Guide to Advance Billing

Overview: Advantage provides the option to Advance Bill (pre-bill) jobs, enabling cash flow to be maximized. A number of Advance Billing and revenue recognition options are available. In the Advance Billing application there is also a history of advance billing records (including invoice number, amount, and billing status) and the option to create and print a client invoice directly from the Advance Billing application. Approved Webvantage advance billing records can automatically be loaded based on selected approval records to generate advance billing invoices. Interim reconciliations can also be processed based on specific records marked to Bill/Reconcile in Webvantage Billing Approval. Advance Billing Methods include Percentage to Date, To Quote Include Actual, and Manual Entry. For jobs billed using the method of income recognition of ‘Upon Reconciliation’, interim reconciliations may be done throughout the life of the job. After final reconciliation, no additional advance billing can be done on the job. Progress billing may be done. A final reconciliation may be reversed and re-reconciled by voiding the final reconciliation invoice. Prior to using Advance Billing, verify that the Office setup accurately reflects the default method for handling income recognition and the proper General Ledger accounts to use. Income can be recognized at initial billing or upon reconciliation. The default can be overridden when an advance is entered. This selection affects the accrued/deferred accounts used when journal entries are created.

Page 1 of 16

Advance Billing Income Recognition: Initial Billing This method recognizes sales and accrued costs at the time of billing. This method can only be final reconciled. If this method is chosen the advance billing journal entry will be:

Journal Entry Account (Account Type)

Debit

Accounts Receivable (Asset)

Credit

X

Sales (Income)

X

Sales Tax Payable (Liability)

X

Accrued COS (Expense-Cost of Sales)

X

Accrued A/P (Liability)

X

T-Accounts A/R

Sales

X

Sales Tax Payable X

Accrued COS X

X

Accrued A/P X

When the job is reconciled and final billed, the entries made to the accrued accounts are reversed and entries to WIP and Cost of Sales are made. If an adjustment invoice is issued additional entries to Sales and A/R will also occur.

Page 2 of 16

Advance Billing Income Recognition: Upon Reconciliation This method allows jobs to be prebilled and to defer the sale until you are ready to recognize income. This method gives you the most control over when it is appropriate to recognize revenue. If this method is chosen the advance billing journal entry will be:

Journal Entry Account (Account Type)

Debit

Accounts Receivable (Asset)

Credit

X

Deferred Sales (Liability)

X

Sales Tax Payable (Liability)

X

Deferred COS (Asset or Contra Liability)

X

Accrued A/P (Liability)

X

T-Accounts A/R

Deferred Sales

X

Sales Tax Payable

X

Deferred COS X

X

Accrued A/P X

This method can be reconciled on an interim basis and eventually final reconciled when the job is completed. The interim reconciliation reverses deferral and accrual amounts based on the actual items being reconciled and recognizes income, actual costs and relieves WIP. The final reconciliation will reverse the balances in the accrual and the deferral general ledger accounts for the job and do the appropriate entries to Sales, Cost of Sales, WIP, Sales Tax, etc.

Page 3 of 16

helpful hint The net advance amount of vendor functions included in an advance billing are how the system calculates the amount posted to Accrued COS and Accrued A/P when processing an advance bill based on Initial Billing and the net amount posted to Deferred COS and Accrued A/P when processing an advance bill based on Upon Reconciliation. In the example below the net amount of $10,000 is used in the advance billing deferred and accrued journal entries.

Page 4 of 16

Processing Upon Reconciliation Advance Billing Generating the Advance Bill Setup Tab 1. Select the Advance Billing application from the Billing menu. 2. Enter or select the job for Advance Billing. 3. The Advance Billing Income Recognition method will default from your Office Table but can be overridden. (The method cannot be changed once the job has been advanced billed without voiding all invoices and starting the entire process over.) 4. Create Billing dates will default to the Current Posting Period and to today’s date. However, this can be overridden. 5. Advance Billing History will be updated with the invoice information after processing.

