1. Contract and Service Billing Implementation Guide
  2. Rated Draw Billing Lines

Rated Draw Billing Lines

A rated draw represents a percentage reduction that you apply to the billing amount of the contract each time that you create an invoice for the contract. The percentage reduction is based on a percentage of work completed for the job. You apply the amount of the rated draw over the life of the contract. The entire amount for the prepayment is fully applied to the contract by the time that the work for the contract is complete. The schedule of values amount for a rated draw is a negative amount. The amount represents a reduction to the total billing value for the contract.

You define a dependent contract billing line for a rated draw. The dependent billing line reduces the billing amount of another billing line in the contract. To apply a rated draw billing line, you must set up a cross-reference between the rated draw billing line and two or more billing lines.

You can set up cross-references between rated draw billing lines and these contract billing lines:

  • Unit price (independent)

  • Lump sum (independent)

  • Milestone (independent)

  • Progress (independent)

Rated draws usually relate to progress billing. After your company completes a specific percent of the job or project, the system calculates the current reduction amount with this formula:

(Schedule of Values) × (Percent Complete on the Cross Referenced Billing Line) = (Initial Billing Amount) (Prepayment Amount) × (Percent Complete) = (Prepayment Reduction) (Initial Billing

Amount) – (Prepayment Reduction)= (Billing Amount)

You apply the reduction beginning with the first billing until the entire schedule of values for the draw is fully applied to the contract. The schedule of values for the rated draw is the amount of the prepayment.

For example, assume that a rated draw is for 5,000 USD, and the related progress billing is for 100,000 USD. You define the first billing event as 10 percent complete. When you complete the first billing event, the system applies the percentage of completion to the schedule of values for the progress billing and the rated draw.

The system calculates the billing amount as:

100,000 × .10 = 10,000 (Initial Billing Amount)

5,000 × .10 = 500 (Prepayment Reduction)

10,000 – 500 = 9,500 (Billing Amount after Reduction)