Approving a subcontractor's progress claim before paying
How a main contractor checks a subcontractor's monthly claim against the subcontract order and the work measured on site before it is posted and paid.
By Achekam · · 4 min read · For Construction businesses in South Africa, Nigeria, Kenya
At the end of each month the subcontractors' claims arrive: the plasterer, the electrician, the steel fixer, the waterproofing specialist. Each one says how much work was done and how much is due. Some are careful. Some round up. A few include work that is not finished, or a variation nobody ordered.
A main contractor that pays claims as they arrive ends up paying for the same wall twice, or for work it will later have to rip out. The cure is old and simple: compare what was ordered, what was done and what is claimed, and pay only when the three agree. This article shows how to run that check with Achekam's procurement screens.
A subcontract order with a line for each stage of the work
The check starts with the order. In Achekam, a purchase order is raised from the selected quotation of an approved requisition:
- Someone raises a requisition saying what is needed, why, and the estimated cost, and a different person approves or declines it.
- Subcontractors' quotations are captured against the requisition and one is selected. Choosing one that is not the cheapest needs a written reason, which is kept.
- The purchase order is raised from the selected quotation. The person who raised it cannot approve it, and an approved order can be cancelled with a reason.
For a subcontract, write the order with one line per measurable piece of work: plastering to the ground floor, plastering to the first floor, external render, and so on, each with its unit and rate from the quotation. Lines like these let the site team record progress against each stage rather than arguing about a single lump sum. How requisitions and orders flow for materials is covered in requisition to purchase order; subcontract orders follow the same steps.
Recording work done the way a part delivery is recorded
Achekam records deliveries against a purchase order line by line, including part deliveries, and keeps a goods-received record. For a subcontract, the "delivery" is the work measured on site.
At month end the site agent walks the job with the subcontractor's foreman, measures what is complete, and records it against each order line. Half a floor plastered is a part delivery of that line. Receiving goods does not add stock in Achekam, which for subcontracted work is exactly right: there is nothing to put on a shelf.
Record only work that is complete and acceptable. Work that is done but defective is not delivered until it is put right.
The claim matched against what was ordered and what was done
When the subcontractor's invoice for the month is recorded against the order, Achekam matches it with what was ordered and what arrived. If the price or the quantity differs, the invoice is held until someone writes a resolution note.
That is the classic three-way match, adapted to a building site. AccountingTools gives a clear account of three-way matching, where accounts payable compares the supplier invoice, the purchase order and the receiving report before paying. Manufacturers run the same test on raw materials; see three-way match in manufacturing.
Differences held until someone writes a resolution note
Typical differences on a subcontract claim, and what a resolution note might say:
| Difference | Likely cause | Resolution |
|---|---|---|
| Claimed quantity above measured quantity | Work claimed before it is finished | Pay the measured quantity; the rest goes into next month's claim |
| Rate above the order | Old price list, or an unapproved increase | Pay the order rate unless a revised order is approved |
| Line not on the order | Extra work or a variation | Hold until a variation is ordered through the same steps |
| Claim includes materials on site | Contract may or may not allow it | Check the subcontract terms before accepting |
The note stays with the invoice, so anyone looking at it later sees why the difference was accepted or how it was resolved.
Posting the matched claim once, by the subcontractor's invoice number
Once matched, the invoice is posted to the ledger as expense, input VAT and trade payables. The subcontractor's invoice number stops the same invoice being posted twice, which matters when a claim is e-mailed, then posted, then hand-delivered on site a week later.
Paying it is a separate step. A bill can be paid in full or in parts from a chosen bank account, which is how retention is left behind on each claim; recording retention you hold from subcontractors explains that part. Paying a supplier in Achekam only records the payment: no bank payment file is produced, so the transfer itself is made in your online banking.
Who signs off the work on site
Keep the jobs apart, so no one person can order, accept and pay for the same work:
- Site agent or foreman: measures the work and records it against the order lines.
- Quantity surveyor: checks the claim against the measurement and the order rates, and writes the resolution notes.
- Contracts manager: approves the order, and any variation order, but did not raise it.
- Accounts: posts the matched invoice and pays it.
A short checklist for each monthly claim:
- order exists and is approved for every line claimed;
- work measured on site and recorded before the claim is matched;
- every difference resolved in a written note;
- subcontractor's invoice number entered exactly as on their document;
- payment made in the bank only after the invoice is posted.
Starting next month
Pick one subcontractor whose claims cause the most argument and run their next claim through this routine from order to payment. Once the site team has done it once, the rest of the claims follow the same path.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
