Accruing for received-not-invoiced costs requires matching open POs against field receipts at period close and posting estimated liabilities to the correct cost codes before the GL locks. Vergo's AP automation captures receipt confirmations in the field and maps them to job-cost codes, giving controllers a clean RNI report without manual reconciliation.
The Current Problem
Construction projects frequently have costs that are incurred but not yet invoiced, such as materials received at the job site or subcontractor work performed. These uninvoiced costs often go unrecorded, leading to understated expenses and inaccurate financial reporting at month-end. This breakdown typically occurs due to siloed purchasing, receiving, and accounting processes, as well as a lack of visibility into outstanding commitments.
- Purchasing agents order materials without notifying accounting
- Subcontractors complete work but delay invoicing
- Received items are never matched to open POs
- Accruals are manually tracked in disparate spreadsheets
The Recommended Workflow
- Identify Open Purchase Orders: Review all open POs in your construction ERP to determine what materials or services have been received but not invoiced.
- Match Receipts to Open POs: Cross-reference job site receiving logs, subcontractor timesheet data, and other field documentation to identify received items without invoices.
- Calculate Accrual Amounts: Determine the value of uninvoiced costs based on PO amounts, contracted rates, and quantity received.
- Record Accruals in ERP: Enter the accrual amounts as liabilities in your general ledger, assigned to the appropriate cost codes and job numbers.
- Schedule Accrual Reversal: Set a reminder to reverse the accruals once the actual invoices are received and recorded.
- Sync Data to Financial Reporting: Ensure all accruals are properly reflected in your month-end financial statements and forecasting.
Tips for Construction Teams
- Require field teams to promptly log all material receipts and subcontractor work
- Enforce a policy of matching POs to receipts before approving invoices for payment
- Leverage mobile apps to capture real-time job site data and streamline the accrual process
- Integrate your ERP with accounts payable automation software to automatically identify uninvoiced costs
- Train accounting staff on recognizing common accrual scenarios in construction
- Review accrual reports regularly to identify opportunities for process improvement
How Vergo Helps
Vergo is a card-agnostic expense management platform built for construction. Connect any corporate or project credit card and get full visibility and control over field spending.
- Job-cost coding at the point of capture — field teams assign job number, cost code, and cost type from their mobile device before the receipt leaves the job site.
- Per-job spend controls — set card limits by project, cost code, or cardholder so spending stays within approved budgets.
- Mobile receipt capture — superintendents and PMs photograph receipts on-site with automatic data extraction.
- Role-based approval workflows — route expenses through project managers, job-level approvers, and controllers based on your org structure.
- Vergo integrates natively with major construction ERPs, syncing coded expenses directly into job cost and general ledger without manual re-entry.
Related Questions
Frequently Asked Questions
What if we can't match a receipt to an open PO?
If you can't definitively link a received item to an existing PO, record it as a general accrual under the appropriate cost code. You can adjust or reverse this accrual once an actual invoice is received.
How do we handle retainage on subcontractor invoices?
When accruing for subcontractor work, include the full contract amount, but also record a separate retainage liability. Reverse the retainage accrual when the subcontractor invoice is paid.
Can we automate the entire accruals process?
Yes, construction-focused AP automation software like Vergo can sync your ERP data, match receipts to POs, calculate accruals, and integrate with your general ledger - all without manual data entry.
What if we receive credits or refunds after an accrual?
Adjust the original accrual amount accordingly when you receive the credit memo or refund. This ensures your financials accurately reflect the final costs.