Roofing Back Office

Finance and Bookkeeping

Accounts Payable for roofing contractors

A supplier invoice is one company’s account of what happened. It becomes payable when two records you hold independently agree with it.

Nate Jones · Founder, Roofing Back Office

Nate Jones is the founder of Roofing Back Office. On this desk he works with owners approving totals they have no way to check.

Last updated · Reviewed by Nate Jones

What arrives ready to approve

A payment run where every item has already been reconciled against the order that authorised it and the delivery that fulfilled it, coded to the job it belongs to, with the exceptions pulled out separately and the specific discrepancy named on each one.

Alongside it, a supplier and subcontractor record that is actually complete — collection documents obtained at setup rather than at year end, contact details that reach somebody, terms recorded where the person raising a purchase order can see them.

The exception list is the useful artifact. A run with nothing flagged has usually not been checked; a run with three flagged items and the reasons attached is a run somebody can approve in minutes with confidence about the rest.

One document is not evidence of a debt

The structural weakness in most contractor payables is that the invoice is the only record consulted. It arrives, it looks plausible, it gets paid. Nothing about that process can detect a quantity that was never delivered or a price that moved between quote and billing, because the only witness is the party being paid.

Three records exist for every supplier transaction and they are created by different people at different moments: what was ordered, what turned up, and what was billed. Agreement between them is a genuine check. Any one of them alone is an assertion.

Roofing makes this harder than most trades, and the reason is physical. Material is delivered to a driveway or a roof rather than to a receiving bay, and the person who takes delivery is a crew lead who is about to start work. There is no gate, no clerk and no signature desk. If the delivery record is not created in that moment by somebody holding a phone, the middle of the three documents simply does not exist, and every invoice for the rest of the year is checked against half a picture.

Which is why this desk starts at the driveway rather than at the ledger. The matching is straightforward once the three records exist. Making the second one exist is the actual work.

What payables produces, and what holds each piece up A horizontal spine carries three labelled artifacts produced by payables: an approved payment run, a matched document set, and a complete payee record. Beneath each artifact a vertical line drops to a second tier naming what holds it up — respectively every item traced to an order somebody placed, the order, the delivery and the invoice in agreement, and the collection document obtained before the first payment. Across the foot of the diagram a separate band states the judgement this function does not make, which is whether a disputed charge should ultimately be paid. The diagram shows structure only and contains no figures. What this desk produces An approved paymentrun A matched document set A complete payeerecord every item traced to anorder somebody placed the order, the deliveryand the invoice inagreement the collection documentobtained before the firstpayment Every item above sits on the one below it. Outside this desk Whether a disputed charge should ultimately be paid
Each artifact on the spine has something underneath holding it up. That is the whole design: payables is not an argument, it is a set of items that can each be traced to how they were arrived at, so that a payment is released against agreement rather than against pressure. The band across the bottom is the part that stays outside the work.

An incomplete payee record changes the payment

Collecting a payee’s details is often treated as a filing courtesy. It is not. Under 26 CFR 31.3406(a)-1 — Backup withholding requirement, “A payor of a reportable payment must deduct and withhold under section 3406 if… The payee of the reportable payment does not furnish the payee’s taxpayer identification number to the payor.” The absence of a document alters what the payer is required to do with the money.

The instrument that carries that information is About Form W-9, Request for Taxpayer Identification Number and Certification, which is how a payee supplies that number and confirms it. It is a document to be collected at the moment a relationship opens, when the other party wants something from you, rather than reconstructed months later when they do not.

The practical rule that follows is unglamorous and worth stating anyway: a new supplier or subcontractor is not set up until the document is in hand. Not the first payment — the setup. Companies that hold that line spend no time on it at all; companies that do not spend a week every January on it, every January.

This describes a federal reporting rule in general terms. It is not legal, tax or accounting advice, it makes no determination about your suppliers or your obligations, and requirements differ by circumstance. Your licensed adviser is the right place for those questions; the department page below sets out where this work stops.

Alongside the rest of the ledger

Payables is one desk inside Finance and Bookkeeping, which sets out the boundary governing the whole department rather than restating it here.

Questions about supplier payments

What does matching actually catch?

Short deliveries, price drift and duplicates, roughly in that order of frequency. A supplier quotes a price, delivers slightly less than the ticket says, and invoices the original quantity — none of it dishonest, all of it invisible if the invoice is the only document anybody looks at. The match is not an accusation. It is the only mechanism that notices.

Our suppliers deliver to a jobsite, not a warehouse. Does this still work?

It has to work differently, which is the whole difficulty in roofing. The delivery document exists on a driveway rather than a dock, so it is photographed by whoever received it or it does not exist at all. Establishing that habit is usually the first month of the engagement, and it is the single change that makes everything downstream possible.

Do you pay our suppliers directly?

Against your accounts, your approval rules and your authority to release funds — which stays with you. What we do is assemble the run: everything matched, everything coded, exceptions separated out with the reason attached. What arrives is a decision rather than a pile.

What happens to an invoice that does not match?

It comes out of the run and goes back to the supplier with the specific discrepancy stated, same day where possible. The mistake companies make is holding a whole payment while one line is queried, which strains a supplier relationship over an amount nobody was arguing about. Pay what matches, query what does not.

We already approve everything ourselves. What changes?

What you are approving changes. Most owners are approving a total and a supplier name, because that is all the information in front of them. When the match happens first, approval becomes a decision about the exceptions only, and the volume of things needing your attention drops sharply without anything being taken away from you.

Why do you care so much about collecting documents from new suppliers?

Because the consequence of a missing one is not administrative, it is mechanical — the section below sets out a federal rule that changes what a payer must do with the payment itself when a payee record is incomplete. Collecting it at the point of setting the supplier up costs one email. Chasing it in January, from a subcontractor who has moved on, is a different exercise.

Payer obligations referenced here

Check whether your delivery records exist

Pick last month’s largest supplier invoice and look for the ticket it should match. Whether you find one answers most of this.

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