Monday, May 2, 2016

Variable Fees and Project Accounting

Project Accounting allows you to configure fees on a project by project basis, by entering the fees in Cards..Project..Project..Fees. Unfortunately, these fees are bound by a couple different constraints when you go to bill:

1.  Only the amount entered on the card can be billed
2.  The default amount when you bill will be based on how the fee was scheduled on the card

So it requires a fair amount of foresight, and isn't the friendliest method if your fees may vary over each billing cycle.  Additionally, recording fees in this way does not allow you to accrue the fee before billing (unless you use a service fee and/or a fixed price project).

Here  is an alternate method I  use when a client wants to use Time and Materials projects due to their simplicity, but still needs fees to accrue and be variable.

First, you set up a cost category (Cards...Project..Cost Category) with a few specific settings:

1.  The unit cost is zero, profit type is Billing Rate, and the billing rate is $1.00
2.  Populate the Unbilled Accounts Receivable  and Unbilled Project Revenue accounts, as well as the normal AR and Revenue accounts

Then you can assign to a project budget as usual. If the project is set up with a When Performed accounting method, the fee will accrue when entered (that comes next).  If the project accounting method is When Billed, the entry will only influence what is available to be billed.

So to enter the fee, you record a Miscellaneous Log. Enter the amount of the fee to be charged as the quantity on the Miscellaneous Log.  Note that no cost is calculated or posted.  In the screenshot below, the project is set up as When Performed, so note the accrued revenues at the bottom of the entry:

The accrued revenues are posted using the Unbilled AR and Unbilled Project Revenue accounts.  If the project is When Billed, then no accrual occurs but the calculated billing amount (Quantity X $1) will be available to be billed by default in Billing Entry.

Happy project accounting!

Christina Phillips is a Microsoft Certified Trainer and Dynamics GP Certified Professional. She is a director with BKD Technologies, providing training, support, and project management services to new and existing Microsoft Dynamics customers. This blog represents her views only, not those of her employer.

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