When the payment certificate is less than you claimed
What a contractor does in the books when the client's quantity surveyor values a progress claim below the invoice, and how to carry the gap forward.
By Achekam · · 4 min read · For Construction businesses in South Africa, Nigeria, Kenya
You submit the month's claim for the work done. The client's quantity surveyor measures, values and issues a payment certificate, and it is lower than your claim. Perhaps the QS did not accept materials on site, measured less brickwork than you did, or left out a variation that is still being argued.
The gap is normal in contracting. What causes trouble is how it is recorded. If your invoice says one figure and the certificate another, your debtors are overstated, credit control starts chasing money that is not due, and the client's accounts team stops trusting your statements. This article sets out how to handle the gap in Achekam, whether or not the invoice has already gone out.
Claim, valuation and certificate: where the gap opens
Three documents, three figures:
- Your claim: what you believe the work done is worth.
- The valuation: what the client's QS measures and values.
- The payment certificate: what the client is obliged to pay, usually the valuation less retention, previous payments and any agreed deductions.
The usual reasons the certificate falls short are quantities measured differently, work not accepted as complete, materials on site not included, a variation not yet instructed or priced, and rates disputed. Note the reason for every shortfall; each one is either a correction you accept or a claim you will make again.
How revenue on a contract builds up as work progresses is a subject of its own. Investopedia explains the percentage-of-completion method, which recognises revenue on construction and other long-term contracts as work progresses, with worked examples and the risks of the method. Your accountant will use the same thinking at year end.
Holding the claim as a draft invoice until the certificate arrives
The cleanest answer is to avoid the problem. In Achekam, customer invoices start as drafts that can be changed or deleted. Issuing one takes the next number in your sequence and posts it to the ledger as debtors, sales and output VAT.
So prepare the claim as a draft invoice, send the claim to the QS in whatever form the contract requires, and wait. When the certificate arrives, change the draft to match it and issue it. The invoice, the certificate and the client's payment then all agree, and nothing needs correcting.
Many clients and contracts expect the tax invoice to follow the certificate in any case. Check your contract and your client's procedures, and agree the approach with your accountant. Some clients will not process anything until they hold both the certificate and a matching invoice, so an invoice raised from the certificate is also the fastest way to get paid.
Crediting the uncertificated lines on an invoice already issued
Sometimes the invoice has already gone out at the claimed value. There are two ways to correct it.
Void it, if nothing has happened to it yet. An administrator can void an issued invoice that has no payments or credits, which reverses its journal. You then issue a fresh invoice at the certificate's value.
Credit the difference, if it has been paid in part or already credited, or you prefer to keep the original in place. A credit note is issued from the invoice it corrects, in full or for chosen lines, posted to the ledger, and can be downloaded as a PDF or e-mailed. Any leftover credit is held for the client. Send the credit note to the client so their records match.
The credit note keeps the original invoice's date and tax codes
A credit note in Achekam uses its original invoice's date and tax codes. That matters when a VAT rate changes between the invoice and the credit: the credit reverses VAT at the rate the invoice charged, not at today's rate, so the two cancel properly.
Kenya: the credit note goes through the same eTIMS channel as the invoice
Kenyan contractors have one more step. Under KRA's rules, a credit note comes from the same eTIMS solution as the original invoice. If the progress invoice was issued through eTIMS Lite, eTIMS Client or a third-party integrator, issue the credit note through that same channel and keep its details with the credit note in Achekam. Using a different channel for the credit than for the invoice will not match on KRA's side.
Carrying the shortfall into the next claim
A shortfall you do not accept is not lost; it moves. Most contracts value work cumulatively, so next month's claim includes everything done to date, and the disputed work is claimed again, with better evidence.
Keep a claim schedule per job:
| Claim | Amount claimed | Amount on the certificate | Shortfall | Reason | Claimed again in |
|---|---|---|---|---|---|
| Each month | your figure | the QS's figure | the gap | quantities, materials, variation | the claim where it is recovered |
With invoices matching certificates, your receivables ageing (0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals) shows only what the client really owes. The disputed amounts live in the schedule, where they belong, until they are agreed. Telecoms providers deal with a similar problem when a credit relates to an earlier month's bill; an outage credit for an earlier month shows their approach.
Next claim
Agree with your accountant that progress invoices will be issued only from the certificate, set up the claim schedule for each live job, and put every current shortfall into it with its reason. Deductions the client makes after the certificate are a different matter, covered in recording penalties and contra charges, and the whole history comes together at the final account.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
