Handling Customer Deposits or Advance Payments On Prime Contracts

Depending on the type of work, deposits or advance payments are some times required to start a project. Below are three alternative methods to process a deposit.

Method 1: Recording the Deposit in the Accounting System and Not In Corecon (Recommended)

This method only applies when the accounting system has a Deposit feature. This method will apply a Future Corecon Prime Invoice (i.e. Progress Invoice) to the Deposit recorded in the accounting system.

1. Enter the Deposit in the Accounting System.
2. When it is time to prepare a progress invoice, login to Corecon.
3. Create the Prime Invoice.
4. Export the Prime Invoice to the Accounting System using a CoreconLink Utility.
5. Within the accounting system, apply the Deposit from Step 1 to the Invoice. The customer will then pay the balance.

Method 2: Create a Prime Invoice equal to the Deposit Amount

This method does not require creating a special Job Cost Code or Schedule of Value to represent the deposit. However, this method does assume the Prime Contract is set to Fixed Lump Sum and not Cost Plus or Unit Price.

1. Login to Corecon
2. Create the Prime Invoice and import one or more Schedule of Values that will immediately commence at the start of the project. Multiple Schedule of Values can be invoiced as long as the invoice total equals the deposit amount.
3. Export the Prime Invoice to the Accounting System using a CoreconLink Utility.

Method 3: Creating a Change Order (CO) That Represents The Deposit and Invoice It

Like Method 2, this option assumes the Prime Contract is set to Fixed Lump Sum.

Create a Deposit CO

1. Login to Corecon.
2. Optional: Create a Job Cost Code to represent 'Deposit'.
3. Create a CO and mark it Approved with a Status Date. The CO # could be '0' or 'Deposit'.
4. In the Proposed Items section, enter two (2) line items.
   • Description: 'Job Deposit'
   • Quantity: 1
   • Units: 'LS'
   • Unit Price: One line item would be a positive number equal to the deposit amount and the other negative with the same value (i.e. $10,000 and -$10,000).
   • Job Cost Code: The same job cost code MUST be referenced on both line items.

Create a Deposit Invoice

1. Create the Prime Invoice to represent the deposit and import only the positive line item from the CO created in the steps above. The billing percentage (%) should be 100% for the line item (i.e. $10,000).
2. Export the Prime Invoice to the Accounting System using a CoreconLink Utility.

Create a Progress Invoice

1. When it is time to create a Progress Invoice, create another Prime Invoice and import the items to be billed (i.e. Schedule of Values) plus the negative line item (i.e. -$10,000) from the CO created above.
2. Export the Prime Invoice to the Accounting System using a CoreconLink Utility.