Allocating Fee Revenue by Billing Category

An alternative to posting all fee billed revenue to a single account is to have Vision post fee billed revenue to separate revenue accounts either for revenue categories or for labor, consultants, and expenses billing categories, with the posted amounts calculated based on fee allocation information that you enter in project billing terms.

Vision allocates revenue to the accounts linked to billing categories based on information you enter in individual billing terms prior to generating the invoice. The disadvantage of this option is that it requires more data entry that posting revenue based on transaction detail, but one advantage is that you have more control over the allocated amounts because they are not tied to the associated transactions.

This option works best if you bill ahead or if, for other reasons, your fee billing amounts are not directly linked to the actual billing value or cost of the transactions associated with each invoice.

If your company uses revenue categories in Vision, you can set up billing terms to calculate revenue amounts for any of your revenue categories. If you do not use revenue categories, you can set up the billing terms to calculate revenue amounts for any combination of labor, consultants, and expenses.

For projects for which you bill by billing phase, you can enter fee information by category for each billing phase.

Example: When You Bill

Assume that the following are true for your company:

• Your company is not using revenue categories.

• The default 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 Entry of Fee by Billing Category under Invoice Posting.

Your firm negotiates a contract that calls for a $40,000 fee billed as a lump sum based on overall percent complete. When you create the billing terms for the project, Allocate Billed Revenue on Fee Invoices Based on Category is selected by default on the Fees tab of the Billing Terms form. You then make these additional entries:

• Fee Method: Overall Percent Complete

• Fee Basis: Lump Sum

• Fee Billing:

	Fee	Pct Compl	Fee to Date	Prior Fee Billing
Labor	25,000.00
Consultant	15,000.00

In preparation for the first invoice for the project, you enter a percent complete for each of the categories on the Fees tab of the Billing Terms form, and Vision calculates the fee-to-date amounts:

	Fee	Pct Compl	Fee to Date	Prior Fee Billing
Labor	25,000.00	20.0000	5,000.00
Consultant	15,000.00	10.0000	1,500.00

Because there has been no prior fee billing, the fee amount to be billed on the invoice is $6,500. The overall percent complete displayed on the invoice is 16.2500: (6,500 / 40,000) × 100.

When you generate the invoice, Vision does the following:

• Allocates $5,000 to account 401.00 based on the fee information entered for the labor category

• Allocates $1,500 to account 421.00 based on the fee information entered for the consultant category

When you display the invoice information in the Invoice Accept dialog box, the grid displays those two revenue account distributions for the Fee invoice section.

The revenue posted to each of the accounts is calculated as Fee to Date – Prior Fee Billing. For subsequent invoices, the posted amounts will be less than the amounts in Fee to Date because the prior fee billing amounts will no longer be 0.00.

Billing Phase Fee Calculation for the Percent Complete by Phase, as Percent of Fee Method

If you select Percent Complete by Phase, as Percent of Fee as the Fee Method on the Billing Terms form, Vision calculates the current fee for a billing phase/billing category combination based on the overall category fees.

For example, assume that the total fee for labor for the project is $80,000 (80% of the overall fee) and the total fee for consultants is $20,000 (20% of the overall fee). If the total billing phase fee for an invoice is $10,000, Vision allocates $8,000 (80%) of that phase fee to the labor category and $2,000 (20%) to the consultants category.