INITIALIZATION

This section discusses how to set up progress payment bills in Costpoint Billing. This discussion will discuss the relevant screens in Costpoint Projects and Accounts Receivable, as well.

Costpoint Billing

Billing Settings

In the Billing Settings screen (Projects » Billing » Controls), you must determine your 1443 posting methods. The Delivery Invoices at Net Amount check box controls the 1443 delivery invoice posting method, Gross or Net. With progress payments, you can submit interim bills to recover a percentage of your incurred costs, even if deliveries have not been made. When you ship a finished good to the customer, the bill is a "Delivery" invoice. This invoice will show the value of the shipment, but you must reduce, or "liquidate," an amount for the progress bills that have already been paid. Therefore, the invoice amount that will be paid is always the net amount.

If you select the Delivery Invoices at Net Amount check box, the general ledger and accounts receivable reports will be posted with the net amount. This means a receivable will be created for the net amount and the liability reduced for the liquidation amount when the bill is posted. When the customer pays the bill, the cash receipt will credit the receivable for the net amount.

If you do not select this check box, the general ledger and accounts receivable reports will be posted with the gross amount. This means a receivable will be created for the gross amount of the shipment. When the customer pays the bill, the cash receipt will credit the receivable for the gross amount and reduce the liability by the liquidation amount. In this scenario, an additional line will be automatically created in the Enter Cash Receipts screen (Accounting » Accounts Receivable » Cash Receipts) to record the liquidation entry.

In summary, this check box controls the presentation of billed accounts receivable and liquidated progress payments for delivery invoices that have not been paid. Using the net method, the liability reduction is recognized when the bill is posted. Under the gross method, the liability reduction is recognized when the cash is received.

Examples of Net versus Gross Method for Posting Delivery Invoices:

Net Method:

In the Billing Settings screen (Projects » Billing » Controls), the Progress Bills to GL When Billed check box controls the 1443 Progress Payment invoice posting method. Progress payment bills are interim bills that allow you to recover a percentage of your incurred costs, even if deliveries have not been made. As such, these bills generate a receivable for the amount of the bill, but also a liability, because you are billing for amounts that have not been delivered. This check box provides two options for presenting the progress payment bills on your financial statements.

Select this check box to treat progress payment bills similar to non-progress payment bills. When you post the bill, not only are the accounts receivable and project billing history files updated but also the general ledger files. The "A/R Progress" account is debited and, instead of using "Unbilled A/R" as the other side of the entry, the "Unliquidated Progress" account is credited to create the liability. When you pay the bill, cash is debited and the "A/R Progress" account is credited. If you use this method, your financial statements will show an A/R progress receivable balance for any unpaid progress payment bills. It will also show the unliquidated liability when the bill is posted.

If you do not select the Progress Bills to GL When Billed check box, the accounts receivable and project billing history files are still updated when you post the bill, but no entry is made to the general ledger and, thus, outstanding accounts receivable are not shown on your financials. When you pay the bill and post the cash receipt, the entry debits cash and credits the "Unliquidated Progress" account. Therefore, the "A/R Progress" account is not used at all, and the liability is not shown on your financial statements until you post the cash receipt. You can suppress progress payment bills when printing the Accounts Receivable Aging Report. This will enable you to reconcile the aging report to the general ledger if you do not select this check box.

Examples:

Maintain Billing Accounts

In the Maintain Billing Accounts screen, enter accounts that will be subject to cash basis billing and/or subcontractor progress payments on a company-wide basis. If your projects require that purchases be paid for before they can be billed, set up the accounts to which this restriction applies in this screen. Note that cash basis is applied only to transactions from Costpoint Accounts Payable. This screen controls the cash basis billing accounts on a company-wide basis. The option for controlling a specific project's cash basis billing status is located in the Project Billing Info screen (Projects » Billing » Billing Master or Projects » Project Setup » Revenue Setup). If a project has specific accounts that are subject to cash basis billing, in addition to the company-wide accounts, you can enter those accounts in the Cash Basis Information subtask of the Project Billing Info screen. In summary, the system checks to see whether the project is subject to cash basis billing. If the project uses cash basis billing, the system checks the company-wide accounts first. Next, it checks the project-specific accounts for any additions. You cannot enter the same account in both the company-wide and the project-specific screens. This will cause a message to appear, and you will be forced to delete the duplicate accounts from the project-specific screen.

