This activity is used to receive an application. When an application is received from a supplier, the amounts need to be registered on the valuation, and recognized so that the costs and expenses can be kept track of. By receiving the application, a voucher that helps to identify future costs, is created. It is possible to recognize a partial value of the total applied amount on an application. In some cases the supplier may have intentionally over applied and the total amount is not really expected to be paid. Based on the percentage (%) to recognize, as defined on the valuation (received from the sub contract), only the allowed percentage (%) of the applied amount will be recognized. The following example details this further:
For simplicity, let us consider a single sub contract line. The total application amount of items on application A1 is £1100, but less Discount 5% (£55), Retention 5% (£52.25) and Deductions 2% (£19.86). The application is raised for £972.89 plus tax. If the percentage to be recognized is 90% of£972.89 (£875.60) excluding tax, this means that only £875.60 will be posted.
If a project activity is connected to a contract item, used cost will be reported to the project when the application for payment related to the item is received and when the item valuation is certified. When multiple currencies are involved, all calculations to reduce the committed cost when the used cost is reported are done in the transaction currency. The remaining committed cost is then converted to base currency, using the currency conversion rate valid to the system date, and updated to the project activity.
Only the Sub Contract Valuations with Valuation Completed set to true will be included in the Cash Plan. (Financials – Planning – Cash Plan – Cash Plan)