How to Bill for Stored Materials on a Pay Application
Some materials have to be bought long before they're installed: custom fabrications, long-lead equipment, specialty finishes. Waiting until installation to bill for them can tie up a lot of cash. That's what stored materials billing is for: being paid for materials that are bought and stored for the project but not yet in place.
Can you bill for stored materials?
Only if your contract allows it, so check first. Many commercial contracts do, but usually with conditions such as:
- The materials are specifically for this project and identified as such.
- They're stored on site in a secure location, or off site in a bonded or insured warehouse the owner has approved.
- You provide proof of purchase, usually supplier invoices, and sometimes proof that the supplier has been paid.
- The materials are insured, with the owner or GC named as an additional insured or loss payee.
- For off-site storage, the owner may want photos, an inspection or a bill of sale transferring title.
Ask the GC before the first pay application what backup they need. Requirements for off-site storage in particular can be strict.
How stored materials show up on the G703
Stored materials have their own column on the continuation sheet:
- Column F, Materials Presently Stored, is the value of materials stored at the end of this period that aren't already counted in columns D or E.
- Column G, Total Completed and Stored to Date, is D + E + F, so stored materials count toward your progress on the line.
The key idea: stored materials move into "work completed" once they're installed. They shouldn't be counted twice.
An example, month by month
Say a line for motorized shades has a scheduled value of $50,000, and $20,000 of fabricated shades are delivered and stored on site in month 1.
| Month | D: Previous | E: This period | F: Stored | G: Total to date |
|---|---|---|---|---|
| 1 | $0 | $0 | $20,000 | $20,000 |
| 2 (half installed) | $0 | $10,000 | $10,000 | $20,000 |
| 3 (all installed, plus labor) | $10,000 | $25,000 | $0 | $35,000 |
In month 2 the shades already paid for as stored materials get installed, so $10,000 moves from column F to column E. Column G doesn't jump, because that material was already counted. By month 3 nothing is left in storage.
Retainage on stored materials
The G702 splits retainage into (a) retainage on completed work and (b) retainage on stored material, because contracts often treat them differently. Some hold the same rate on both, some a higher rate on stored materials, and some none at all. Use whatever your contract says.
Backup that gets stored material bills approved
- Supplier invoices matching the amount in column F.
- Photos of the materials, labeled with the project name.
- The storage location, and for off-site storage, the warehouse agreement or certificate.
- A certificate of insurance covering the stored materials.
- A running log of what was stored, when it was installed, and what's left. GCs appreciate this, and it makes your next pay app easy to check.
Keep the paper trail with the pay app
Stored materials billing is mostly about documentation. When the invoices, photos and insurance go out in the same package as the pay application, approval is faster and you get your money sooner.
PayAppHub has a stored-materials column on every line, carries it forward month to month, and lets you attach invoices, photos and other documents to the pay application so the whole package goes to the GC together.