UNBILLED RECEIVABLES - Special Topic BL-4

This special topic discusses how to create and print the Unbilled Receivable Analysis and Unbilled Reason Code Reports. These reports are an important management tool that provides information on the unbilled balance calculation and on the major components of that balance. A brief discussion of how to initialize your unbilled receivables appears at the end of this Special Topic. Details of the Unbilled Reason code Report follow.

The Unbilled Receivable Analysis Report is actually two different reports: a Summary report and a Detail report.

The Summary report is designed to provide an overview of the unbilled balances and a quick reference on the unbilled balance calculation. On the Summary Report, there are two Unbilled Amounts: one is derived from the ITD Revenue minus ITD Billings calculation, and one is the unbilled amount per the G/L. These two amounts should, in theory, be the same; but there can be circumstances where they do not agree. Variances could result if the revenue and billing history files are not initialized with the correct amounts, or if a journal entry is made to either the revenue or billed A/R accounts that may not be reflected in the revenue or billing postings. A variance could also result if you select a Rate Type for the report that is different from your posting method. You should investigate any discrepancies so that you understand the nature of the variance.

The Unbilled Receivable Analysis Summary report lists the following:

The Unbilled Receivable Analysis Detail report provides a listing of some of the major components of the unbilled balance. This will assist you in determining when some of these components can be billed.

The Detail report lists the following:

The Unbilled Reason report lists the following:

Creation of the Report Table

Before printing the Unbilled Receivable Analysis Report, you must create a report table. This report table, which pulls together all of the information required for the report, must include any project that will be printed on the report. Therefore, if a project is to appear on the report, you must select it in the creation process.

The best time to create and print the Unbilled Receivable Analysis Report is immediately after you complete your billing cycle. You should then create and print the report for the previous period. This previous period contains the transactions that were just billed in the recently completed billing process. It will also contain revenue for the previous period.

For example, if the period ended March 31 and the billing process ended April 14, you would execute the Create process for the period ended March 31 as soon as possible after April 14.

By processing your unbilled report information in this fashion, you can capture the ending unbilled balance for a specific period. You can then identify the amount of the unbilled balance that was subsequently billed in the next billing cycle.

After selecting the projects and the ending subperiod, select the ending subperiod for the subsequent billings. As noted previously, the bills that have been posted after the ending subperiod selected are considered "Subsequent Billings." To include only those subsequent billings that have been posted up to a certain subperiod, enter a valid fiscal year/period/subperiod. This combination must be later than the ending subperiod selected. Creating the report table in this way will also result in the most accurate data for the Unbilled Reason Code Report.

Printing the Unbilled Receivable Analysis Report

You should print the Unbilled Receivable Analysis Report immediately after you have updated your unbilled information using the Create Unbilled Analysis Report screen. You must first select the Unbilled Analysis Report check box at the top of the screen.

In the Print Unbilled Analysis screen (click Projects»Billing»Unbilled Receivables), select the desired option in the Report Type group box, either Summary Report or Detail Report (220 chars/line).

Select the Grouping. This determines how the information will be sorted on the report. The valid options from the drop-down list are:

Select the Range Option, From, and To parameters for the Grouping selected.

If you are grouping by Organization, select the Organization Level. This is the highest organization level that you want printed on the report. Balances will be rolled up to this organization level.

Identify the highest project level that you want printed on the report. Balances will be rolled up to this project level.

Select a valid Fiscal Year/Period/Subperiod combination to print the report. This selection should match the Fiscal Year/Period/Subperiod combination that you selected when you ran the Create Unbilled Analysis Report screen (Projects»Billing»Unbilled Receivables).

select the option for the revenue Rate Type, Actual or Target that your company uses to recognize its revenue. On the Summary Report, this selection will determine the ITD Revenue column of the unbilled equation. On the Detail Report, the unbilled balance is derived from the General Ledger, which already contains the revenue postings. However, the Rate Type selection will affect the Current Year Rate Variance on the Detail report. You should be aware that billings generally use provisional rates; therefore, revenue postings at actual automatically create a variance.