If you designate an account in this screen as a subcontractor account, the account will be included in the Update Subcontractor Progress Payments process. There is a requirement to segregate subcontractors for 1443s because they are not subject to progress payment percentages. The subcontractor amounts, when entered into the system through Costpoint Accounts Payable, will already have the appropriate percentage retained. Therefore, subcontractor costs are not integrated with other project costs. Accounts designated a 1443 subcontractor should be used exclusively for that purpose. In other words, subcontractor costs for 1443s should not be charged to non-designated accounts, nor should non-subcontractor costs be charged to subcontractor-designated accounts. The account designation for subcontractors is available on a company-wide basis only.

Remittance Addresses, Govt. Payment Offices, Contractor Addresses

Three addresses are required on the 1443: contracting office, paying office, and remittance address. You need to set up these addresses in the Contractor Addresses (Materials » Sales Order Entry » Sales Order Entry Controls), Govt. Payment Offices (Projects » Billing » Controls), and Remittance Addresses (Projects » Billing » Controls) screens, respectively. When you initialize the Project Billing Info screen (Projects » Billing » Billing Master or Projects » Project Setup » Revenue Setup) for the project, you can reference these addresses.

Generic Billing Formats, Supporting Schedule Formats

You do not need to set up generic bill formats or supporting schedule formats because the 1443 is a standard government form with no supporting schedules required. You can view information on specific billing lines in the Line Detail subtasks of the Edit Progress Payment Billings (Projects » Billing » Edit Billings) and Maintain Closed Progress Billing Detail (Projects » Billing » Billing History) screens.

Project Billing Info

In the Project Billing Info screen (Projects » Billing » Billing Master or Projects » Project Setup » Revenue Setup), the formula must be Progress Payment from the inception of the bill (that is, the formula cannot bill using a Cost Incurred Plus Fee On Cost formula and then be changed to Progress Payment, or vice-versa).

There is no retainage on 1443s.

In the Controls group box of the Project Billing Info screen, all options work the same for 1443s as for other types of bills. The Remittance Address for the code entered will print in line 2 of the 1443. Complete the Customer Terms field only if you want the system to calculate the Due Date. This date will initially appear in the Edit Progress Payment Billings screen (Projects » Billing » Edit Billings), where it can be edited. You can use the Bill Cost Incurred on Cash Basis check box to control whether this project is billed as a "large business" or "small business." If you want the bill computed using "large business" calculations, cash basis billing should be used and you should select this check box. If you want the bill computed using "small business" calculations, this means cash basis billing should not be used and you should not select this check box. Note that this option is provided at the project level instead at the company-wide level. It is possible to have some projects that are being billed as "large business" while others are billed as "small business." For example, if your company graduated from a small business to a large with projects still in progress, new projects would be classified as "large business," while the older projects would still be "small business."

Complete the Customer(s) subtask to assign the customer to the bill. You must designate an Address Code even though it will not be used; the required addresses on the bill are derived from the Addresses section described previously. Complete the % of Project Responsibility field with 100%, as 1443s cannot be shared by more than one customer.

In the Format group box on the Project Billing Info screen, select the Govt 1443 Billing Format option. Do not enter a Supporting Schedule Format code, because 1443s do not use supporting schedules.

Enter the bill number of your last invoice from your previous system in the Last Bill Number field in the Project Billing Info screen. The right-most numeric value of the bill number will be incremented by one, and will become the value for line 8A, Progress Payment Request No., on the 1443 when progress payment bills are calculated. To use bill numbering, make sure that you have selected the Enable Project Specific Bill Numbering check box in the Billing Settings screen.

Do not complete the Supporting Schedule Headers (Detail Bills) subtask of the Project Billing Info screen because 1443s print only at the top level.

