Back to P100: Project Implementation and Processing

Lesson 11: Billing Projects for Time and Material

Part 3: Project Billing

You run billing for a project to prepare an invoice for the customer. You can bill the customer for the time and material spent on the project.

Time and Material Billing: General Information

With time and material billing in Acumatica ERP, you run project billing to automatically generate customer
invoices based on the cost project transactions.

Learning Objectives

In this lesson, you will learn how to do the following:

Configure a time and material billing rule
Make sure that the project is ready to be billed
Run project billing for a project
Process the documents that have been generated during the project billing
Review how the project’s actual amounts are updated with the billed amounts

Applicable Scenarios

You run project billing to prepare an invoice for the customer for the time and material spent on the project. The
timing of project billing depends on the project billing period defined for the project.

Configuration of a Billing Rule Step

For a billing rule step of the Time and Material type, you can specify the following settings:

The account group that is used as a filter to select the transactions for billing by the Time and Material billing steps. When the billing procedure is run, the system selects all the transactions that are due for billing and that have this account group. Normally, you use for billing the same account group or groups that you use for accumulating the unrecognized revenue.
A formula to define the description of the invoice and a formula to define the description of each invoice line, to make the system compose these descriptions dynamically during the billing process.
A formula to calculate the amount of the invoice lines created by the Time and Material billing steps, and another formula to calculate the quantity of these invoice lines. In these formulas, you can use fields and attributes from such entities as the project, project budget, project task, project transaction, customer, vendor, employee, inventory item, and account group. You can also use diﬀerent sources of the project rates: those from rate tables, which can be configured on the Rate Tables (PM206000) form; and those from sales price lists, which are defined on the Sales Prices (AR202000) form.
```
                If inclusive taxes are configured in the system, the amounts of project transactions are
                considered gross amounts—that is, already including the inclusive taxes. If the project
                transaction amounts that you enter in your system are net amounts (that is, it does not
                include an inclusive tax), you need to configure the line amount formula to include the
                PMBudget.InclTaxAmount value in the calculations.
```
The source of the sales account and the source of the destination branch for each invoice line. The billing process uses the originating branch from the project settings on the Projects (PM301000) form and the destination branches from the sources according to the billing rules. When an accounts receivable invoice is released, the accounts receivable account is updated under the originating branch of the invoice, while the revenue amounts are recorded to the destination branches of the invoice lines.
The invoice group, which can be used during billing to make the system create separate invoices (either pro forma invoices or accounts receivable invoices, depending on the billing workflow of the project) for particular steps with the same invoice group during the project billing.
Non-billable transactions that do not contribute to the amount billed to the customer and that you may decide to include in the invoice.
Grouping criteria by date, employee, vendor, and inventory item for the invoice lines created by the Time and Material billing steps.

The Time and Material Billing Process

The time and material billing workflow is provided for project tasks that need to be billed based on project transactions. Time and material billing can be performed only for project tasks of a project that is pending billing —that is, if the project has at least one unbilled transaction that is ready to be billed on the invoice date. The Time and Material billing steps can be run once the project transactions that match the selection criteria have been processed. Optionally, the allocation process can be executed for these transactions before billing. For more information, see Billing with a Direct AR Invoice: General Information.

          If a project is billed with a billing rule that includes only Time and Material billing steps, during the
          billing process, the system ignores any pending invoice amount of the revenue budget lines.

To bill a project task for time and material, you need to create a billing rule on the Billing Rules (PM207000) form and configure a step or multiple steps of the Time and Material type in this rule. Multiple Time and Material steps are used in a billing rule for diﬀerent account groups of transactions that should be used to determine the invoiced amounts by using diﬀerent formulas. Then you assign the configured billing rule to project tasks on the Tasks tab of the Projects (PM301000) form.

          If you configure multiple time and material steps for the same account group, only the last pro forma
          invoice line created based on these steps will be linked to the project transaction that has been used
          as a basis for billing.

You can run billing for one project by clicking the Run Billing button on the form toolbar of the Projects form or process multiple projects on the Run Project Billing (PM503000) form. When you run the project billing, the system prepares a project invoice whose type depends on the state of the Create Pro Forma Invoice on Billing check box on the Summary tab of the Projects form as follows:

