The contract terms that drive every bill
You will be able to: List the commercial terms stored on a contract and what each controls; Explain billing by percent complete of each item; Describe the three money lines on a bill: retention, advance recovery, deductions.
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- Watched not done yet
- Self-check: not taken not done yet
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In Zeyto Construction & Contracting the contract is created on the project's Billing tab as a sales order. It posts nothing by itself; it fixes the value and the terms that every later advance, bill and release will use. Each contract line is one item of the breakdown with its amount, and a bill is made by entering the percent complete of each line.
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1. Contracts lists every contract with its terms 2. Open Progress Bills from Sales 3. Each bill moves from draft to approved to certified to invoiced 4. Open the Billing tab of a project 5. Billing: the contract terms and the bills 6. Retention shows what the client is holding 7. Variation orders change the contract value 8. Advance Tax Invoices record the advance payment 9. The Finance Hub shows what clients still owe
| Term | What it controls |
|---|---|
| Advance % | How much of each bill recovers the advance, and the size of the expected advance |
| Advance recovery basis | Whether recovery is a percent of the certified gross, or of the gross after retention |
| Retention % | The share of each certified gross the client withholds |
| Retention cap % of contract | The most retention that can ever be held, as a share of the contract value |
| Release at practical completion % | The share of retention held that can be claimed at practical completion (the default is 50%) |
| Defects liability months | How long after completion the rest of the retention stays held |
| Delay damages % per day and cap % | Daily rate and the ceiling of liquidated damages |
| Payment terms (days) | Due date of a bill = invoice date + days; drives receivables ageing |
| Revenue method | A on billing, B percent of completion, C straight line, D point in time (module 5) |
Billing by percent of each item
A progress bill lists the contract items. For each one you type the percent complete this period, or Zeyto takes it from the approved progress when you draft the bill from the progress grid. The amount of the line is the item's contract value times the percent of this bill. Three guards protect the bill: the cumulative percent of an item may not exceed 100%, may not exceed the approved physical progress of the item, and a variation line can be billed only after the client approved that variation.
Three money lines change a bill between the work done and the cash due: retention (withheld), advance recovery (the advance coming back) and deductions (delay damages, back-charges). The next lessons take them one at a time.
Walk it through
- Fill the term table for a contract you know.
- Choose an advance recovery basis and defend it from the contract wording.
- In the demo, open a project's Billing tab, the Contract and advance section, and see which fields appear when you start a New contract.
Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.
- A contract is a sales order that posts nothing; its terms drive every bill.
- A bill is the percent complete of each contract item, guarded against 100%, approved progress and unapproved variations.
- Retention, advance recovery and deductions sit between work done and cash due.
Check yourself
3 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.
1. In Zeyto Construction & Contracting, what does the contract (a sales order) post when it is created?
2. A progress bill is made by entering:
3. Which of these are guards on a progress bill?
Select all that apply.