Project Billing and RetainageLesson 10

Billing Projects for Progress by Quantity and Amount

Back to V300: Project Accounting for Construction

Lesson 10: Billing Projects for Progress by Quantity and Amount

Part 2: Project Billing and Retainage

If you need to bill customers for the services provided as a part of a project, you can generate invoices based on the pending quantities or pending amounts. This lesson describes how you can bill the projects by progress based on the pending quantities.

Progress Billing: General Information

With progress billing in Acumatica ERP, you run project billing to automatically generate project invoices based on
the progress recorded for the project.

Learning Objectives

In this lesson, you will learn how to do the following:
  • Configure a progress billing rule
  • Update the project progress to make it 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 based on the current progress of the project. The
timing of project billing depends on the project billing period defined for the project.

Configuration of a Billing Rule Step

Each billing rule can include only one step of the Progress Billing type. For the billing rule step of this type, you can
define the following settings:
  • A formula to define the description of the invoice and another formula to define the description of each invoice line, to make the system compose these descriptions dynamically during the billing process.
  • 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 of the steps of the billing rules to which the project tasks refer.

The Progress Billing Process

Progress billing is a simple billing workflow for the projects that are gradually billed at a fixed contract amount. Progress billing does not involve project transactions. To bill a project task by its progress, you need to create a billing rule on the Billing Rules (PM207000) form and configure a step of the Progress Billing type in this rule. Then you assign the configured billing rule to project tasks on the Tasks tab of the Projects (PM301000) form.

          If a project is billed with a billing rule that includes only a Progress Billing billing step, during the
          billing process, the system ignores any unbilled project transactions.

The progress billing procedure could be initiated for a project if either of the following is true:

  • It has at least one revenue budget line with billable project revenue.
  • It has pending values of 0 if the progress billing step of the billing rule assigned to any project task has the Create Lines with Zero Amount and Quantity check box selected on the Billing Rules form. For more information, see Billing with a Direct AR Invoice: General Information. Each revenue budget line is billed based on amount or quantity, depending on the option selected in the Progress Billing Basis column on the Revenue Budget tab of the Projects form as follows:
  • For a line billed by amount, you need to specify a nonzero amount, which may be a negative amount, in the Pending Invoice Amount column. For these lines, the Pending Invoice Quantity, Dra Invoice Quantity, and Actual Quantity values are always 0.
  • For a line billed by quantity, you need to specify a nonzero quantity in the Pending Invoice Quantity column. In this case, the system will calculate the Pending Invoice Amount of the line as the pending invoice quantity multiplied by the unit rate specified in the line. The system will calculate the percentage of line completion (Completed (%)) based on the specified values. You can also specify the Completed (%) value on the Revenue Budget tab for the needed revenue budget lines to indicate that the project tasks are being performed. The system will calculate the pending invoice values by using the following formulas: Pending Invoice Amount = Revised Budgeted Amount * ( Completed (%) / 100 ) - Draft Invoice Amount - Actual Amount Pending Invoice Quantity = Revised Budgeted Quantity * ( Completed (%) / 100 )
  • Draft Invoice Quantity - Actual Quantity
            Project-related invoices, debit memos, and credit memos that have been created manually on the
        Invoices and Memos (AR301000) form are not included in pending invoice quantities and amounts.

    You 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 billed amount is positive) or credit memo (if the billed amount is negative). For more information about credit memos, see Project Invoice Correction: Credit Memos for Projects. The system creates a project invoice with the unit prices, amounts, and quantities copied from the Unit Rate, Pending Invoice Amount and Pending Invoice Quantity columns of the Revenue Budget tab of the Projects form for the corresponding revenue budget lines. If the project billing is performed by using the pro forma invoice workflow, the pro forma invoice lines that are produced by the progress billing steps are shown in the prepared pro forma invoice on the Progress Billing tab of the Pro Forma Invoices (PM307000) form. During the billing process, the system groups the billable amounts into 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. Once an invoice is prepared, the Dra Invoice Amount and Dra Invoice Quantity of the revenue budget lines are updated with the amount and quantity for which the invoice has been prepared. The Pending Invoice Amount and Pending Invoice Quantity values become 0. If you manually adjust the Amount to Invoice of a pro forma invoice line, the system automatically recalculates the Total Completed (%) in this line. This is the percentage of the revised budgeted amount of the revenue budget line of the project that has been invoiced by all the pro forma invoices of the project, including the current one. However, the system does not update the Completed (%) of the corresponding revenue budget line on the Revenue Budget tab of the Projects form accordingly. Also, the system does not update the Completed (%) of the revenue budget line if the related pro forma invoice with the corresponding progress billing line is deleted. When you release a pro forma invoice and the system creates the corresponding accounts receivable invoice, the system copies the values in the Amount to Invoice column from the Progress Billing tab of the Pro Forma Invoices form to the corresponding lines of the accounts receivable invoice on the Details tab of the Invoices and Memos (AR301000) form.

Progress Billing: To Bill a Project by Quantity and Amount

This activity will walk you through the process of performing progress billing for a project based on the pending amounts and quantities.

