The G702 & G703 forms are a type of consolidated billing on a monthly basis based on the contract completion percentage. This is a type of accounting called the Percentage of Completion. According to CPA William Brighenti,“the percentage-of-completion method is generally the required method of financial and tax accounting of larger construction companies for long-term contracts. Its justification relies largely on the matching principle in accounting, where revenues and expenses are matched in the applicable accounting period.”
So, why the rant and boring blog on the AIA? Well, I was once the ‘office personnel’ that had to prepare these little beasts. From about the 15th to the 24th of every month, it was highly known to avoid my office at all costs. The first couple of years, I thought it was just me…..but as I’ve maneuvered through the Door and Hardware Industry, I’ve learned that nearly all office accountants in this trade feel the same pains as I once did. Basically, you save all invoices for the month and compile them into this one “summarized” billing on the G702&G703 forms. Once you have these forms completed, you send them to the contractor, and in some cases, to the owner, architect, and job supervisors as well. Each contractor and each project set the “rules” for billings. They all want originals and they want them on their desk no later than their contract billing date. Some contracts bill the 15th of the month, others the 20th, 23rd, or 25th. It used to be streamlined about 6 years ago, where nearly everyone wanted these billings on the 25th, but now-a-days, contractors have adjusted their billing schedules- and some have even created their own custom billing forms to avoid the headaches of using the AIA’s.
As I roll to conclusion, the final question many of you wonder: Is the AIA stringent paperwork requirements going to ease up anytime soon? From how I see it, absolutely NOT! I say this in full confidence as it seems that the paperwork requirements are just getting worse. Each year more and more documents are needing to be drafted, reviewed, and signed. Each state also gets to throw in their own regulatory guidelines for construction projects, as well as those general contractors (GC) we all love so much. I’ve noticed that the larger a GC is, the more paperwork they want. So, do you distributors get to increase you pricing for the job to accommodate these extra man hours needed? Again, absolutely NOT. In fact, you are expected to become even more competitive in your pricing due to the lucrative industry and ease of internet bidding. No wonder why many “little guys” closed their doors years ago.
Keep your head up, though, because what would America be like without all these rigorous guidelines and paperwork anyway? When you get sick of your carpal tunnel kicking in, and you’re going cross-eyed from staring at the same document over and over again— contact me! I have a contract solution for you…..you enter the data and it generates your AIA G702&G703 forms for you. Well, at least all the data that populates the forms, since those bad boys are copyrighted. One little click and your form is done…..no more banging your head into the wall.
“Whatever good things we build end up building us.” – Jim Rohn