If the check box is selected, the system generates a pro forma invoice with a positive or negative amount.
If the check box is cleared, the system generates an accounts receivable invoice (if the total billed amount is positive) or credit memo (if the total billed amount is negative). For more information about credit memos, see Project Invoice Correction: Credit Memos for Projects. The system creates a project invoice based on the unbilled project transactions with amounts calculated by using the billing rules of the project tasks. In the billing, the system includes the transactions with a date that is earlier than the billing date and does not include the transactions with a date that is later than the billing date. If the project billing is performed by using the pro forma invoice workflow, the invoice lines that are produced by the Time and Material billing steps are displayed on the Time and Material tab of the Pro Forma Invoices (PM307000) form. The transactions with the same date as the invoice date are billed if Include Transactions with Billing Date is selected as the Billing Cutoﬀ on the Projects Preferences (PM101000) form; if Include Only Transactions Before Billing Date is selected, the system skips the transactions with the same date as the invoice date. During the billing process, the system groups the billable amounts into separate invoices based on the following:
The invoice group of the steps of the billing rules to which the project tasks refer
The customer
The customer location
The Bill Separately setting of each project task defined on the Project Tasks (PM302000) form For more information, see Grouping of Invoices: General Information. If the status of a pro forma invoice is On Hold, you can change the Amount to Invoice values in the time and material lines of the pro forma invoice. When you release a pro forma invoice and the system creates the corresponding accounts receivable invoice or credit memo, the system copies the values in the Amount to Invoice column from the Time and Material tab of the Pro Forma Invoices form to the lines of the accounts receivable invoice (or credit memo) on the Details tab of the Invoices and Memos (AR301000) form. You cannot change the Amount to Invoice value in the lines of a pro forma invoice with the Open and Closed status.
```
        If the Construction feature is in use, you may need to prepare an American Institute of Architects (AIA)
        report that includes time and material amounts from the prepared pro forma invoice. To do this,
        you include the time and material amounts to be billed in the progress billing amounts. For more
        information, see Construction Reports: Time and Material Amounts in AIA Reports.
```

Time and Material Billing: To Configure a Time and Material Rule

The following implementation activity will walk you through the process of configuring a time and material billing rule.

Story

Suppose that you, as the project accountant of the SweetLife Fruits & Jams company, need to configure a billing rule to be used for billing customers for the materials that have been spent on providing services as part of the project, and for the time that has been spent by SweetLife's employees performing work for the project.

Configuration Overview

In the U100 dataset, the following tasks have been performed to support this activity:

On the Enable/Disable Features (CS100000) form, the Project Accounting feature has been enabled to support the project accounting functionality.
On the Account Groups (PM201000) form, the following account groups have been configured:
The MATERIAL account group of the expense type, which aggregates the amounts posted to the 50000 (GOGS – Inventory) account
The LABOR account group of the expense type, which aggregates the amounts posted to the 54100 (Project Labor Expense) account.

Process Overview

You will create a billing rule for time and material billing on the Billing Rules (PM207000) form, and add to this rule two steps for billing diﬀerent account groups.

Step 1: Configuring a Billing Rule and Adding a Step To configure a billing rule to be used for time and material billing and then add a step for billing for materials, perform the following instructions:

On the Billing Rules (PM207000) form, add a new record.
In the Summary area of the le pane, specify the following settings:

Billing Rule ID: MATTIME
Description: Billing rule for materials with markup

In the le pane, add a row for the billing rule step, and specify the following settings in the row:

Active: Selected
Step ID: 10
Description: Billing for materials (cost with markup)

In the right pane, specify the following settings for the step (which is selected in the le pane because it is the only step):

Billing Type: Time and Material
Account Group: MATERIAL This step of the billing rule will be used for processing project transactions related to the account group, which includes expenses for materials.
Invoice Description Formula: ='Invoice for '+PMProject.ContractCD The system uses this formula to define the description of the invoice created based on the billing rule. The PMProject.ContractCD data field stores the project identifier.
Line Quantity Formula: =PMTran.BillableQty
Line Amount Formula: =PMTran.Amount*1.25 The invoiced amount is calculated as the amount of a project transaction multiplied by 1.25.
Line Description Formula: =PMTran.Description
Use Sales Account From: Inventory Item
Create Lines with Zero Amount and Quantity: Cleared You clear this check box to add to the created invoice only lines with a nonzero amount and quantity.

Save your changes.

Step 2: Adding One More Step to the Billing Rule To add and configure a step for billing for labor, do the following:

While you are still viewing the MATTIME billing rule on the Billing Rules (PM207000) form, in the le pane, add a row for the second step of the billing rule, and specify the following in the row:

Active: Selected
Step ID: 20
Description: Billing for employee time

In the right pane, specify the following settings for the new step (which is selected in the le pane):

Billing Type: Time and Material
Account Group: LABOR This step of the billing rule will be used for processing project transactions related to the account group, which includes expenses for employee labor.
Invoice Description Formula: ='Invoice for '+PMProject.ContractCD The system uses this formula to define the description of the invoice created based on the billing rule. The PMProject.ContractCD data field stores the project identifier.
Line Quantity Formula: =PMTran.BillableQty
Line Amount Formula: =PMTran.Amount*1.25 The invoiced amount is calculated as the amount of a project transaction multiplied by 1.25.
Line Description Formula: =PMTran.Description
Use Sales Account From: Inventory Item
Create Lines with Zero Amount and Quantity: Cleared

Save the created billing rule.
You have configured the billing rule that can be used for billing the cost-plus project for the time and material spent on the services related to the project. To bill a project by using this rule, you need to assign the rule to the project tasks.

