Advance Payment

Overview

The Advance Payment functionality gives users the ability to record an advance payment (deposit) against a specific vendor subcontract and track the recovery/amortization of the advance payment through the RFP progress payments.

Accounting Transactions

Advanced Payment creates two separate transactions that are posted to accounts at separate stages. It is different than the current way CMiC handles deposits. The Advanced Payment is an invoice that does not impact job costing.

When Advanced Payment is posted

DR Advance Payment Control account
CR AP Subcontractor Liability account (Accounts Payable)

When Advanced Payment check is posted

DR AP Subcontractor Liability account (Accounts Payable)
CR Bank Cash account

When Amortization of Advanced Payment is posted

DR Job Cost Expenses
CR AP Subcontractor Liability account (Accounts Payable)
CR Advance Payment Control account
CR Retainage Payable

When Amortization of Advanced Payment check is posted

DR AP Subcontractor Liability account (Accounts Payable)
CR Bank Cash account

Setup

  1. In the Subcontract Management Control File, check the Use RFP Screen for Advance Payment Creation box on the RFP Defaults tab.

    Sample of the Use RFP Screen for Advance Payment Creation checkbox on the SC Control File

  2. In the Accounts Payable Control File, setup the department and account for Advance Payment on the Accounting tab.

    Sample of the Advance Payment Department and Account fields

    Under the System Defaults tab, set up the tax under the Tax Options section. For example, enable credit taxes.

    Sample of the Tax Options section of the AP Control File

  3. On the Tax Table Maintenance screen in the Accounts Payable module, set up the appropriate tax codes.

    Sample of the creating a tax code on the Tax Table Maintenance screen

Advance Payment Creation

  1. Select the desired subcontract and check the Advance Payment box in the Enter Request For Payment screen. The Advance Payment % and Advance Payment Amount on the Details tab and SOV lines on the Schedule of Values section becomes available.

  2. The RFP cannot contain any other amounts except deposit related amounts on it, e.g. Current Amount, Current Quantity, Current Release Amount, and Current Material Stored Amount. Those fields and Amortization related fields are disabled.

    Sample of entering an advance payment RFP in the Subcontract Management module

  3. Enter a value for the Advance Payment % field in the Details tab. The system automatically populates the Current Deposit % field from the Detail tab to the SOV lines and auto-calculates the Advance Payment Amount and Current Deposit Amount fields in the Detail tab and SOV lines. The Advance Payment % column can be overridden in the SOV lines.

  4. Enter a value for the Advance Payment Amount field in the Details tab. The system automatically calculates the Advance Payment % field and then populates the Current Deposit % field from the Details tab to the SOV lines and auto-calculates the Current Deposit Amount column in the SOV lines. The Advance Payment Amount column can be overridden in the SOV lines.

    Users can also create an Advance Payment RFP in the Request For Payment screen on CMiC Field.

    Sample of the Advance Payment and Owner Payment Required checkboxes on the Request For Payment screen in CMiC Field

  5. The tax amount is calculated on the advance payment fields according to the tax setup on the General tab and Schedule of Values tab of the Subcontract Maintenance screen.

    Sample of tax setup on the Schedule of Values tab of the Subcontract Maintenance screen

    Sample of tax setup on the General tab of the Subcontract Maintenance screen

    Sample of the Total Tax field on the Account Summary tab of the Enter Request for Payment screen

    Sample of the Tax Amount field on the Request for Payment screen in CMiC Field

  6. Post an Advance Payment RFP.

    When an Advance Payment RFP is posted, while creating the distribution for the voucher, a new G type line is created for the Advance Payment Amount of 900.00, linked to the Advance Payment Control Account, which is added on the Accounting tab of the AP Control File.

    The amount on regular J type lines is 0.

    The following illustrates how Advance Payment RFP transactions are applied:

    DR Advance Payment Control Account $900.00
    DR Job Cost Expenses $0.00
    DR Tax Credit Account $108.00
    CR AP Subcontractor Liability Account $1008.00

    After an Advance Payment RFP is posted, the subcontract's Deposit Amount field is updated. The Deposit % and Deposit Amount columns in the RFP SOV lines are also updated.

    Sample of the Deposit % and Deposit Amount columns in the RFP SOV lines

    The deposit amount and percentage are also visible on the Subcontract Detail tab of the Subcontract Entry screen in CMiC Field after the Advance Payment RFP is posted.

    Sample of the deposit amount and percentage on the Subcontract Detail tab of the Subcontract Entry screen in CMiC Field

Advance Payment Creation with Compliance Validation

Sample of the Compliance Status pop-up window for a subcontract

If the Advance Payment Compliance is assigned to the subcontract or the RFP while posting the RFP, then it must be compliant. If it is not compliant, the posting will stop with an error.