Use the 1443 Info subtask to control what will be printed in the header of the bill and some of the calculated amount lines of the bill. Enter the progress payment and liquidation rates that will print in lines 6A and 6B, respectively, of Section I of the bill. These rates are also used in the calculation of the progress payment and delivery invoices. Enter a valid payment office that will print in line 1 of Section I. Enter the initial award date of the contract. The year will print in line 7A and the month in 7B of Section I. If this project has been classified as Work-In-Process or Common Inventory, and you have completed the Cost of Goods Sold screen (Projects » Project Setup » Revenue Setup), the value entered in the Estimated Costs field will default to the Estimate to Complete field of the 1443 Info subtask. You can override this value. This amount will be used in Line 12B, Estimated Additional Cost to Complete, in Section II. In the Contract Info group box, enter a valid contractor address, which is the agency receiving the invoice, that will print in line 1 of Section I. Enter the name and title of the contractor representative that will print in the certification section in the footer of the form 1443. Select a price basis that will print in Line 5 of the form 1443 header. It will also be used in calculating some of the amount lines of the bill. Selections available are Contract Cost, Contract Value, Funded Cost, Funded Value, and Other. The Contract and Funded Values are entered in the Modifications screen (Projects » Project Setup » Controls). If you want to use an amount different from the Contract and Funded options, select "Other" and enter the amount in the field below. Enter any accounts that are subject to cash basis billing and are not already included as company-wide cash basis accounts in the Maintain Billing Accounts screen.

If you want to restrict transactions on the 1443 to only those that occurred within the period of performance date range, select the Limit Transactions To Period of Performance check box in the Other Info subtask of the Project Billing Info screen. Do not enter any text in the Bill Heading list box, as it will not print on the 1443.

Maintain Project WAWF Information screen (Projects » Project Setup » Project Master)

If you plan to submit your Progress Payment bill to the DoD via WAWF, you must initialize this screen. Set it up at the billing level of the project for which you would like to create a WAWF FTP file.  You must also assign a CAGE Code to this project. (You should have set up the CAGE Codes in the Maintain WAWF Billing Settings screen (Projects » Billing » Controls).)  You can assign only one CAGE code to an invoice-level project. The DoDAACs you assigned to the CAGE code in the Maintain WAWF Billing Settings screen default in to the DODAACs group box at the bottom of the screen, but you can change them.  

If you are submitting an invoice to Mechanization of Contract Administration Services (MOCAS), be sure to select the MOCAS Pay System check box. A MOCAS file is built differently than a non-MOCAS file.  For example, sales tax and discounts cannot be billed to MOCAS, and quantities need to be in whole numbers. If you select the MOCAS Pay System check box, be sure that the Payment Office entered is a MOCAS payment office.  

You need to specify Progress Payment as the type of invoice you want to generate. The File Source must be Progress Payment Bills. The CLIN Mapping method is ignored for progress payment invoices.

Please be aware that the Create WAWF Billing Files screen (Projects » Billing » Print Billings) retrieves the data from the progress payment edit tables.  Do not post your bills until you have generated your WAWF FTP files.  

You may also need to complete several fields in the Progress Payment subtask. This subtask is available only when you select the Progress Payment invoice type. If advanced payments against this contract have been received or items have been delivered, invoiced, and accepted, select the Deliver On Invoice check box.  If you select this check box, you must have amounts in line 20a and 25 on the progress payment invoice from which a WAWF file will be generated.

You also need to enter the Date of Financial Info.  This is a mandatory field in the WAWF file.  Select the Certification check box to certify that the invoice was prepared in compliance with the contract, that it is correct.

You may also need to add a request number in the Previous Progress Payment Request Number field. The request number must begin with PPRB if you selected the FMS (Foreign Military Sales) check box. Otherwise, the request number must begin with PPRA.  If the request number is eight characters long, the eighth character must be a letter to designate a LOT contract.  Because of this, the system cannot extrapolate a previous bill number.  This is a required field in the WAWF file.  

