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Accrued revenue for time and material projects

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Hello everyone,

We would like to start using the accrue revenue functionality in the Project Management and Accounting module.

From what I was able to see online, it is necessary to have accrue revenue checkbox enabled for the specific project group as well as on the line property.

Both of these things are done (attached print screens).

However, when posting a billable hour transaction, it does not appear on Accrue revenue -> Select (when inserting the necessary parameters).

Is there something missing?

Regards,

Teodora 6648.project-group.png

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Ludwig Reinhard Microsoft Employee on at

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Hello TeodoraMK,

The setup looks ok.

Can you open the voucher of the posted transaction to see the accrued amounts posted?

Best regards,

Ludwig

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Hi Teodora!

The context is a still a bit unclear to me but i can comment if it helps.

Accrual is done for revenues belonging to the other months than the current. If you have such case in Hours, i suggest the use of Manage-->Service subscription process like other projects. I don't think Hour journal let accrue revenue.

Secondly, these project group settings do not matter as i accrue projects all the time but have these settings for none.

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Ludwig Reinhard Microsoft Employee on at

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Hello TeodoraMK,

Many thanks for this screenprint.

What you see in this screenprint is a transaction that accrues the sales amount at the time your project hours are posted.

Unfortunately, your cost price for the hours recorded is $0.

For that reason, you cannot see the cost posting and the voucher only debits a WIP account and credits a revenue accrual account.

At the time you invoice the customer this transaction is reversed and the accrued revenue is replaced with the ordinary revenue account that is setup in your project module.

Best regards,

Ludwig

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Helo Ludwig,

Thank you for the clarification.

Since we are not using cost prices for resources, but rather only sales prices, does this mean the functionality for accrue revenue cannot be used?

I added a cost price for a resource and added a new hour transaction, but the vouchers remained the same.

Should I add some additional account in the ledger posting setup (besided accrued revenue - sales value and WIP - sales value)

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Ludwig Reinhard Microsoft Employee on at

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Good Morning ToedoraMK,

You can use this feature even if you don't have a cost price setup.

What you need to be aware of is that this posting makes you richer.

In other words, you post an accrual on a P&L account that increases your profit but you don't have an offsetting cost - at the project level - and as a result (a) your project will look highly profitable because the costs for the hours are not shown and (b) your profit increases immediately due to the P&L posting and might cause higher profit tax payments.

Hope this helps clarifying things.

Best regards,

Ludwig

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Good morning Ludwig,

Thanks again for the clarification.

We are aware of the fact that without cost prices in the system, the projects seem more profitable than they actually are. There have been ongoing discussions with management regarding this topic, to have the costs entered in the PM module for a more realistic picture.

However, I still do not see the issue as to why we cannot use this functionality currently with only sales prices.

Meaning, do we need to change something in the set up or maybe something else?

Regards,

Teodora

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Hello hafasn,

Thank you for the reply.

The thing is not all of our projects are subscription based, we have plenty that are regular time and material projects that invoice hours. Nevertheless, could you tell me a bit more about the accrual of revenue for subscriptions?

I created one for January, but it did not appear on the accrue revenue select transactions.

Regards,

Teodora

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Sure,

Acruing revenue for subscriptions could be either routine subscriptions which you need to accrue each month, these could be done through Service Management module Perform periodic tasks-->Service subscriptions-->Accrue subscription revenue for the respective month.

Secondly if you invoice a subscription retroactively or you create a credit note for an invoiced subscription, then through Project invoices, open invoice, look for transaction ID row by row for both invoices and then again Service Management module -->Inquiries and reports-->Subscription fee transaction inquiry-->match the Transaction ID and-->Accrual Periods,

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Ludwig Reinhard Microsoft Employee on at

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Hi Teodora,

I did not say that you cannot use this feature if you don't have cost prices :-)

Maybe I did not express things clear.

You can of course use it without cost prices only for sales related accruals.

Best regards,

Ludwig

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