Revenue Methods

If you set up Revenue Generation to track only one uninvoiced revenue account and one unbilled services account, DPS provides six standard revenue methods. You can also create your own revenue methods.

Standard Revenue Methods

These are the standard revenue methods:

• Revenue Method B = Job-to-Date Billings

  The most commonly used of all revenue methods, Method B calculates job-to-date revenue as equal to job-to-date billings. This method makes sense if you bill clients on a monthly basis and process bills in the same month as the corresponding expenses are incurred. This is the default revenue method.

• Revenue Method M = (Job-to-Date Direct Labor x Multiplier) + Job-to-Date Reimbursable Expenses @ Cost Rates

  With Revenue Method M, you recognize job-to-date earned revenue as equal to the project’s job-to-date labor cost with a markup, plus job-to-date reimbursable expenses at cost. This method makes sense for projects or tasks that are billed on an hourly basis.

• Revenue Method N = No revenue generation. All revenue must be posted through journal entries.

  When you use Revenue Method N, DPS does not generate any revenue for the project. If you wish to recognize revenue, you must post a journal entry. This method is appropriate for situations in which none of the standard revenue methods apply and you cannot devise a custom revenue method that works consistently.

• Revenue Method P = (Percent Complete * Estimated Compensation) + Job-to-date Reimbursable Expenses @ Cost Rates

  With Revenue Method P, DPS calculates revenue as equal to the project’s percent complete multiplied by its estimated compensation amount, plus job-to-date reimbursable expenses at cost. This method produces very accurate results if project managers keep percent completes up-to-date. If they do not, Method M makes more sense. This method is appropriate for lump sum contracts or for time-based contracts with upset limits.

• Revenue Method R = Job-to-Date Receipts

  Revenue Method R is a cash-basis method. It calculates job-to-date revenue as equal to total cash received. This method is appropriate for speculative projects or any projects that have a high risk of non-payment.

• Revenue Method W = Job-to-Date Billings + Work-in-Progress @ Billing Rates

  When you use Revenue Method W, DPS calculates job-to-date revenue as equal to job-to-date billings plus work in progress at billing rates. Work in progress is any labor or expense that has been posted but not yet billed. To use this method, you must use DPS Billing.

User-Defined Revenue Methods

For certain projects, you may find that none of the standard revenue methods is appropriate. If so, you can create your own formula for calculating revenue in Settings > Accounting > User Defined Revenue.

If you set up Revenue Generation to use revenue categories to track multiple unbilled accounts, you must create your own user-defined revenue methods for all revenue categories that you set up.