If the codes entered in the ACRN/FMS Worksheet table are FMS codes, the FMS check box must be selected, indicating the code used is a Foreign Military Sales code. Be sure the code entered is an accepted FMS code.

If your contract specifies that you must submit your progress payment by ACRN or FMS codes, you must enter rows in ACRN/FMS Worksheet table window. The Accounting Character Reference Number/Foreign Military Sales (ACRN/FMS) codes entered in the ACRN/FMS Worksheet table window must be unique and the total amount of all of the lines should equal the amount billed.

The ACRN/FMS codes are not tied to the new ACRN functionality because the source records for WAWF come from BILL_EDIT_DETL, and ACRN is not contained in that table.  

If you need to submit an attachment needs with the file, enter the file path and file name. The file path is not submitted in the file but is stored here to help you locate the submitted file. The file name is included in the WAWF file.  If the WAWF file indicates that an invoice has an attachment, you must manually put the file on the FTP site for retrieval. You must submit the attachments before the FTP file. They are placed in the same SFTP directory. If the WAWF file fails for any reason, you must resubmit the attachment before submitting the file again.

Maintain Open Billing Detail

As with regular standard bills, enter any posted transactions from your previous system that have not been included on a 1443 in the Maintain Open Billing Detail screen (Projects » Billing » Prepare Billings). If the project is classified as "large business," be sure you include the check information for any transactions that are subject to cash basis billing and have been partially or completely paid. Enter this information in the Cash Basis Information subtask. Do not set up any records for subcontractors in this screen; enter these transaction costs in the Maintain Subcontractor Progress Payments screen (Projects » Billing » Billing History).

Maintain Billing History

In the Maintain Billing History screen (Projects » Billing » Billing History), enter a summary record for each unique project, organization, account, and transaction type. This record should be the Inception-to-Date (ITD) amount from the latest 1443 for each project. The Line Type will always be COST. The system uses these amounts to calculate some of the billing lines, such as lines 9 and 10. You can enter each record individually if you want to see the detail here and in the Maintain Closed Progress Billing Detail screen (Projects » Billing » Billing History). Do not set up any records for subcontractors in this screen; enter these transaction costs in the Maintain Subcontractor Progress Payments screen (Projects » Billing » Billing History).

Maintain Project Bill Summary

In the Maintain Project Bill Summary screen (Projects » Billing » Billing History), you can enter either one row in which all prior posted bills are summarized, or you can enter each fiscal year, period, and subperiod for informational purposes. With either method, Costpoint uses the screen totals. Enter amounts in the Delivery Amount and Amount Billed columns only; retained amounts are not used by 1443s. Be sure that the amounts entered in the Amount Billed column include both the "Progress" and "Delivery" invoice types. Three different processes reference this screen: (1) it is used when the revenue formula is Equal To Billings Before Retainage, Equal To Billings After Retainage, or Equal To Deliveries;  (2) it is used in the Unbilled Receivables process to derive Inception-to-Date (ITD) billings; and  (3) it is used in the Cost of Goods Sold calculation when the formula uses either Billed Amounts or Delivery Amounts.

Maintain Closed Progress Billing Detail

In the Maintain Closed Progress Billing Detail screen (Projects » Billing » Billing History), you must enter at least one record per project, which is the latest invoice from your previous system. With progress payment billings, all calculations are ITD. If you want to enter additional invoices, they will serve only as historical references. When you post 1443s, the system writes each invoice for each project to this file, so you will have a separate record for each invoice. Complete each of the billing lines as per your latest invoice. Notice that the billing lines coincide with the actual 1443 form. Complete the Section I - Identification Information, Section I - Addresses, and Section I - Remit To subtasks for informational purposes only. If you want to enter the individual transactions that comprise some of the billing lines, highlight the appropriate line and use the Line Detail subtask. In general, this information is not used in the calculation process and is for informational purposes only; however, keep in mind that you should enter the detail information if the progress payment bills are subject to rate adjustment billings. The lines available for entering line detail are:

Line 9                   Paid Costs Eligible Under Progress Payment Clause

Line 10                 Incurred Costs Eligible Under Progress Payment Clause

Line Detail is also available for line 13, but this information results from the calculation process and is non-editable.

