How it runs for construction companies and contractors
Unapplied cash is worked within days rather than left at month end. The result is an aging report that shows the true position per job and per general contractor, which is what your follow-up calls and cash forecast depend on.
What is cash application?
Cash application means matching money received from customers to the invoices it pays and recording that in the accounting system. It covers bank receipts, checks, lockbox files, card payouts and remittance advices, including partial payments, deductions and payments with no reference. Done well, the aging is accurate and no customer is chased for an invoice they already paid.
What we handle for construction companies and contractors
- Deposits applied to specific pay apps, change orders and retainage lines
- Remittance advices requested from GC accounts payable when missing
- Short payments and back charges recorded with the stated reason
- Joint-check and lender-funded payments traced to the correct job
- Unapplied cash cleared weekly with the reason logged in ReconBot
The KPI that matters here
Unapplied cash older than 5 business days held at zero, measured weekly.
Construction compliance notes
Sales tax on materials
In most US states a contractor pays sales tax on materials at purchase and does not charge tax on the finished job. A few states, including Arizona and Washington, tax the contract itself, and many states have separate rules for repair work versus new construction. We set up tax codes per state and contract type and track exempt purchases with resale or project certificates on file.
Retainage
Retainage withheld by owners is recorded as retainage receivable, and retainage you withhold from subcontractors is recorded as retainage payable. Several states cap retainage on public work, commonly at 5%, and set release deadlines after completion. We track the release date per contract so closeout billing goes out on time.
Job costing and WIP
Bonding companies and lenders expect a work-in-progress schedule that ties to the general ledger, with contract value, costs to date, estimated cost to complete and billings to date. We maintain the schedule monthly and book over and under billing entries so the P&L reflects percentage of completion.
CIS in the UK
Under the Construction Industry Scheme, UK contractors deduct 20% from registered subcontractors and 30% from unregistered ones, and file a monthly CIS return with HMRC. We verify subcontractors, prepare the deduction statements and CIS return workings, and reconcile deductions suffered against your PAYE liability. Your accountant or the business submits the return.
Construction software we work in
- QuickBooks Online
- QuickBooks Desktop
- Xero
- Bill.com
- Gusto
- Sage 50
- Buildertrend
- Procore
- All 50 platforms
More for construction companies and contractors
Other services for construction
Frequently asked questions
What happens when a general contractor pays without a remittance?
The accountant contacts the general contractor's accounts payable desk under your company name and requests the payment detail. Until it arrives, the deposit sits in a clearing account rather than being guessed onto an invoice. Most remittances are obtained within a few days, and the request is logged so repeat offenders can be addressed.
How is retainage handled when applying cash?
When a payment arrives net of retainage, the accountant applies the amount received to the pay app and moves the withheld portion to retainage receivable for that job. The invoice is then closed and the retainage remains open until closeout. Aging reports show both balances separately so collectible cash is never overstated.
Can you apply cash inside Buildertrend or Procore as well as the ledger?
Yes, where the job-management system carries invoicing, payments are recorded there and synced to the accounting file, then the sync log is reconciled. If the system does not sync payments, the accountant records them in both places on the same day. Either way, job-level receivables agree between systems.
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