Page 5 of 16

Generate Advance Billing Details Based on Webvantage Billing Approval 1. The Approvals tab will display billing approval records processed in the Webvantage Billing Approval application. Automatically load approved billing net amounts based on the selected approval record by clicking on the Insert Approval Icon.

2. The Billing Method will be set and the Functions and Net Advance will be loaded based on the Webvantage Billing Approval. The markup and tax will be automatically added to calculate the Total Advance.

Page 6 of 16

3. Click the Save icon to process the Advance Billing transactions. Actual records are created that will be used to generate the Advance Billing invoice. 4. Click on the Setup tab. Under Advance Billing History, you will see ‘Pending’. This is your invoice waiting to be processed. The invoice can be processed individually from this screen by clicking on the Process Pending Invoice or selected for billing along with other billing.

Note: If items are selected for billing and you choose Process Pending Invoice from the Advance Bill screen, the items selected for billing will also process at this time.

Page 7 of 16

Generate Advance Billing Without Using Billing Approvals 1. Select the Billing Method. There are three different types to choose from. The method we are using in this example is 100% of the Quote. After entering the percent to bill hit enter or tab and the Net Advance, Markup, Sales Tax and Total Advance will calculate based the estimate.

Below are details of the three different Billing Methods. •

% To Date - Selecting % To Date bills a user-specified percentage of an approved quote linked to the job through Quote Approval. Advantage will bill this percentage of each estimate function. Note: If Advance Billing is done for 50% and then an additional Advance Billing is done for 25% the cumulative total of 75% would be the percentage entered in this field.

•

To Quote Include Actual - Advantage bills the amount of a quote that has been linked to the job through Quote Approval. Actual charges on a job are posted to the correct "sales" and "cost of sales" accounts, and WIP is relieved. The difference between the actual amounts on the job and the quote are treated as an advance bill.

•

Manual Entry - No Actual - The user specifies the exact amount to advance bill for each Function. If there is not an approved quote or you want to bill a different Function than is included in the quote, Functions can be inserted by using the Insert Arrow icon.

2. Click the Save icon to process the Advance Billing transactions. Actual records are created that will be used to generate the Advance Billing invoice.

Page 8 of 16

3. Click on the Setup tab. Under Advance Billing History, you will see ‘Pending’. This is your invoice waiting to be processed. The invoice can be processed individually from this screen by clicking on the Process Pending Invoice or selected for billing along with other billing.

Note: If items are selected for billing and you choose Process Pending Invoice from the Advance Bill screen, the items selected for billing will also process at this time.

Page 9 of 16

Interim Reconciliation of the Advance Bill There are three options for performing an Interim Reconciliation of an advance billed job. 1. Income may be recognized by entering an amount in the Income to ‘Recognize’ field on the Detail Tab. This amount can actually exceed the total of the amount advance billed to the client. 2. Income and Costs may be recognized at the detail level by selecting transactions to reconcile. This includes: Employee Time and Income Only – Actual charges and previously reconciled amounts display by function. The amount to reconcile can be selected for each detail item or for the function as a whole. Check the Reconcile box to accept all detail items for the selected function. Individual items may be selected for recognition by double-clicking in the gray box of the desired detail line. The Reconcile - Employee Time or Reconcile - Income Only screen will display. Vendor – Actual charges and previously reconciled amounts display by function. Check the Reconcile box to accept all detail items for the selected function. Individual items may be selected for recognition by double-clicking in the gray box of the desired detail line. The Reconcile Vendor Detail screen will display. Vendor Functions display the posting period the vendor invoice was posted to accounts payable. If a Vendor Function is reconciled in the period prior to the period it was posted the accounts payable this transaction may not show on some Production WIP reports. 3. Income and Costs may be recognized at the detail level by using the Reconcile to Approval option. In the Webvantage Billing Approval application the approver has the ability to mark actual transactions as Bill/Reconcile. These transactions can then be automatically selected in the Advance Billing application. This is done by selecting the approval record and clicking on the ‘Reconcile to Approval’ icon.