Maintain Subcontractor Progress Payments

In the Maintain Subcontractor Progress Payments screen (Projects » Billing » Billing History), enter a record for each unique project, account, organization, and vendor combination. This screen is the source for line 14, as well as the delivery invoices for line 10, of the 1443. Normally, the Update Subcontractor Progress Payments process updates this screen during your monthly billings process. You can execute the Update Subcontractor Progress Payments screen (Projects » Billing » Prepare Billings) regardless of the status of the project ("large" or "small" business). When you execute this process, transactions that have been identified as subcontractors are deleted from the Open Billing Detail file and moved to the Maintain Subcontractor Progress Payments screen. The Maintain Subcontractor Progress Payments screen then becomes the source for line 14 and the delivery invoices for line 9. Subcontractor transactions are separated from other transaction types because they appear on separate lines on the form 1443 and because they require special treatment in the calculation process. Subcontractors are governed by the same progress payment FAR clauses as your company. When subcontractors submit delivery invoices to your company, you can bill the entire amount, because the invoice was "netted" when it was entered into the system. You initialize both progress and delivery subcontractor invoices in this screen.

For Invoice Types of "Progress Payment," you can summarize, into one row, all invoices where the Invoice Amount, Paid Amount, and Billed Amount fields are equal (that is, transactions that have been fully paid and billed). The calculation process uses ITD amounts, and transactions that have been fully paid and billed are not required on an individual transaction basis. For informational purposes, you can enter the individual transactions. If any transaction has not been fully paid or billed, you must enter it individually to allow the system to update it. For progress payment types, Invoice Amount and Billed Amount columns are completed. The Delivery Value, Delivery Hours, and Liquidation Amount fields are always zero because progress payment invoices are not used for shipped finished goods and no liquidation occurs. Be sure to complete the Paid Amount column by entering the check information in the Payments subtask. During the normal monthly processing, the Update Subcontractor Progress Payments process updates the Invoice Amount field with the invoice amount from the Enter A/P Vouchers (Accounting » Accounts Payable » Vouchers) or Enter PO Vouchers (Accounting » Accounts Payable » Vouchers) screens in Costpoint Accounts Payable. The Update Cash Basis Information screen (Projects » Billing » Prepare Billings) updates the Payments subtask. There is no partial billing of subcontractor transactions; either the invoice is accepted or rejected in this screen, in the Accepted column. The Update Subcontractor Progress Payment process always sets this column to Y. You can edit this field; only accepted subcontractor invoices are included on the 1443.

For "delivery" invoices, complete the Invoice Amount, Billed Amount, and Paid Amount fields the same as for the progress invoices. For "Delivery" subcontractor invoices, the Invoice Amount field contains the invoice amount from the Enter A/P Vouchers screen (Accounting » Accounts Payable » Vouchers) or the Enter PO Vouchers screen (Accounting » Accounts Payable » Vouchers); however, because subcontractors are also subject to the rules of Progress Payments, this invoice amount has already been reduced by the liquidation amount before entering the voucher.

When your company receives a delivery invoice from a subcontractor, enter the net amount of the invoice, which represents the amount owed to the subcontractor, on the Enter A/P Vouchers or Enter PO Vouchers screens. Enter the delivery, or shipped, amount in the Delivery Value field in the Header Information subtask of the Enter A/P Vouchers or Enter PO Vouchers screens. The difference between the delivery amount and the invoice amount is the liquidation amount, which is liquidating the amount of progress payments the subcontractor has been paid. Therefore, the same method (billing full invoice amounts for progress payment bills and reducing delivery invoices by the liquidation amount) can also be used for subcontractor invoices.

For "delivery" subcontractor invoices, the Shipment Value field contains the amount of the Delivery Value field from the Header Information subtask of the Enter A/P Vouchers or Enter PO Vouchers screens. On the form 1443, the Shipment Value is the billable amount on line 9 or 10 for subcontractor delivery invoices. The Liquidation Amount field is the difference between the Shipment Value and Invoice Amount.