  1. Create an Advance Payment RFP for a deposit amount of $450:

    Sample of creating an Advance Payment RFP for a deposit amount of $450

  2. After trying to post the RFP, the posting stops with the error message, "Deposit Compliance Code is non-compliant for Invoice Number: XXXXX".

    Note Creating an Advance Payment RFP with compliance validation is currently in development for CMiC Field.

    Sample of the compliance validation error message when trying to post an RFP

Amortization of the Advance Payment Amount

  1. The subcontract deposit amount can be amortized on the regular RFP. The Advance Payment checkbox on the Enter Request for Payment screen in Subcontract Management must be unchecked during entry.

  2. On the new RFP with amortization, the Amortization % column on the SOV defaults with the value from the Deposit % column on the SOV. The Amortization Amount is calculated as

    Amortization Amount = Amortization Percent × Current Amount.

    The Amortization % and Amortization Amount columns can be overridden on the SOV lines or on the Details tab of the Enter Request for Payment screen.

    Example of amortization on a regular RFP in Subcontract Management

    Example of an amortization on a regular RFP in CMiC Field

  3. Post the amortization of the advance payment on the regular RFP.

    When the RFP with an amortization amount is posted, the accounting transaction credits the Advance Payment Control account 90.00 as the total amortization amount, and it debits 100.00 and 200.00 for each SOV on regular J type lines.

    The Tax Credit is calculated as:

    Tax Credit = (Current Amount - Amortization amount - Retainage) × 12%, which means

    Tax Credit = 21.60 in this example.

    The Tax Credit on Retainage is calculated as:

    Tax Credit on Retainage = Retainage × 12%, which means

    Tax Credit on Retainage = 3.60 in this example.

    The following illustrates how the transactions in the RFP with amortization are applied.

    DR Tax Credit Account $21.60
    DR Tax Credit on Ret. Account $3.60
    DR Job Cost Expenses $300.00
    CR AP Subcontractor Liability Account $201.60
    CR Retainage Payable $33.60
    CR Advance Payment Control Account $90.00

  4. Post the second RFP of 2700.00 with amortization.

    Example of posting an RFP of $2700 with amortization

    The following illustrates how transactions in the RFP with Amortization are applied.

    DR Tax Credit Account $194.4
    DR Tax Credit on Ret. Account $32.4
    DR Job Cost Expenses $2700.00
    CR AP Subcontractor Liability Account $1814.4
    CR Retainage Payable $302.4
    CR Advance Payment Control Account $810.00

Release Retainage for Advance Payment

Users can release retainage at SOV level for advance payment RFPs as normal. For more details, see Retainage & Retainage Release.

Example of a retainage release for advance payment

The following illustrates how Retainage Release transactions are applied in the above example.

CR AP Subcontractor Liability Account $336.00
DR Retainage Payable $336.00
DR Job Cost Expenses $0.00
DR Tax Credit Account $36.00
CR Tax Credit on Ret. Account $36.00

Void Advance Payment RFPs

Users can void advance payment RFPs as normal. For more details, see Void Request for Payment.

  1. Void the retainage release.

    CR Tax Credit Account $36.00
    DR Tax Credit on Ret. Account $36.00
    DR AP Subcontractor Liability Account $336.00
    CR Retainage Payable $336.00

  2. Void the second RFP with amortization.

    RFPs with amortization of advance payment can be voided via the Void Request for Payment screen.

    If a check has been issued against the pay request, users must void the check before voiding the RFP.

    CR Tax Credit Account $194.4
    CR Tax Credit on Ret. Account $32.4
    DR Advance Payment Control Account $810.00
    DR AP Subcontractor Liability Account $1814.4
    DR Retainage Payable $302.4
    CR Job Cost Expenses $2700.00

  3. Void the first RFP with amortization.

    CR Tax Credit Account $21.60
    CR Tax Credit on Ret. Account $3.60
    DR Advance Payment Control Account $90.00
    DR AP Subcontractor Liability Account $201.60
    DR Retainage Payable $33.60
    CR Job Cost Expenses $300.00

  4. Void the advance payment RFP.

    Advance Payment can be voided via the Void Request for Payment screen.

    If a check has been issued against the advance payment, users must void the check before voiding the advance payment. Likewise, if amortization has been created against the advance payment, users must void the amortization of the advance payment before voiding the advance payment.

    CR Tax Credit Account $108.00
    CR Advance Payment Control Account $900.00
    DR AP Subcontractor Liability Account $1008.00

Void Subcontract for Advance Payment

The advance payment subcontract can be voided via the Void Contract screen. For more details, see Void Contract.