:

  1. Posted Subcontract with one SOV and 10% retainage.

    • Total Contract Amount: $5,000,000.00

    • Total Deposit Amount: $50,000.00

    • Total Retainage: $100,000.00 (10% of Total Contract Amount)

  2. Vendor submits RFP #1 for 20% of Original Contract Amount for SOV ($1,000,000.00). The following calculations are performed:

    • Deposit Amount (Amount posted in Accounts Payable as a Deposit against the Subcontract): Read-only value displays $50,000.00

    • Remaining Deposit Amount (Amount of the Deposit, not yet allocated to Invoices): 50,000.00 – Sum of all Amortization Amounts on posted RFPs

    • Amortization Amount (Amount of Deposit to be applied to the current Request for Payment): 20% (50,000.00) = $10,000.00

    • Net Payable Amount (Amount Payable on this Request for Payment after Retention and Deposit have been applied): 1,000,000.00 – 10,000 – 100,000.00 = $890,000.00

  3. Post the RFP. Standard posting routines apply.

    • In this example, the net payment amount is $890,000.00

    • Deposit Amount: Read-only value displays $50,000.00

    • Amortization Amount: $10,000.00 = .20 * 50,000.00 (Percent Complete value * Deposit Amount)

    • Net Payable Amount: $890,000.00 = 1,000,000.00 – 10,000.00 – 100,000.00 (Current Amount – Applied Deposit Amount – Current Retainage Amount)

  4. Vendor enters a second RFP for a current complete percentage of 60%, which equates to current completed Amount of $3,000,000.00.

    • Current % Complete = 60%

    • Remaining Deposit Amount: Deposit Amount – (Sum of amortization amount in posted RFPs) = 50,000.00 – 10,000.00 = 40,000.00

    • Amortization = (Current % Complete) (Deposit Amount) = 60% (50,000.00) = 30,000.00

    • Deposit Amount = 30,000.00

    • Net Payable Amount = 3,000,000.00 – 30,000.00 -300,000.00 = 2,670,000.00

  5. Vendor enters third Request for Payment for 10%.

    • Current % Complete = 10%

    • Remaining Deposit Amount: 50,000 – (30,000+10,000) = 10,000.00

    • Amortization = (Current % Complete) (Deposit Amount) = 10% (50000) = 5000

    • Amortization Amount in the current RFP = 5000

    • Net Payable Amount = 500,000.00 – 5000.00 – 50,000.00 = 445,000.00

Example for Multiple SOV Lines in a Subcontract:

NOTE: While editing the Subcontract if user updates Down Payment percentage in Accounting, Down Payment Percentage values in SOV should be updated manually.

1. Posted Subcontract with 3 SOV and 10% Retainage:

a. Total Contract Amount: $100,000.00

i. SOV 1: $20,000.00

ii. SOV 2: $30,000.00

iii. SOV 3: $50,000.00

b. Total Deposit Amount: $30,000.00

i. SOV 1: $6000.00

ii. SOV 2: $9000.00

iii. SOV 3: $15000.00

2. Vendor enters RFP using Percent Complete in each SOV.

a. Current Amount

i. SOV 1: 20% = $4,000.00

ii. SOV 2: 30% = $9,000.00

iii. SOV 3: 20% = $10,000.00

iv. 10% Retainage: $2,300.00

b. Deposit Amount Applied for each line:

i. SOV 1: 20% (Deposit Amount) = $1,200.00

ii. SOV 2: 30% (Deposit Amount) = $2,700.00

iii. SOV 3: 20% (Deposit Amount) = $3,000.00

c. The Net Pay = Current Amount - Amortization Amount - Retainage

i. SOV 1 = 4,000.00 – 1,200.00-400.00 = $2,400.00

ii. SOV 2 = 9,000 – 2700 – 900 = $5,400.00

iii. SOV 3 = 10,000.00 – 3,000.00 – 1,000.00 = $6,000.00

iv. Net Pay for entire payment: $13,800.00

AP Invoice Query - Deposit

AP Invoice Query – Screenshot showing Deposit details in AP invoice query