Allocating Fee Revenue Based on Transaction Detail

An alternative to posting all fee billed revenue to a single account is to have Vision post to multiple accounts based on the transaction detail that underlies the fee.

For example, if your fee contracts commonly include labor, direct consultants, and direct expenses in the fee, you can set up Vision to automatically calculate revenue amounts for each of those types of charges, based on either their total billing value or total cost, and post those amounts to three separate revenue accounts.

Any difference between the actual fee amount and the sum of the revenue amounts calculated from transaction detail is posted to a revenue account that you specify (usually a labor billed revenue account).

For projects with lower WBS levels, Vision posts the revenue to those levels based on the transaction detail and also allocates the over/under billed amount based on each lower level WBS component’s proportion of the total amount for labor transactions.

Using this option for allocating fee billed revenue to revenue accounts does not affect the appearance of the invoice itself. Vision calculates and displays fee billed amounts, percent completes, prior billing totals, and so on, in exactly the same way on invoices, whether or not you select this option.

The option to post to multiple accounts based on the transaction detail works best if your fee billing amounts tend to closely approximate the actual billing value or cost of the transactions associated with each invoice.

Example: When You Bill

Assume that the following are true for your company:

  • The default fee billed revenue accounts on the Accounts tab of Billing Setup are 401.00 for labor and 421.00 for consultants.

  • On the Fees tab of Billing Setup, you select Enable Allocation of Billed Revenue on Fee Invoices Based on Transactions Detail and specify these settings:

    • Calculate Transaction Values At: Billing
    • Over/Under Billed Account: 409.00
    • Include Transactions From: Labor and Consultant – Direct

You set up a new project with fee billing terms at the project level and select Allocate Billed Revenue on Fee Invoices Based on Transactions. The project has two WBS levels, project and phase. You do not enable posting by billing phase, and you do not override the default fee billed revenue accounts.

When you generate an invoice with a $10,000 fee billing amount, Vision calculates transaction amounts as follows:

  • Total billing value of the labor transactions = $5,000: $2,000 for Phase 1 and $3,000 for Phase 2.

  • Total billing value of the direct consultant transactions = $4,000: $1000 for Phase 1 and $3000 for Phase 2.

  • Difference between the actual fee billing amount ($10,000) and the sum of the included labor and direct consultant transactions ($9,000): $1000

Based on these calculations, Vision posts to accounts as follows:

  • $5,000 to account 401.00 based on the labor transactions

  • $4,000 to account 421.00 based on the direct consultant transactions

  • $1,000 to account 409.00 for the over/under billed amount

These posted amounts are further broken down by phase:

  • Labor: $2,000 to Phase 1, $3,000 to Phase 2

  • Direct consultants: $1000 to Phase 1, $3000 to Phase 2

  • Over/under billed (based on percentage of the total billing value of labor transactions):

    • $400 to Phase 1: (2,000 / 5,000) × 1,000 over-billed amount
    • $600 to Phase 2: (3,000 / 5,000) × 1,000 over-billed amount

When you display the invoice information in the Invoice Accept dialog box, the grid displays these allocations by account and phase, all with Fee in the Invoice Section column of the grid.

Invoice Transaction Detail Report

The Invoice Transaction Detail report (Reporting > Accounts Receivable) is designed to support the option to post fee invoice revenue based on transaction detail. Use that report to review the transaction detail that Vision uses to allocate and post fee billed revenue amounts for invoices to revenue accounts and WBS levels.

For each invoice, the report provides complete transaction detail, grouped and subtotaled by general transaction type (labor, consultant, and expenses). You have the option to also display the invoice total amount and totals for each of the invoice sections: fees, labor, reimbursable expenses, and so on.

In addition to posted transactions, the report includes any billing-only transactions created in Interactive Billing. The detail on this report matches the detail displayed in Interactive Billing when the invoice is posted.

Multicompany

If you use the Multicompany feature:

  • If you have projects for which some lower WBS levels belong to other companies, the company for the top WBS level determines whether the option to post fee billed revenue based on transactions is available at any level of the project, whether or not the option is enabled for the company of a lower WBS level component.

  • If you have projects for which some lower WBS levels belong to other companies, the company for the top WBS level determines whether the option to post fee billed revenue based on transactions is available at any level of the project, whether or not the option is enabled for the company of a lower WBS level component.

  • If you have projects for which a fee is specified at the project level but some lower WBS levels belong to other companies, it is recommended that you select the same option—Cost or Billing—in Calculate Transaction Values At for all companies.

  • You specify an over/under billed account for each of your companies. Vision always uses the account defined for the company associated with the fee. For example, if a project has phases that belong to a different company than the project and you set up a fee for a phase, Vision posts the variance amount for that fee to the over/under billed account specified for the company that is associated with the phase for which you billed the fee.

Multicurrency

If you use the Multicompany feature, both billing and cost amounts are calculated in the billing currency.

If No Transaction Detail Exists

If an invoice has a fee amount but no associated transaction detail, the full fee amount is allocated and posted to the over/under billed account. Even if the project has more than one WBS level, only one WBS component receives the full fee amount.

If You Consolidate Posting

If you select Consolidate All Posting on the Sub-Level Terms tab of the Billing Terms form, Vision allocates fee billed revenue to the applicable revenue accounts based on transaction detail. However, rather than allocating the fee to WBS components based on transactions, Vision posts the entire fee amount for the invoice to the phase specified in Phase to Post (or to the phase in Phase to Post and the task in Task to Post, if the project has three WBS levels).

If You Enable Posting by Billing Phase

If you enable posting by billing phase for a fee, Vision determines allocations for each billing phase separately. For example, if the Schematic Design billing phase is set up to post to phase 01, Vision only considers transactions for phase 01 when determining how to allocate the fee billed revenue for the Schematic Design billing phase to labor, consultant, expenses, and unit.

Fees for Multiple WBS Levels

Deltek recommends that you do not set up fees at more than one WBS level for the same project (for example, a fee at the project level and another fee at the phase level). The fee billed revenue allocations would probably not be correct in that case.

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