If you have hours-based pools and want to burden the subcontractor hours from a subcontractor delivery invoice, enter the Delivery Hours. The delivery hours will be burdened if the Invoice Type entered is D and the Delivery Value and Delivery Hours are entered along with the Paid Amount and the Accepted column is Y.

As with the Progress Payment invoices, the Paid Amount field contains the total of the Check Amount Applied column from the Payments subtask. The system obtains payment information from the vendor check history files.

Projects Folder

Maintain Project Master screen (Projects » Project Setup » Project Master) or Basic Info screen (Projects » Project Setup » Project Master)

You can bill progress payments at one and only one level of the project, which can be at any level. Progress payments do not have supporting, or "backup-only," invoices. For cost accumulation and reporting purposes, you can set up multiple project levels in the Maintain Project Master screen or the Basic Info screen.

Typically, companies use progress payment billings on projects in which something is being built. Because the costs are retained on the balance sheet until the revenue is recognized, the Project Classification in the Maintain Project Master (or Basic Info) screen in Costpoint Project Setup is usually WORK IN PROCESS or COMMON INV. This is not mandatory, however, unless you plan to use the Cost of Goods Sold (COGS) feature.

Project Account Groups screen (Projects » Project Setup » Controls)

You should establish a project account group specifically for progress payments. Aside from the usual accounts with Function Codes of BILLED A/R and UNBILLED-GENERL (in the Project Account Groups screen (Projects » Project Setup » Controls)) that you normally place in your account group for billing, be sure to include accounts for the BILLD AR-PRGRSS, PRGRSS-LIQUID, and PRGRSS-UNLIQUID Function Codes. You can assign the PRGRSS-LIQUID and the PRGRSS-UNLIQUID Function Codes to the same account, or you can use a separate account for each Function Code. In addition, the BILLED A/R and BILLD AR-PRGRSS Function Codes can be assigned to the same account. The UNBILLED-GENERL Function Code must have a separate account.

Cost of Goods Sold, Basic Revenue Info

If the Project Classification in the Maintain Project Master screen (Projects » Project Setup » Project Master) (or Basic Info screen (Projects » Project Setup » Project Master)) is WORK IN PROCESS or COMMON INV, you must set up the Cost of Goods Sold screen (Projects » Project Setup » Revenue Setup) to transfer the costs from the balance sheet to the income statement. Many companies use the Delivery Amount, Estimate to Complete or the Delivery Amount, Estimate at Completion formula for calculating COGS. Using one of these methods, along with the Equal To Deliveries revenue formula selected in the Basic Revenue Info screen (Projects » Project Setup » Revenue Setup), allows them to recognize revenue when the deliveries are made and then match the approximate cost to that revenue. This scenario is not mandatory; you can use any COGS or revenue formula you want.

Costpoint Accounts Receivable

Maintain A/R History

In the Maintain A/R History screen (Accounting » Accounts Receivable » Beginning Balances), enter a summary record for each type of invoice, Progress Payment or Delivery, for all invoices in which the Balance Due amount is zero. Then enter a record for each individual invoice that has a Balance Due amount greater than zero. These are the invoices for which your company still carries an open receivable amount and that may appear on the A/R Aging Report. Ensure that you have the correct Invoice Type for each invoice, Progress Payment or Delivery. The calculation programs rely on these types in the calculation process.

For Progress Payment invoice types, enter each open invoice as you would for non-1443 invoices. The Delivery Amount, Liquidation Amount, Liquidation Taken, and Liquidation Account fields are not used by progress payments. You should complete the Unliquidated Account field to track which account recorded the unliquidated amount.

For Delivery invoice types, complete the Delivery Amount with the shipment value or value of the finished good. The Liquidation Amount contains the value that was used to "net" the Delivery Amount down to the Invoice Amount. The Liquidation Taken field should always represent the amount of the liquidation when the cash is received. It should differ from the Liquidation Amount only when the payment of an invoice has been adjusted by the contract officer to reflect a liquidation amount different from the one invoiced. The Liquidation Account field tracks the account used to record the liquidation amount.