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When should I be reimbursed?

Hi Alex I have entered in to a contract with a lot of allowances , when can I use my allowances and how this usually works? For example, he allowed me 28 K for my kitchen cabinets and counter top and I had purchase all that he needed to continue with the project . When should he credit me for all that I have bought?

1 reply

Feb 19, 2020

Hello! How and when the allowances will be credited should be included in the contract terms themselves. A well-drafted allowance clause should detail how to deal with any overages/underages, markups, and most importantly when they should be credited. Most standard allowances clauses that I've run across will either provide for the application of the credit on either the "next invoice" or "upon the final billing" of the job. Allowances can be a slippery slope. So there are two important things to keep in mind. (1) Read the allowances clause carefully. If there are any sort of prior notice or approvals required, be sure to comply with them. Failing to do so could potentially leave you stuck with the tab. (2) Once used, the invoices should be submitted to the customer as soon as possible. That way you can avoid the sticker shock by waiting until the end of the project to inform the customer of the total amount used; even if you've already received approval. Assuming you've read my article on the matter (since you called me out by name!), here's an article by Markup & Profit that has a good explanation on different approaches to construction allowances: Allowances in Your Pricing Happy building!

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