Page 10 of 16

The records are automatically marked to reconcile. To complete the process select the correct Posting Period for accounting to post to the general ledger and click on the Process Interim Reconciliation button to complete the process.

A reconciliation zero invoice will be processed and listed on the Setup tab.

Note: Detail recognition and header income to recognize cannot be done at the same time.

Page 11 of 16

helpful hint If income recognized exceeds the amount pre-billed the debit to Deferred Sales will exceed the credit amount from the advance billing. This will also appear as a debit balance in the G/L and will show as a negative balance on the WIP reports including deferred sales. This practice may also affect the Deferred COS and Accrued A/P accounts.

Final Reconciliation of the Advance Bill 1. Select the Advance Billing application from the Billing menu. 2. Enter or select the job for Advance Billing Reconciliation. 3. The Detail tab will now show the summary of the actual amounts posted to the job.

Page 12 of 16

4. Click on the Reconcile tab. Select the Final - Reconcile option to display the Type of Reconciliation selection box. Select the type of Reconciliation to perform:

•

Reconcile to actual and bill – Generates an invoice for the difference between the total amount advance billed and the actual costs on the job to date. This option will record the billing to the actual Functions on the job and will post to the general ledger based on the Office Table setup.

•

Reconcile to quote and bill – Generates an invoice for the difference (negative or positive) between the total amount advance billed and the approved quote. (Requires an approved quote). This option will record the billing to the actual Functions on the approved quote and will post to the general ledger based on the Office Table setup.

•

Reconcile to billed – Generates GL entries to clear WIP and accrued/deferred income and cost accounts to reconcile the actual amounts on the job to the total amount advance billed. This option will record the billing to the actual Functions used in the Advance billing and will post to the general ledger based on the Office Table setup.

Page 13 of 16

5. For this example we are Reconciling to Actual and Bill. This method will reverse the accruals and bill the difference between the actuals and the previously advance billed amounts. In this example an invoice will be generated for $34,846.50. Click on save.

6. On the Setup tab, under the Advance Billing History section, you will see ‘Pending’. This is your final reconciliation invoice waiting to be processed. The invoice can be processed individually from this screen by clicking on the Process Pending Invoice or selected for billing along with other billing.

Page 14 of 16

Advance Billing Record Detail Below is a screen shot of the Invoice Backup Report to illustrate the transactions the system will make and a print out of the Journal Entries for the billing and reconciliation of the advance billing.

Detail G/L Transaction Report

Transaction 296 is the Journal Entry generated during the initial advance billing with the income recognition method of Deferred.

Transaction 297 is the Journal Entry generated during the final reconciliation choosing the method of ‘Reconcile to Actual.’

Page 15 of 16

Advance Billing Income Recognition: Initial Billing

The process for generating an advance billed job with income recognized at initial billing is exactly the same as upon reconciliation. The difference in the process is that the job cannot be reconciled on an interim bases, only final reconciled when all charges on the job have been received. The billing and reconciliation journal entries are listed below based on billing 100% of the quote and reconciling to Actual and Bill:

Transaction 300 is the Journal Entry generated during the initial advance billing with the income recognition method of Upon Billing.

Transaction 301 is the Journal Entry generated during the final reconciliation choosing the method of ‘Reconcile to Actual.’

Billing Command Center

New advance billing features will be included in the new Billing Command Center. Already available in 583 is the ability to select and process billing by approval. Other options of the Billing Command Center will include: ™ “Grid view” display and review of qualified records ™ Job, Estimate and Traffic Status indicators help determine what to bill and close ™ Adjust multiple jobs at once; accept approval instructions automatically ™ Reconcile advance billing on multiple jobs at once – (Phase I) ™ Close multiple qualifying jobs at once – (Phase I) ™ Print custom invoices by client – Also available in 5.83

Page 16 of 16