Commited Cost for Prepayment

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Posted on by Abishek

All,

I made a PO and assigned 50% prepayment for Project X. Now I want to see only 50% prepayment amount in Committed cost for that Project X. Right now I see the Full amount of PO in Committed cost. Is there any parameters that I need to set up? or Anything Please help me.

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Ludwig Reinhard Microsoft Employee on at

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Hello Abishek,

This is not possible in my opinion. Does it actually make sense trying to include a prepayment as cost when the prepayment made is being deducted later on?

Best regards,

Ludwig

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Abishek on at

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Hello ludwig,

Yeah it doesnt but my requirement is the prepayment cost will be invoiced to vendor before receiving the PO. The finance team wants to see that prepayment amount as committed cost for a Project so that they can charge for that amount to customer. Thanks for the reply ludwig.

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Mohammed Atef Rasheed 2,475 on at

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Dear Abishek,

committed costs will show only the costs that not yet posted - for many source like PO and PR - and this is not related to advance payment.

so the full amount of PO appears as committed costs and this is aligned with the financial term of committed cost.

please clarify more about requirements so we may provide you a solution or workaround for the requirement.

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David Massey on at

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This is mixing concepts. Committed costs are amount which you are expected to pay. e.g. cash outflow. The amounts to bill a customer are handle differently depending on a number of factors: pricing schedules, Not-to-Exceed constraints, Fixed bid contracts. You will not be able to create a billable until the vendor invoice is received in a typical Time and Material project. You can create a Cash advance to reconcile against the vendor invoice against.

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Ludwig Reinhard Microsoft Employee on at

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Good Morning Abishek,

Agree with David. Things seems a bit mixed in regards to committed costs, cash flows and things you can charge.

There might, however, be a workaround depending on how you handle prepayments.

Q1: Do you use the standard PO prepayment functionality to account, record and pay for prepayments your vendors ask for?

Q2: Assuming that you use this functionality, can you alternatively make use of dummy items that you use for incorporating PO related prepayments? If you make use of those dummy items you should be able to see the related amount as committed costs and can charge it to your project customers. I cannot assess whether this makes sense or is a common business practice in your business environment but technically this workaround should be able to help.

Would be great if you could test in a demo/test environment and let us know the outcome.

Best regards,

Ludwig

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Abishek on at

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Thanks all for responding.

Ludwig we use standard PO prepayment functionality. And I will close this discussion here because we have told finance and project department guys that this doesnt make sense.So, they will use the invoice as evidence to charge the customer.

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