Time and Material Billing: To Bill a Project for Time and Material

This activity will walk you through the process of billing a project for time and material.

Story

Suppose that the HM's Bakery and Cafe customer has ordered a juicer from the SweetLife Fruits & Jams company, along with the services of installation and employee training on operating the juicer. SweetLife's project accountant has created the project to handle the tracking and billing of the juicer and the provided services. Then the project accountant has entered a project transaction to record the delivery and installation of the juicer, and eight hours of training have been provided by SweetLife consultants on January 14, 2025. Acting as the project accountant, you need to bill the customer for the project so that the billing includes the materials used and the work time spent on the project.

Configuration Overview

In the U100 dataset, the following tasks have been performed to support this activity:

On the Enable/Disable Features (CS100000) form, the Project Accounting feature has been enabled to support the project accounting functionality.
On the Billing Rules (PM207000) form, the TM billing rule has been configured. The billing rule includes three steps, each billing a particular account group (MATERIAL, LABOR, and SUBCON); for each group, the amount to be invoiced is calculated by multiplying the project transaction amount by 1.25.
On the Customers (AR303000) form, the HMBAKERY customer has been defined.
On the Projects (PM301000) form, the HMBAKERY4 project has been created for the HMBAKERY customer, and the PHASE1 and PHASE2 tasks have been added to the project. On the Tasks tab, the TM billing rule has been specified for both project tasks. Also, on the Summary tab, the Create Pro Forma Invoice on Billing check box is selected, indicating that a pro forma invoice is created when the project is billed.
On the Project Transactions (PM304000) form, the PM00000007 batch of project transactions related to the project has been created and released to record the services provided for the project.

Process Overview

You will make sure that the project is pending billing and run the project billing on the Projects (PM301000) form, which causes the system to create a pro forma invoice. On the Pro Forma Invoices (PM307000) form, you will review the lines that have been added to this pro forma invoice and release it. Then you will review the corresponding accounts receivable invoice and release it on the Invoices and Memos (AR301000) form, and review how this aﬀects the project’s actual values.

System Preparation

To prepare to perform the instructions of the activity, in the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, make sure that the business date in your system is set to 1/30/2025. If a diﬀerent date is displayed, click the Business Date menu button, and select 1/30/2025 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.

Step 1: Reviewing Project Transactions Pending Billing To review the project transactions that have not been billed yet, do the following:

Open the Project Transaction Details (PM401000) form.
In the Selection area, select HMBAKERY4 as the Project, and make sure that the Project Task and Account Group boxes are cleared. In the table, the system lists the following project transactions dated 1/14/2025:

The JUICER15 line in the amount of $2,000
The TRAINING line in the amount of $320
Two lines with the INSTALL item related to the PHASE1 project task, with amounts of $80 and $240 Notice that in all lines, the Billable check box is selected and the Billed check box is cleared, indicating that these project transactions are pending billing.

Step 2: Billing the Project and Processing the Related Documents To bill the project, do the following:

On the Projects (PM301000) form, open the HMBAKERY4 project. In the Summary area, notice that the actual expenses of the project are $2,640 (which is the total of the processed project transactions), while the actual income of the project is $0 because the project has not been billed yet.
On the form toolbar, click Run Billing. The system creates a pro forma invoice and opens it on the Pro Forma Invoices (PM307000) form.
On the Time and Material tab of the form, review the lines that the system has created based on the project transactions. The pro forma invoice includes three lines:

The JUICER15 line with the billed amount of $2,500
The TRAINING line with the billed amount of $400
The INSTALL line (which aggregates two project transactions) in the amount of $400

On the form toolbar, click Remove Hold to assign the pro forma invoice the Open status, and then click Release. The system creates a corresponding accounts receivable invoice based on the pro forma invoice. The pro forma invoice is assigned the Closed status.
On the Financial tab, click the AR Ref. Nbr. link to open the accounts receivable invoice that has been created on the Invoices and Memos (AR301000) form.
On the form toolbar, click Remove Hold to assign the invoice the Balanced status, and then click Release.

Step 3: Reviewing the Project Transactions and the Updated Project Balance To review the project transactions and project balance, do the following:

On the Project Transaction Details (PM401000) form, in the Selection area, select HMBAKERY4 as the Project. In the table, review the project transactions that have been created based on the released accounts receivable invoice (these are the lines that have AR specified in the Module column and negative amounts). In the GL Batch Nbr. column, the reference number of the corresponding GL batch is shown. Also notice that the project transactions based on which you have performed time and material billing now have the Billed check box selected, indicating that these transactions have been billed.
On the Projects (PM301000) form, open the HMBAKERY4 project. In the Summary area, notice that the actual income is now $3,300. On the Revenue Budget tab, notice that the system has automatically created two revenue budget lines (one for each project task), and filled in the Actual Amount for the rows.
On the Balances tab (see the following screenshot), review the project income and expenses aggregated by account groups.
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   Figure: The project balances aer project billing
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You have billed the project for time and material.