Story

Suppose that ToadGreen Building Group, a general contractor, is building an Italian restaurant for its customer, the Italian Company. A ToadGreen manager has agreed upon a budget with the customer and decided that the project manager will bill the customer monthly based on the progress of work for each project task during the billing period. The work on the project starts on March 1, 2025. At the start of the project, the construction project manager made sure that the construction permit was promptly obtained for the construction site, the design plans and specifications were prepared and agreed upon, and the documents for construction insurance have been prepared. Then the construction project manager will bill the customer for the performed work. The customer should be billed as follows:

  • In the amount of $4800 for the work related to obtaining construction permits
  • For 240 working hours spent on preparing design plans
  • For 24 working hours spent on preparing documents for construction insurance Acting as a system administrator, you need to create the new project and make sure that billing settings are specified correctly for the project. Then acting as a construction project manager, you need to record the current progress of the project and perform billing for the first billing period.

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 and Construction features have been enabled.
  • On the Customers (AR303000) form, the ITACOM customer has been created.
  • On the Billing Rules (PM207000) form, the PROGRESS billing rule has been defined. This rule is defined to gradually bill the projects at a fixed contract amount based on the progress of performed work.
  • On the Project Templates (PM208000) form, the PROGRQ project template has been configured with multiple project template tasks, revenue budget lines, and cost budget lines.

Process Overview

Acting as a system administrator, on the Projects (PM301000) form, you will create a new project based on a project
template and review the billing settings that apply to particular revenue budget lines. Then acting as a construction
project manager, you will specify the pending invoice amounts and quantities on the Projects (PM301000) form to
indicate the project's progress and run the project billing. On the Invoices and Memos (AR301000) form, you will
review and release the prepared AR invoice. Finally, you will review the project budget again and make sure that
the project balances have been updated with the actual values.

System Preparation

To prepare to perform the instructions of this activity, do the following:
  1. Sign in to the system as the system administrator by using the ewatson username and the 123 password.
  2. In the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, click the Business Date menu button, and select 3/1/2025 on the calendar.

Step 1: Creating a Project and Specifying Its General Settings To create a new project and specify the basic settings for it, do the following:

  1. On the Projects (PM301000) form, create a new record.
  2. In the Summary area, specify the following settings:
  • Project ID: ITALIANQ
  • Customer: ITACOM
  • Template: PROGRQ
  • Description: Italian Restaurant (South Street)
  1. On the Summary tab, make sure the following settings are specified:
  • Start Date: 3/1/2025
  • Billing Period: On Demand
  • Create Pro Forma Invoice on Billing: Cleared You are clearing this check box because you want to create accounts receivable invoices when you bill the project without the preliminary creation of pro forma invoices.
  1. In the Branch box, specify TBGROUP.
  2. Save your changes to the project.
  3. On the Tasks tab, make sure that the PROGRESS billing rule is assigned to each task. This means that the project will be billed based on the progress that you will specify in the revenue budget lines.
  4. On the table toolbar, click Activate Tasks to activate the project tasks.
  5. On the Revenue Budget tab, make sure that multiple budget lines have been added based on the project template. Also, in the Progress Billing Basis column, notice that the revenue budget has mixed settings. That is some lines will be billed based on the pending amount and other lines will be billed based on the pending quantity.
  6. Save your changes to the project. In the Summary area, notice that it has the In Planning status. 10.On the form toolbar, click Activate to activate the project.

Step 2: Billing the Project Based on Progress To perform progress billing by quantity and amount, while reviewing the project on the Projects (PM301000) form, do the following:

  1. On the Revenue Budget tab, in the line of the table with the 01-300 cost code and the Permit description, enter 2400 in the Pending Invoice Amount column.
  2. In the line with the 01-330 cost code and the Design Fees description, enter 240 in the Pending Invoice Quantity column. The system calculates the line's pending invoice amount to be 5,280 based on this quantity and the unit rate specified in the line.
  3. In the line with the 01-600 cost code and the Insurance description, enter 24 in the Pending Invoice Quantity column. The system calculates the line's pending invoice amount to be 6,000.
  4. In the Summary area, make sure that the Pending Invoice Amount Total is 13,680.00, and save your changes.
  5. On the form toolbar, click Run Billing to bill the project. The system prepares an AR invoice and opens it on the Invoices and Memos (AR301000) form. The AR invoice includes three lines on the Progress Billing tab. The first line was billed based on amount, so the quantity in this line is 0, and the Ext. Price column shows the Pending Invoice Amount copied from the respective revenue budget line. In the second and third lines, the Quantity column shows the Pending Invoice Quantity copied from the respective revenue budget line, and the Ext. Price for each line is calculated as the unit price in this line multiplied by the quantity.
  6. On the form toolbar, click Remove Hold to assign the accounts receivable invoice the Balanced status.
  7. On the form toolbar, click Release to release the invoice.
  8. On the Projects form, open the ITALIANQ project, and on the Revenue Budget tab, review the actual values in the budget lines that have been updated as the result of the billing (see the following screenshot). Figure: The updated values of the project revenue budget
    You have finished billing the project's progress based on the quantities and amounts in the budget lines.