If you want to see either report with the amounts rounded to the nearest thousands, select the Amount in Thousands check box.

Components of the Unbilled Balance

A description of the major components of the Unbilled Balance, as listed on the Detail report, follows:

Subsequent Billings

Billings posted after a specified ending subperiod are one of the major components of the unbilled balance. These are known as "Subsequent Billings." As part of the Create Unbilled Analysis Report process (Projects»Billing»Unbilled Receivables), the ending subperiod for these subsequent billings is selected. This restricts the subsequent billings that are included on the report to billings that have been posted up to and including the selected subperiod. If you complete the process at the optimum time, a correlation between unbilled and subsequent billings will be established. This does not imply that all amounts in Subsequent Billings are included the unbilled balance. Subsequent billings could include a milestone billing, a fixed amount, or another amount that may not be included in the unbilled balance.

In another issue related to proper timing, transactions included on posted bills that were not included in the Subsequent Billings cutoff show up in the Miscellaneous column rather than in the Transactions Not Billed column. This occurs because, although the transactions are no longer open, the bill on which they are included does not fall within the Subsequent Billing cutoff.

Current Year Rate Variance

This amount is the target or actual burden amount used for revenue calculations, less the burden amount for billing, for the current year. The amount is dependent on all pools established in the Cost Pools screen (Projects»Cost and Revenue Processing»Cost Pool Setup). Therefore, if a pool is used for revenue calculation purposes but not for billing, the entire burden amount for that pool will be included in the Current Year Rate Variance column.

Prior Yrs Rate Variance

This amount is the target or actual burden amount used for revenue calculations, less the burden amount for billing, for all years before the current year. There is not a separate column for each year, but rather a single column that sums all the prior years. Therefore, it is advisable to retain a final copy each year that reflects the rates used in the fiscal year close. The rate type used depends on the selection when the fiscal year is closed. The amount depends on all the pools established in the Cost Pools screen (Projects»Cost and Revenue Processing»Cost Pool Setup). Therefore, if a pool is used for revenue calculation purposes, but not for billing, the entire burden amount for that pool will be included in the Prior Yrs Rate Variance column. Likewise, if a project has accumulated burden costs for revenue purposes but has never been billed, the burden amounts for all pools will all be included in this column.

Retainage

This amount is derived from the Maintain Project Bill Summary screen (Projects»Billing»Billing History). This screen should be completed during initialization and is updated during the Post Bills process. It stores retentions on both the fee and total invoice.

Transactions Not Billed (Hours and Cost)

These amounts are taken from the Maintain Open Billing Detail screen (Projects»Billing»Prepare Billings) and include any transactions not included on a posted bill. As noted in the "Subsequent Billings" section, if a bill has been posted and not included in the subsequent billings cutoff, it will appear in the Miscellaneous column rather than in the Transactions Not Billed column.

Some examples of Transactions Not Billed are:

Revenue Adjustments

The amount in this column is the sum of revenue adjustments computed for the current and prior years.  

Miscellaneous

This column is the Unbilled Balance less the sum of the components identified in the other columns.

Some examples of Miscellaneous amounts are:

Investigate this balance so that you feel comfortable with its contents.

Initializing Unbilled Receivables

The following is a step-by-step approach for initializing your unbilled receivables. You should use this list with your overall Costpoint system initialization. The affect of each step, relative to the Unbilled Receivables process only, is included in the documentation.

  1. Enter your beginning unbilled receivable balances in the Maintain Project Beginning Balances screen (Accounting»General Ledger»Beginning Balances) for each project. These are the beginning balances that appear in your General Ledger. If you are initializing Costpoint in the middle of a fiscal year, enter the balances as they were at the start of the current year. The unbilled amounts for the current year will be added when you process the current year's transactions through revenue posting.

