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Hi Guys
We have this scenario in jobs where each job is divided into phases and under each phase you have tasks which are revenue(billable) only and other tasks budget only. I couldn't find a way to align revenue and costs within a phase so ideally i want to mark all the tasks as completed and allocate costs and revenues from WIP to P&L. This wasn't possible because job status is only available on job header level so each task cannot be marked as completed. Now we cannot use POC as when a phase is completed from cost perspective we can go over/under budget hence this cannot be used as "completion" criteria. I'm looking for ideas on how to create multiphase projects and a method to recognize costs and revenues at the end of the phase as opposed to the whole job.
Thanks
Samantha,
You are correct that out-of-the-box the planning lines only reflect if you are overdue (late) and the Job Tasks Line do not have a mark complete flag. I have not seen a feature, with an APP, but you might check around with APP source if a Job APP offers this. Overall, the WIP Methods and recognition and reporting is something you should review and then align with. When I create Jobs I make sure I have my Start and End Dates for Tasks and Planning Lines and create reports to monitor and report against. This does help me see which Task/Planning Lines are open or completed, against Actual postings. Yes, these reports are external (i.e. Jet Reports or Power BI). Below is a summary of WIP Methods and Progress.
Work In Progress (WIP) is the way to estimate the financial value of jobs in the General Ledger during the progress of the job. WIP is represented by a temporary transit account that shows the intermediate stage of costing, in other words, contains the accumulated costs that will be allocated to the G/L accounts when the job is completed. When a user does not post WIP, it means that the General Ledger will show expenses and revenue when they occur. In many cases, there is a time span between posting of the job expenses and the job’s revenue (invoicing). During a job’s progress, where only expenses have been posted, the
financial statement of the company will be inaccurate. Calculating and posting Work In Progress can help eliminate such inaccuracy. In the course of a job, WIP and recognition are calculated and posted to G/L in
between posting usage and invoicing the job to the customer. If this is a long term project, WIP and recognition can be calculated and posted to G/L more than once. After the job receives the status Completed, the accountant must calculate and post WIP and recognition for the completed job to G/L again. It is necessary to reverse the last recognition posting for the job and post the final recognized profit for the job (invoiced sales value less the total usage cost). But the job can still be reopened to redo calculations if necessary. The marked section in the following diagram depicts how WIP is calculated and posted in the general job workflow.
As a job progresses, materials, resources, and other expenses are consumed and must be posted to the job. Work in Process (WIP) is a feature that enables you to estimate the financial value of jobs in the general ledger while the jobs are ongoing. In many cases, you might post expenses for a job before invoicing a job. When only expenses have been posted, your financial statement will be inaccurate.
To track the value in the general ledger, you can calculate WIP and post the value to the general ledger.
Business Central supports the following methods of calculating and recording the value of work in process.
