1. Building Order Cash-Flow Management, Invoicing
Lecture was elaborated with the help of grant project of Ministry of Education, Youth and Sports, FRVŠ n „Innovation of Subject Financing of Building Order“
Building Order Cash-Flow Management, Invoicing

2. Basic Principle of Building Order Financing
Sources of financing
Returns from order
Other own sources
Advance payments
Other foreign resources
Material
Labour power
Delivery of building works (objects)
Building order
Machines
Sub-supplies
Inputs (resources)
Production process
Outputs
Financing of Building Order

3. Basic Ways of Building Order Financing
Advance payment financing
Sequent invoicing
From time aspect
From technological aspect
Financing with own sources of supplier with final invoice
Financing of Building Order

4. Advance Payment Financing
Investor provides advance payments
In time intervals defined in contract of work
After finishing of (in contract of work) agreed parts of building realization
After finishing of works it is issued a final invoice with:
Total price of works without VAT
VAT
Total price of works including VAT
Total price of works is decreased by value of just paid advance payments
Financing of Building Order

5. Sequent (Partial) Invoicing
Supplier realizes part of building order
In (in contract of work) agreed moment the supplier provides to investor partial invoice (tax document) for payment for just realized part of building works
In contract agreed moment can be defined as
Time (e.g. invoicing per month)
Finished technological part of building
Invoice is verified by job logging (overview of building works
realized during invoiced period) that creates an integral part of
invoice.
Financing of Building Order

6. Financing with own Sources of Supplier with Final Invoice
Supplier obliges to realize whole building order on own account
After finishing of realization the supplier provides to the investor the final invoice (including job logging)
Financing of Building Order

7. Financing of Orders according to the Character of Investor
From the aspect of investor it is possible to differ following kinds
of orders (in classification according to the ways – sources – of
financing):
Public orders
Private orders
Individual orders
Orders in the frame of business sphere
Financing of Building Order

8. Management of Cash-Flow of Building Order
Main aim of the cash-flow on the building order management is:
Assurance of sufficient amount of finances for the efficient coverage of production costs of building order
Suitable relation between of capital and other sources used for financing of building order
Assurance of liquidity of the company (ability of the company to satisfy own financial liabilities towards suppliers, employees and state
Financing of Building Order

9. Planning of Cash-Flows of Building Order
Basis for planning of cash-flows of the building order is the timetable of repayments agreed with investor and with sub-suppliers
Timetable of repayments is based on:
The way of financing of building order – agreed in the contract for work
Agreed time harmonogram of construction (part of the construction) and defined milestones
Co-ordination of timetable of repayments agreed with investor with timetable of repayments agreed with particular sub-suppliers
The output of cash-flow on the building order planning is the creation of plan of cash flow of building order
Financing of Building Order

10. Invoicing of Building Works
Invoice is acceptable tax document, which involves following appropriateness (law about VAT):
Characteristics of the company of supplier and investor (name, firm domicile, identification numbers)
Number of evidence
Amount and subject of the fulfillment
Date of issue
Date of realization of taxable fulfillment
Unit price without VAT
Tax base
Tax rate of VAT (basic or decreased)
VAT
Integral part of the invoice is the job logging agreed by both sides and created in conformity with the budget of the building construction
Financing of Building Order

11. General Principles of Invoicing
Contract for work (order)
Agreed price
Way of invoicing, maturity of invoices
Term of beginning and finishing of order
Subject of fulfillment
Time harmonogram, activities
INVOICING
Issue of invoice including job logging
Work realized in monitored time period
Site diary

12. Financing of Building Order
Contract Bonds
Express invoiced amount of money (usually 10 % from agreed price), which payment is delayed:
Till the handover of building and removing of defects
Till the end of the guarantee period
If the supplier properly and in time does not remove defects, the contract bond can be used for the coverage of costs connected with their removing
Financing of Building Order

13. Sub-Supplies from the Financial Aspect
Realization of building construction is necessary to divide into particular supplies:
Realized by own employees
Realized by sub-suppliers
In the case of sub-supplies is necessary to realize the selection procedure according to the practice in the company:
Creation of groundwork for valuation - budgeting (technical documentation)
Sending of groundwork to potential sub-supplies
Solution of the suitable sub-supplier according to the usual criterions
Creation of contract for work between main supplier of the building and sub-supplier
Based on contract for work between supplier and investor id necessary to set the conditions also in the contract for work with the sub-supplier
Mainly it concerns about the way of invoicing and the maturity of invoices
Financing of Building Order

14. Practical Aspects of Financing of Building Order
Description of activities of site engineer in economic area
Each month he provides information about realized works in physical and financial form (units)
Each month he provides the same information connected with invoicing towards investor
Each month he provides the same information connected with sub-suppliers
He provides commentary and explains differences
He makes presumption of output in next month (plan of invoicing, what works in what amount will be invoiced)
He agrees the attendance of workers (based on this information he is able to define costs connected with direct wages)
Financing of Building Order

15. Practical Aspects of Financing of Building Order
Description of activities of site engineer in economic area
He provides overview of consumption of main materials. It is good to check out, if real consumption of material is corresponding to planed consumption
The same overview it is necessary to make for renting of machines a machinery
From information about time of using and costs for one hour it is possible to find out real costs connected with using of machines and machinery per one month
Presumption of higher cited item for next month
Creation of job logging
Financing of Building Order