Project Advance Payment - Ax 2012 R3

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Posted on by Anandh

I have an scenario in of our clients place, where they used to take 5 to 10 % of the project contract value as advance payment from the customer. This can be handled from the Advance payment functionality of the Project Module. I am able to settle off the prepayments in the subsequent invoices if we do not do the project estimate

When we run the Project estimate on an periodic basis (monthly)y, prepayment amount do not get displayed for settling off when we raise the future invoices

Can someone suggest a way to over come this issue

Thanks

Anandh

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André Arnaud de Cal... 301,082 Super User 2025 Season 2 on at

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Hi Anandh,

The project estimates are related to fixed-price projects (or investment). Only On account transactions are used for invoicing this type of projects. The first On account transaction can be used to invoice a first installment an so have a 5-10% invoiced. Or are you meaning that you also want to use prepayments without invoicing for fixed price projects?

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Anandh on at

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Hi Andre,

We have this scenario for the fixed price projects and I have created milestone billing for this project and have not included advance payment (10% advance) in the milestone billing.

I have made use of Customer advance from the project details and made the invoice for this prepayment.Run the monthly estimate and posted the transactions for revenue accrued

In the every milestone billing this (advance payment) should be deducted on a proportionate basis (10%) on the invoice amount. When we are trying to do the invoice for this first milestone billing, we are not able to select the prepayment to set off

Hope the scenario is clear.

Thanks

Anandh

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André Arnaud de Cal... 301,082 Super User 2025 Season 2 on at

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Hi Anandh,

I do understand your scenario. I have not used the advance payments in this way before. I can't say if it should work with fixed price projects or not as these are using own installments.

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Anandh on at

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Hi Andre

Thanks for your support. I do believe this scenario is not supported in Fixed Price Projects of Ax.

In my opinion as we are taking the prepayment this should not be treated as revenue and it should have a separate GL such as Advance from the client and it should be credited and customer balance should be debited.

When running the monthly estimate this prepayment should be not treated as revenue and when the invoices

are raised based on achieving milestones this prepayment amount should be available for deduction.

Now in the present case even the prepayment is being posted to Project - Invoiced on account (Cr) and debited to to Customer Balance and it is treated as revenue. This may suit the time and material projects but not the fixed price projects

Regards

Anandh

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André Arnaud de Cal... 301,082 Super User 2025 Season 2 on at

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Hi Anandh,

As workaround, you can probably setup a sub project of time and material to handle the prepayment. When invoicing milestones you have to do some manual actions then.

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Joel Leichty 466 on at

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Perhaps I'm not understanding the scenario, but I agree with Andre that this should simply be a part of the on-account schedule for a fixed-price project. There's not really any such thing as a "Prepayment" on a fixed-price project since all the invoicing goes to a Balance sheet account.

Just put in your on-accounts:

10% up front ($10,000)

40% project start ($40,000)

50% project complete ($50,000)

Then when you run revenue recognition it will be based on the full $100,000 contract.

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David Massey on at

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This is a common misconception of Fix Price revenue recognition. For a fixed price project, when you invoice the customer does not determine how much revenue is recognized. Revenue is recognized base on percentage completed or completed contract.

This differs from a contract which has a fixed amount bid, but revenue is being recognized as invoiced. Or the invoice amount is placed as unearned income to be offset on latter invoice. This is the typical customer advance scenario.

Customer advances are not supported on Fixed Price projects. Even if it was supported, there is no process for determining how much of the customer advance should be used on any given milestone invoicing. Revenue would still be recognized by the Fixed Price contract type.

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Anandh on at

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Hi Andre,

Thanks for suggesting this workaround. It sounds great and able to meet the clients requirement.

I complete agree with David Massey Points about the limitation of fixed price projects in Ax as we cannot set off prepayments with the milestone payments

Thanks

Anandh

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