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We use Subcontracts to track our Lighting and Gear orders, Our projects usually have several changes to these type orders resulting in change orders to Subcontracts (Subcontracts used in this case essentially are Material Contracts which we get charged tax on).

Issue: When drilling in to look at costs we always have open commitments for associated phases, when in fact, the costs are not open, it's just how Spectrum calculates and shows as OPEN. When building our projections for jobs it's impossible to see that the open commitment is tax and there is no way to relieve unless you force projection to be less than JTD+Open, not usually the case with projections. At the end of a project when job is closed, the hidden profit shows up (JTD+OPEN TAX) when set to 100% complete in Job Maintenance screen. Profits can be quite substantial depending on size of Subcontracts written to vendors whom we pay sales tax. Using GAAP accounting principles this makes it difficult to project larger projects in prior month's basically not being able to project profits month to month, and having to wait till project is complete to get the real number unless we use the work around.

This is Dexter Chaney Response

ISSUE: Job Cost is showing open commitments for subcontracts that have been billed in full. These subcontracts were put in as taxable, essentially tracking material contracts to our suppliers on major purchase's for lighting and Gear. Change orders constantly affect these type of orders.

 
DEXTER CHANEY SOLUTION: There is a limitation in our software that affects JC open commitments. That limitation is sales tax on subcontracts. Spectrum is not designed to handle sales tax on subcontracts. The sales tax remains as an open commitment once the subcontractor invoices are paid.

When you go into AP-Maint-Subcontract you set up the subcontract for $10,820.00. That is the open commitment that hits the job. Out of that $10,820.00, $820.00 is sales tax.

If the vendor is setup as a taxable vendor when you enter the subcontract invoice, the invoice itself is entered for $10,000 and the $820.00 is calculated as sales tax for a total invoice of $10,820.00. That $10,820.00 updates as cost to the job but job cost looks at the initial invoice entry of $10,000.00 as what is being entered against the open commitment thus leaving an open commitment in JC only of $820.00.


After speaking with a trainers about paying sales tax on subcontracts they suggested that if you want the sales tax to be considered part of your open commitment set the subcontract up for $10,820.00 but bill it out as non-taxable. The only bad part about this is the sales tax for this invoice would not be reflected on your sales tax reports.

To relieve the open commitment on this job for this subcontract I have two suggestions.

1. You could enter a negative subcontract change order to the subcontract for $820.00 to relieve the open commitment in JC. This will look a little weird because the subcontract would look like it is over billed but JC would show the open commitment received in full.

2. Go back into AP-Data Entry-Invoice Credit Memo Entry and add a credit memo, with the subcontract number on it, as TAXABLE for $10,000.00 and update it. Then go back in and add a new invoice, with the subcontract number on it, but this time make it NON-TAXABLE and the amount would be $10,820.00. Update the invoice. You can then go in and do a zero dollar manual check to apply the two invoices together. Again the only draw back to this is the sales tax report. You are kind of in a catch 22 here.

You'll want to review these invoices and the job itself and note the overage on the open commitments. Correcting these and maybe changing the way taxable subcontracts are handled will greatly decrease the open commitments on all your jobs.

This area is being addressed by our programmers as an enhancement for a future version. The system has always worked this way.