Calculation of Billing Amounts

Together, the project type and the accounting method determine the level of detail included on invoices.

This topic provides the formulas the program uses to calculate invoice detail amounts according to project type and accounting method, and notes the treatment of revenue amounts in a multicurrency system.

Time and Materials

For all time and materials invoices, the billing amounts are calculated when you post transactions; these are the amounts that are used for the billing details.

For each billable transaction, the program calculates the billing amount as follows:

The billing amount is converted to functional currency using the current exchange rate at the time of invoicing. The cumulative amounts billed for the project appear as Actual Revenue on the project's Totals tab in both functional and source currencies. The total billing amounts from unbilled transactions appear in the customer currency as Expected Billings on the project's Activity tab.

Fixed Price Projects

Project and Job Costing calculates invoice amounts in the customer currency for fixed price projects.

The invoiced amount for a project is converted to functional currency using the current exchange rate, and is displayed as Actual Revenue on the project's Totals tab. Current billings (from unposted worksheets and from invoices in Accounts Receivable) are shown in the customer currency on the project's Activities tab.

Accrual-basis and billings and costs

For fixed price projects that use the accrual-basis or billings and costs accounting method, the program calculates a summary invoice detail for each billable transaction, as follows:

Completed Project

For fixed price projects that use the completed project accounting method, Project and Job Costing produces invoices only when the project is marked Complete. The program creates one invoice detail for a project's fixed price amount (in the customer currency).

Project Percentage Complete

For fixed price projects that use the project percentage complete accounting method, the program creates an invoice for each project using the current percentage complete calculated for the project. It calculates the billing amount as follows:

Cost Plus Projects

The current exchange rate is used to convert the functional billing amount to customer currency. The cumulative amount billed is shown in both currencies on the project Totals tab.

Current billings for the project are shown in the functional currency on the project's Activity tab.

Percentage Complete Accounting Methods

For cost plus projects that use a percentage complete accounting method, the program first calculates the current percentage complete, then applies that percentage to the revenue estimate for the project (or category, for the category percentage complete method) to determine the amount to bill.

Note that in multicurrency systems, the program first calculates the billing amount in functional currency (using the functional revenue estimate), and then applies the current exchange rate to convert the amount to the customer currency.

The cumulative billed amounts are shown in both currencies on the project's Totals tab. Current billings for the project are shown in the functional currency on the project's Totals tab.

The following sections provide the formulas used to calculate the amount to bill for each accounting method, given the current percentage complete.

Note that the estimates and billed amounts used in these formulas are in functional currency.

Total cost percentage complete

For projects that use the total cost percentage complete accounting method, Project and Job Costing calculates an invoice detail for each project as follows:

Labor hours percentage complete

For cost plus projects that use the labor hours percentage complete accounting method, the program calculates an invoice detail for each project as follows:

Category percentage complete

For cost plus projects that use the category percentage complete accounting method, the program calculates an invoice detail for each project category:

Billings and costs

For projects that use the billings and costs accounting method, the program calculates one detail line for each project category as follows:

Accrual-basis

For cost plus projects that use the Accrual-basis accounting method, the program calculates an invoice detail for each project category as follows:

In a multicurrency system, Project and Job Costing sends all billing amounts to Accounts Receivable in each customer's currency. To determine the amounts to invoice in the customer currency, Project and Job Costing:

• For time and material projects, uses the billing amount specified in the customer currency from each transaction.

• For cost plus projects, calculates the amount to bill in functional currency, then converts this amount to the customer currency.

• For fixed price projects, calculates the amount to bill in the customer currency. (The fixed price for the project is given in the customer currency.)

When you post the invoices, Accounts Receivable calculates and sends billing amounts in both customer and functional currencies to Project and Job Costing. The project is updated in both currencies.