Advanced BillingLesson 3

Billing Projects for Progress and Time and Material

Back to P120: Project Accounting Basic Scenarios

Lesson 3: Billing Projects for Progress and Time and Material

Part 2: Advanced Billing

The billing procedure in Acumatica ERP is based on billing rules that specify the conditions for which the system

calculates the amounts to be billed to customers. This lesson describes how to configure complex billing rules for
projects that require billing both for progress and for time and material.

Billing Projects: To Configure a Combined Billing Rule

The following implementation activity will walk you through the process of configuring a combined billing rule so
that you can bill a fixed-price project in two stages based on the time and material that was spent.

Story

Suppose that the Thai Food Restaurant customer has ordered a juicer from the SweetLife Fruits & Jams company,
along with the installation and training of the company's employees on operating the juicer. Both companies have
agreed that the customer will be billed in two stages. In the first stage, the customer will pay for the juicer, and for
40% of the services, which have a fixed price. In the second stage (aer the project is completed), the customer will
pay for the remainder of the services.
Acting as the project accountant, you need to configure the appropriate billing rule.

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 MATERIAL, LABOR, and SUBCON account groups of the expense type have been configured. These account groups will aggregate the expenses posted to particular GL accounts.

Process Overview

You will create a combined billing rule on the Billing Rules (PM207000) form to be able to bill different stages of a
project with different billing settings.

Step 1: Configuring a Billing Rule and a Step with Billing for Progress To configure a billing rule and add a step to bill the customer for progress, do the following:

  1. On the Billing Rules (PM207000) form, create a new record.
  2. In the Summary area, specify the following settings:
  • Billing Rule ID: COMBRULE
  • Description: Combined billing in two stages
  1. In the Billing Steps table, add a row for the billing rule step, and specify the following settings in the row:
  • Active: Selected
  • Step ID: 10
  • Description: Billing for progress
  1. 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: Progress Billing
  • 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 Description Formula: =PMBudget.Description
  • Use Sales Account From: Account Group
  • Create Lines with Zero Amount and Quantity: Cleared
  1. Save your changes.

Step 2: Configuring a Billing Rule Step to Bill for Materials To add and configure a step to bill the customer for materials, do the following:

  1. While you are still reviewing the COMBRULE billing rule on the Billing Rules (PM207000) form, in the Billing Steps table, add a row for the second billing rule step, and specify the following settings in the row:
  • Active: Selected
  • Step ID: 20
  • Description: Material cost plus markup
  1. 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: MATERIAL This step of the billing rule will be used for processing project transactions related to the account group, which includes expenses for materials.
  • Rate Type: Empty This step of billing rule does not use billing rates, so the rate type is not needed.
  • 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.BillableQty*1.25 The invoiced amount is calculated as the amount of a project transaction multiplied by the fixed 1.25 coefficient.
  • Line Description Formula: =PMTran.Description
  • Use Sales Account From: Inventory Item
  • Create Lines with Zero Amount and Quantity: Cleared
  1. Save your changes.

Step 3: Configuring a Billing Rule Step with Billing for Labor To add and configure a step to bill the customer for employees’ labor, do the following:

  1. While you are still reviewing the COMBRULE billing rule on the Billing Rules (PM207000) form, in the Billing Steps table, add a row for the third step of the billing rule, and specify the following settings in the row:
  • Active: Selected
  • Step ID: 30
  • Description: Employee labor
  1. 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 employee labor expenses.
  • Rate Type: Empty This step of billing rule does not use billing rates, so the rate type is not needed.
  • 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 holds 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 the fixed 1.25 coefficient.
  • Line Description Formula: =PMTran.Description
  • Use Sales Account From: Inventory Item
  • Create Lines with Zero Amount and Quantity: Cleared
  1. Save your changes.

Step 4: Configuring a Billing Rule Step with Billing for Subcontractors’ Services To add and configure a fourth step to the billing rule for billing customers on services provided by subcontractors, do the following:

  1. While you are still reviewing the COMBRULE billing rule on the Billing Rules (PM207000) form, in the Billing Steps table, add a row for the fourth step of the billing rule, and specify the following settings in the row:
  • Active: Selected
  • Step ID: 40
  • Description: Re-invoice subcontractor services
  1. 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: SUBCON This step of the billing rule will be used for processing project transactions related to the account group, which includes services provided by subcontractors.
  • Rate Type: Empty This step of billing rule does not use billing rates, so the rate type is not specified.
  • 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 the fixed 1.25 coefficient.
  • Line Description Formula: =PMTran.Description
  • Use Sales Account From: Inventory Item
  • Create Lines with Zero Amount and Quantity: Cleared
  1. Save the billing rule.
    You have configured the combined billing rule that can be used for billing the first part of project for progress and the rest of the project for time and materials. To bill the project by using this rule, you need to assign the rule to the project tasks.

Billing Projects: To Bill a Project with a Combined Rule

This activity will walk you through the process of billing a project by using a combined billing rule that depends on the progress stage being billed.