| WIP Method | Calculation Formula | Calculation Description |
|---|---|---|
| Cost Value | Recognized Revenue = Billable Invoiced Price Estimated Total Costs = Billable Total Price x Budget Cost Ratio WIP Costs = (Percentage of Completion - Invoiced %) x Estimated Total Costs Percentage of Completion = Usage Total Costs / Budget Total Costs Invoiced % = Billable Invoiced Price Billable Total Price Recognized Costs = Usage Total Costs - WIP |
Cost value calculations start by calculating the value of what has been provided by taking a proportion of the estimated total costs based on percentage of completion. Invoiced costs are subtracted by taking a proportion of the estimated total costs based on the invoiced percentage. This calculation requires that the billable total price, budget total price, and budget total costs be correctly entered for the whole job. |
| Cost of Sales | Recognized Revenue = Billable Invoiced Price Recognized Costs = Budget Total Cost x Invoiced Percentage Invoiced % = Billable Invoiced Price / Billable Total Price (Invoiced % exists as column on job task lines) WIP Costs = Usage Total Costs – Recognized Costs |
Cost of sales calculations begin by calculating the recognized costs. Costs are recognized proportionally based on budget total costs. This calculation requires that the billable total price and budget total costs be correctly entered for the whole job. |
| Sales Value | Recognized Costs = Usage Total Costs Recognized Revenue = Usage Total Price x Expected invoicing ratio Cost Recovery % = Billable Total Price / Budget Total Price WIP Sales = Recognized Sales - Billable Invoiced Price |
Sales value calculations recognize revenue proportionally based on usage total costs and the expected cost recovery ratio. This calculation requires that the billable total price and budget total price be correctly entered for the whole job. |
| Percentage of Completion | Recognized Costs = Usage Total Costs Recognized Revenue = Billable Total Price x Percentage of Completion Percentage of Completion = Usage Total Costs / Budget Total Costs (Referred to as "Cost Completion %" on job task lines) WIP Sales = Recognized Sales - Billable Invoiced Price |
Percentage of completion calculations recognize revenue proportionally based on the percentage of completion, that is, usage total costs vs. budget costs. This calculation requires that the billable total price and budget total costs be correctly entered for the whole job. |
| Completed Contract | WIP Amount = WIP Cost Amount = Usage (Total Cost) WIP Sales Amount = Billable (Invoiced Price) |
Completed contract does not recognize revenue and costs until the job is complete. You may want to do this when there is high uncertainty around the estimates of costs and revenue for the job. All usage is posted to the WIP Costs account (asset) and all invoiced sales are posted to the WIP Invoiced Sales account (liability) until the job is complete |
As a job progresses, materials, resources, and other expenses are consumed and must be posted to the job. Work in Process (WIP) is a feature that enables you to estimate the financial value of jobs in the general ledger while the jobs are ongoing. In many cases, you might post expenses for a job before invoicing a job. When only expenses have been posted, your financial statement will be inaccurate.
To track the value in the general ledger, you can calculate WIP and post the value to the general ledger.
You can calculate WIP based on the following:
If you want to view the result using a different method, you can change the method and calculate WIP again. There is no limit to the number of times that you calculate WIP. WIP is only calculated, it does not get posted to the general ledger. After you have calculated WIP, you can post to the general ledger.
You can create a job WIP method that reflects the needs of your organization. After you have created it, you can set it as the default job WIP calculation method that will be used in your organization.
Note
After you have used your new method to create WIP entries, you cannot delete the method or modify it.
When you create a new job, you must specify which job WIP method that applies. In some cases, which Job WIP method that you can use has been set up for you as a default.
You can determine the WIP amount that is to be posted to balance sheet accounts for the period end reporting. You use the Job Calculate WIP batch job to do this.
Note
The batch job only calculates the WIP. It is not posted to the general ledger. To do so, you must run the Post WIP to G/L batch job when you have calculated the WIP. For more information, see the following procedure.
When you have calculated WIP, you can post it to balance sheet accounts for the period end reporting. You use the Job Post WIP to G/L batch job to do this.
You can view job usage up to the completion of a project in one step. To do so, you use the Job Calc. Remaining Usage batch job for all the tasks up to and including the end of a job.
This lets you track and compare your original estimates against actual results and make modifications or new entries as needed. For example, you may have estimated that a job required 10 hours, and to date, it has taken 15 hours. You can add the extra five hours to the existing journal line or create a new journal line to report these five hours as overtime, which is another work type. The appropriate cost and price are calculated, and you can then post to the journal.
Note
Item entries create item ledger entries and reduce the inventory quantity. The Post Inventory Cost to G/L batch job transfers the cost from inventory to the general ledger. Resource entries create resource ledger entries.
All job-related entries are recorded in job registers and are numbered sequentially, starting with 1. From the job register, you can get an overview of all job ledger entries.
On the Job Ledger Entries page you can review the entries that are associated with any job.
Hope this helps.
Thanks,
Steve
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