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Project Under Billing & Over billing Setup based POC

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Posted on by CU07101257-0

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Hi All,

How can setup Project Under Billing & Over billing Setup based Completed Percentage ( POC) in fixed price project.

An under billing, means that the percentage of completion method arrives at a higher amount of earned revenue than what has actually been billed to customer. This under billing is carried on a balance sheet as an asset.

An overbilling, means that the billing is higher than the amount of revenue recognized according to the percentage of completion method.Overbillings on their balance sheet as a liability

we didn't identify any ledger configuration to set up those accounts in Project Group Ledger settings other than WIP Sales Value.Do we have any option available in Dynamics to move under billing to Asset type a/c and over billing to Liability account.

Regards

Sunil G Kurup

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saurabh bharti 15,039 Moderator on at

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Hi Sunit,

i am not sure in fixed price project you can have billing based on percentage of work completion because that is done usually with time and material project type

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CU07101257-0 130 on at

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Fixed Price project , billing based on billing rules. My question is based on Estimation, system will move accrued sales value and WIP sales value. But if recognized revenue is more than billed amount, then difference need to move to Under billing a/c in Balance sheet asset type. If recognized revenue is less than billed amount, then difference will move to Over billing a/c as liability.

How can we configure those accounts in Project group or ledger settings. Is there any option is available or not?

If not, is there any alternative way to handle this ?

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Community Member on at

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Hi Sunil,

This can be achieve on the ledger posting setup of the Project group by selecting the following set up.

A breakdown of this posting setup can be found at these links:

https://docs.microsoft.com/en-us/dynamicsax-2012/appuser-itpro/examples-posting-fixed-price-projects

https://docs.microsoft.com/en-us/dynamicsax-2012/appuser-itpro/about-the-fixed-price-project-posting-examples

Specifically, Example 5 below. Note that the order of these examples is a bit jumbled on the "about the fixed price project posting examples" page

https://docs.microsoft.com/en-us/dynamicsax-2012/appuser-itpro/posting-example-5-fixed-price-project

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CU07101257-0 130 on at

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Thanks for your reply. Could you please give the ledger account( Sample voucher entry) to understand the transactions. Do we need to configured same account in both Accrued Sales value & WIP sales value. Is it balance sheet account or P&L

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Ludwig Reinhard Microsoft Employee on at

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Hello Sunil,

Can you explain more about this statement?

An overbilling, means that the billing is higher than the amount of revenue recognized according to the percentage of completion method.Overbillings on their balance sheet as a liability

In general, you cannot over/underbill because what you bill is defined in your billing rules as milestone payments.

Let's say 5 mio.

If you create an invoice then there is no effect on your P&L. You debit and credit basically just BS accounts.

The estimate process does the following:

Compare your actual costs to your planned costs and calculate the POC.

This POC is then multiplied with the total of the milestone payments.

Example:

Let's say you spent 400000 out of 1 mio and get a POC of 40%.

40% * 5 mio = 2 mio that will be recognized as revenue by the estimate process.

Hope that clarifies things.

Best regards,

Ludwig

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CU07101257-0 130 on at

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Thanks Ludwig for your reply.

As mentioned by Dan Friedland, milestone invoicing in P&L, but after POC, if recognized revenue more than invoiced amount, balance amount need to move to balance sheet account ( under billing) and vice versa. But I didn't understand the ledger account to configure like Accrued sales value, under billing and over billing account

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Ludwig Reinhard Microsoft Employee on at

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Hi Sunil,

Can you let us know what drives your revenue?

The on-account invoices that you create, the estimate calculations or both?

Best regards,

Ludwig

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CU07101257-0 130 on at

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Estimate(POC) will derive the actual revenue. As of now we are doing through manual JV process.

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Ludwig Reinhard Microsoft Employee on at

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Hi Sunil,

If the estimates determine your revenue then the screenshot shared above from Dan does not fit because it posts the on-accounts to your P&L accounts.

Is it possible that you provide us with a simplified example and list the vouchers that you want to have generated?

This would help a lot in getting the right project group setup.

Best regards,

Ludwig

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