Story

Suppose that the Thai Food Restaurant customer has ordered a juicer from the SweetLife Fruits & Jams company, along with installation of the juicer and training of the company's employees on operating the juicer. The SweetLife project accountant has created a project to handle the tracking and billing of the juicer and the provided services. Both companies have agreed that the customer will be billed in two stages. At the end of the first stage, the customer will pay for 40 percent of the services, which have a fixed price, and for the juicer (which is installed during the first stage). At the end of the second stage (aer the project is completed), the customer will pay for the remainder of the project. Then suppose that on 1/30/2025, the juicer has been delivered and installed. Acting as the project accountant, you need to update the progress of the project, process the issue of the juicer, and bill the customer for the first stage of 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 following features have been enabled:
  • Project Accounting, which provides support for the project accounting functionality
  • Inventory and Order Management feature, which provides the ability to maintain stock items and create and process sales orders and purchase orders
  • On the Customers (AR303000) form, the TOMYUM customer has been defined.
  • On the Projects (PM301000) form, the TOMYUM2 project has been created for this customer, and two project tasks (PHASE1 and PHASE2) have been added. 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 Billing Rules (PM207000) form, the COMBINED billing rule has been created; it has been assigned to both project tasks of the TOMYUM2 project on the Projects form.
  • On the Warehouses (IN204000) form, the EQUIPHOUSE warehouse has been created, and the TOMYUM2 location has been created and associated with the PHASE1 task of the TOMYUM2 project.
  • On the Stock Items (IN202500) form, the JUICER15 stock item has been defined.

Process Overview

You will issue the stock item for the project on the Issues (IN302000) form to record the sale of a juicer. You will
update the progress of the project on the Projects (PM301000) form and run the project billing. You will review the
created pro forma invoice and release it on the Pro Forma Invoices (PM307000) form to create the corresponding
accounts receivable invoice. On the Invoices and Memos (AR301000) form, you will review the prepared accounts
receivable invoice, and release the invoice. Finally, you will review the project to make sure that the release of the
AR invoice has caused the system to correctly update the actual amounts of the project.

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: Issuing a Stock Item for the Project To directly issue a stock item for the project (to record that the juicer that has been delivered to the customer) and capture the issued cost on the project, do the following:

  1. On the Issues (IN302000) form, add a new record.
  2. In the Summary area, type A juicer for Thai Food Restaurant in the Description box.
  3. On the table toolbar of the Details tab, click Add Row, and specify the following settings in the row:
  • Tran. Type: Issue
  • Inventory ID: JUICER15
  • Warehouse: EQUIPHOUSE (inserted automatically)
  • Location: TOMYUM2
  • Quantity: 1
  • Unit Price: 2,500
  • Reason Code: INISSUEPROJ
  • Inventory Source: Project Stock (inserted automatically)
  • Project: TOMYUM2 (inserted automatically)
  • Project Task: PHASE1 (inserted automatically)
  • Cost Code: 00-000 In the footer of the table, the system shows that one juicer is available for issue for the selected project and warehouse location. Unit Cost in the line is $2,000. This is the cost at which the item will be issued from inventory.
  1. Save the inventory issue, and release it.
  2. On the Projects (PM301000) form, open the TOMYUM2 project.
  3. On the Cost Budget tab, make sure that the line with the PHASE1 project task and the JUICER15 inventory item was created based on the inventory issue you have released. The Actual Quantity is 1 because you have issued one juicer from the project-specific location. The Actual Amount of the line is $2,000, which is the amount of the related project transaction (that is, the cost of the juicer).
  4. On the table toolbar of the tab, click View Transactions. On the Project Transaction Details (PM401000) form, which opens, review the only row in the table. The Amount of the transaction is $2,000, the Billable check box is selected, and the Billed check box is cleared. This transaction will be billed by the time and material step of the billing rule assigned to the PHASE1 project task.
  5. Close the form to return to the Projects form.

Step 2: Billing the Project To update the progress of project completion and bill the project, do the following:

  1. While you are still viewing the TOMYUM2 project on the Projects (PM301000) form, on the Revenue Budget tab, specify 40 as the Completed (%) of each revenue budget line. Notice that the system calculates the Pending Invoice Amount for each line ($112 for the PHASE1 project task, and $160 for the PHASE2 project task). This pending amount will be billed by the progress billing step of the billing rule assigned to the PHASE1 and PHASE2 project tasks.
  2. Save your changes to the project, and on the form toolbar, click Run Billing. The system creates a pro forma invoice and opens it on the Pro Forma Invoices (PM307000) form. Review the invoice details and notice the following:
  • On the Progress Billing tab, the Amount to Invoice in each line is equal to the Pending Invoice Amount of the corresponding revenue budget line of the TOMYUM2 project on the Revenue Budget tab of the Projects form.
  • On the Time and Material tab, the system has generated a line with the JUICER15 item. The Amount to Invoice in the line is the price of the juicer ($2,500).
  1. On the form toolbar, click Remove Hold to assign the pro forma invoice the Open status, and then click Release to release the pro forma invoice. The system creates the accounts receivable invoice based on the pro forma invoice and assigns the Closed status to the pro forma invoice.
  2. On the Financial tab, click the AR Ref. Nbr. link to open the accounts receivable invoice that was created on the Invoices and Memos (AR301000) form. The AR invoice has three lines: two lines with the Inventory ID column empty that have been generated with the progress billing step of the billing rule (in the amounts of $112 and $160), and a line generated by the time and material step with the JUICER15 item and the amount of $2,500.
  3. On the form toolbar of the Invoices and Memos form, click Remove Hold to assign the invoice the Balanced status, and then click Release to release the accounts receivable invoice.
  4. On the Projects form, open the TOMYUM2 project, and on the Balances tab, review the amounts in the budget lines that have been updated as the result of the billing (see the following screenshot). Actual Amount for the REVENUE group is $2,772, which is the sum of the price of the juicer ($2,500) and 40 percent of the price of the services ($112 + $160); Actual Amount for the MATERIAL group is $2,000, which is the cost of the juicer.
        Figure: The project balances

    You have finished billing the project with a combined billing rule.