  2. Enter your prior years' project history in the Prior Year Cost and Revenue screen (Projects»Project Setup»Project History) for each project. Enter all costs, burdens, fees, and revenues in the Incurred columns so they can be used for project tracking. This process will initialize your ITD Revenue for prior years' activity. In the Allowed columns, enter only those amounts that have been included in the revenue calculation. For example, if a T&M project does not include any burden amounts in the revenue calculation, enter none in the Allowed columns. The burden amounts in the Allowed columns, less the burdens entered in the Maintain Billing History screen for prior years' billing transactions, will be the source of the Prior Years Rate Variance amounts.

  3. Current year costs should be summarized by project to the level you desire, entered via journal entry, and posted. Current year allowable burden amounts, as calculated by the Compute Burden Cost screen (Projects»Cost and Revenue Processing»Project Cost Processing), less the burden amounts from the Maintain Billing History screen for current year billing transactions, will be the source for the Current Year Rate Variance amounts.

  4. Calculate revenue for the current year during your regular revenue process. This will update your ITD Revenue for the current year's activity:

  1. Enter the billing history of each project for all years in the Maintain Billing History screen (Projects»Billing»Billing History). This will initialize the cumulative billed amounts. The system subtracts burden amounts entered or posted here from the allowable burden amounts included in the revenue to calculate the current and prior years rate variances.

  2. Enter any unbilled transactions in the Maintain Open Billing Detail screen (Projects»Billing»Prepare Billings). The transactions entered here will appear as Transactions Not Billed (Hours and/or Costs) until they have been included on a posted bill.

  3. Enter all previously billed amounts and retainages in the Maintain Project Bill Summary screen (Projects»Billing»Billing History). You may want to summarize all bills for the prior years onto one line. This screen, which is updated automatically when you post the bill, is the source for the ITD billings, subsequent billings, and retainage amounts.

  4. Run the Create Unbilled Analysis Report screen (Projects»Billing»Unbilled Receivables).

  5. Print the Unbilled Receivable Summary Report and review the information in each column. Compare the two unbilled amounts (one per the ITD Revenue minus ITD Billings formula, one per the General Ledger) to ensure they are the same.

  6. Print the Unbilled Receivable Detail Report and review the information in each column. Investigate the Miscellaneous column as required, to your desired level of detail.

Unbilled Reason Code Report

Use the Unbilled Reason Code Report to identify the amounts in the Miscellaneous column of the Unbilled Receivable Detail Report. The report uses system codes and user-defined codes to identify unbilled amounts. Using the system codes, the Create Unbilled Analysis Report process groups amounts such as rate variances, subsequent billings, revenue adjustments, and retainages and stores them in the Edit Unbilled Reason Codes screen by system code. You can set up user-defined codes to identify unbilled amounts resulting from contract issues, on hold amounts, fixed price billing arrangements, or various other unbilled reasons. You can use these user-defined codes on a project-by-project basis in the Edit Unbilled Reason Codes screen. You can establish the unbilled amounts each month or set them up to exist until released. A standard system report is available. Follow these steps to create the Unbilled Reason Code Report:  

  1. Set up the user-defined codes in the Maintain Unbilled Reason Codes screen (Projects»Billing»Unbilled Receivables).  The system already has codes for the following:

The system calculates the amounts and groups them by system code. Any unbilled amount that does not fall into one of the preceding descriptions is shown under a system code of NONE. You then have the opportunity to redistribute the NONE unbilled amount by the user-defined codes. Some examples of user-defined codes are: COMP (Billed at Completion), CONTRACT (Pending Contract), MLSTONE (Milestone Billings).

  1. Run the Create Unbilled Analysis Report screen (Projects»Billing»Unbilled Receivables). This populates the Edit Unbilled Reason Codes table with system-defined codes and the NONE amount. 

  2. Use the Edit Unbilled Reason Codes screen (Projects»Billing»Unbilled Receivables) to reclassify the NONE amount to various user-defined unbilled reason codes. 

  3. Print the Unbilled Analysis Report, clicking the Unbilled Reason Code Report option at the top of the screen.

Once you have assigned an amount to a user defined code, you can select a code of S or N to prevent the recalculation of this amount. Only amounts with a code of Y are recalculated. You must manually change the S or N code to Y to have the system recalculate the amount in a future period.