In all businesses, billing management is a key strategic business area. It must indeed be treated daily with rigor and precision. But what does billing mean? An invoice is a document that certifies the purchase or sale of a good or service. French law requires the publication of an invoice during a sale of goods or services between two companies, or during a distance sale to an individual. In certain sectors of activity such as construction ( building and public works ) or that of long-term service provision, it is customary to use specific invoices: progress invoices, also known as situation invoices . Find out everything you need to know to edit progress invoices.
Definition of a progress invoice
According to Blog du Dirigeant, a website specializing in entrepreneurship, a progress invoice is a document designed to allow payments to be staggered according to the progress of the work . Also known as the situation invoice, the progress invoice is therefore very commonly used in the building sector . This type of invoice is also particularly useful for companies offering their customers long-term services. Progress invoices can therefore be defined as interim invoices . They are edited periodically as the work progresses.. The payment dates are, as a general rule, fixed in the estimate binding the company to its client. It can therefore be bi-monthly, monthly or even quarterly invoices.
The amounts of the situation invoices are calculated according to the state of progress of the work or the performance of a specific service. In management, these services are called lots or contracts . On a classic site in the construction sector, structural work, electricity and plumbing are, for example, lots that are found systematically. Whether they are carried out by a subcontractor or not, each of these contracts will therefore be invoiced to the customer individually.
At the end of the work, the customer receives a closing invoice, or final invoice, issued by the company. This closing invoice must specify the amount still to be paid, as well as those already paid within the framework of the situation invoices issued. As on conventional invoices, it is advisable to show the amounts excluding tax and including VAT, as well as the VAT.
What are the differences between a progress invoice and a deposit?
A situation invoice and a deposit are two completely different business concepts. The deposits paid by customers are intended to make a partial payment to guarantee the delivery of a service. The amount paid for the deposit is naturally deducted from the remaining balance on the final invoice . In this sense, the deposit is made only upstream or at the start of the service sold. This is also an extremely common practice for many companies in various industries.
For businesses, down payment invoices are primarily a means of guaranteeing the sale of a good or service by financially committing the customer. It is also an excellent way to improve their cash flow or reduce their working capital requirement. Conversely, as mentioned previously, the purpose of the situation invoice is to allow a staggering of payments throughout the overall progress of the site or the provision of service.
How to calculate the amount of a progress invoice?
There are two methods for calculating the amount of an invoice as it progresses. The first possibility for calculating a situation invoice is based on the overall progress of the work. The client responsible for monitoring the progress of the project is then responsible for calculating the amount of the invoice.
The second method differs in the sense that the progress invoice amount corresponds to the completion of a batch. When many service providers are subcontracted on the site, this system has the advantage of allowing each of them to be able to invoice their contract , regardless of the progress of the others.
What is the point of progress invoices?
The main advantage of progress invoices is that they allow companies to generate cash flow without having to wait for the end of the project. This explains in particular that this device is very widespread in construction companies, often used to working on sites that can last several months, or even years. Thanks to situation invoices, construction companies can thus get paid quickly by customers. They obtain liquidity in order to pay the salaries of their employees, to pay for the services of each provider or to finance the purchase of materials from the supplier.
These interim payments are therefore compulsory to ensure the good financial health of the company and avoid a deficit in cash flow. In terms of accounting management, the use of progress invoices offers professionals the possibility of generating regular turnover throughout the progress of the site.
How to establish a progress invoice?
From a legal standpoint, progress invoices must meet the same obligations as traditional invoices. Situation invoices, however, have some specificities. As for conventional invoices, you must imperatively mention the date of issue of the invoice and the identity of your company (company name, postal address, SIRET number, VAT identification number, legal structure and amount of the share capital). Also specify the customer’s contact details, the detail and quantity of the service sold, the total amount to be paid, the terms of payment and the penalties required if the payment deadline is exceeded.
With regard to information specific to status invoices, it is essential to indicate the mention « progress invoice ». Likewise, each progress invoice must be numbered. You must also show the estimate to which your invoice refers and designate the lots concerned. Finally, add the percentage of progress of the site, the sums already paid for progress invoices and the possible amount of the deposit.
To establish your invoices for the attention of your customers, it is finally in your interest to opt for online invoicing software . In addition to finding situation invoice templates, you will benefit from many features that will save you time on a daily basis. From making a quote to editing the closing invoice, you will benefit from fully dematerialized accounting management .
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