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Uninstalled Materials
What are Uninstalled Materials?
Uninstalled materials refer to construction materials that have been purchased but are yet to be put in place or installed in a construction project. They are typically stored on-site or at a secure location and are accounted for in a contractor's Work-In-Progress report. These materials may include items like bricks, steel, concrete, wood, electrical wiring, piping, insulation, and fixtures. It is crucial for project managers to properly track and manage these materials as they represent a significant investment and, if misplaced, lost, or damaged, could lead to costly delays and overruns in the project. Their handling requires proper planning to ensure safe storage, timely installation, and effective use in the construction process.
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Other construction terms
What are Generally Accepted Accounting Principles (GAAP)?
Generally Accepted Accounting Principles (GAAP) are a set of standardized rules and procedures in accounting to provide consistency in financial reporting across different entities. In the construction industry, GAAP are of particular importance due to the unique nature of accounting involved. For instance, consideration of revenue recognition when recognizing costs for long-term projects is guided by GAAP. Under GAAP, the percentage of completion method is commonly used, allowing companies to report income as the work progresses, thus providing a more accurate view of the financial health of a construction company. Similarly, fixed asset accounting, inventory valuation, recognition of liabilities, and depreciation methods are all guided by GAAP in the construction industry. By adhering to GAAP, the construction industry ensures transparency, consistency, and comparability in its financial information, promoting investor confidence and informed decision-making.
What is Retainage?
Retainage is a common practice in the construction industry where a portion of a subcontractor's payment is withheld until the project reaches substantial completion or a specific milestone. This withheld amount, typically 5-10% of each progress payment, serves as a safeguard for the project owner, ensuring that the work is completed to their satisfaction. However, retainage can significantly impact subcontractors' cash flow, as it ties up a portion of their earnings and limits their access to working capital.
This restriction on cash flow can create challenges for subcontractors, especially smaller businesses with limited financial resources. They may need to secure additional financing or lines of credit to cover ongoing expenses like labor, materials, and overhead. This can lead to increased borrowing costs and potentially reduce their profit margins. In some cases, subcontractors may even delay starting or completing work until retainage from previous projects is released, causing potential disputes.
To mitigate these challenges, subcontractors should carefully review and negotiate retainage contract terms, ensuring they fully understand the percentage withheld, release conditions, and payment schedule. Proactive financial planning, including budgeting for delayed payments and potential additional financing, is crucial for navigating the pitfalls associated with retainage.
Siteline can be a valuable tool in this process. It allows subcontractors to track retainage meticulously—ensuring they always collect retention payments—and provides a centralized repository for all closeout documentation. Additionally, Siteline streamlines the billing process, generating accurate and timely pay applications and submitting the correct lien waivers, further simplifying the complexities of retainage management.
If you're looking to gain control over your retainage tracking and improve your overall billing efficiency, book a demo with Siteline today.
What is an Automated Clearing House (ACH)?
An Automated Clearing House (ACH) within the construction context refers to an electronic fund transfer system primarily used for direct deposit payments, including for construction services. It's a method universally used by many businesses in the industry for its convenience and speed. This system provides an efficient platform for moving funds from one account to another in a collective and prioritised manner, aiding greatly in the financial management of a construction project, including payroll and paying suppliers. The benefits include prompt payment, less risk of cheque fraud, and streamlined bookkeeping. It's an integral part of the financial mechanism in the construction industry.
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