About work-in-progress write-off vs. nonbillable
When to write it off
You write off a draft invoice or individual work-in-progress (WIP) items that you cannot bill, or a final invoice that you cannot collect. When you write off WIP, the spent amount remains but the billed amount is zero, thus showing as a write-off on reports.
You write off a WIP amount that you want to deduct from a draft invoice because either a maximum was exceeded or employee time or expense could not be billed in full. You write off a final invoice because of a contract dispute or because the client refuses to pay.
Typically, you write off amounts that cannot be billed for reasons beyond the company's control, but you still want to track the potential earnings on the project.
When you write off an amount by changing the status of the WIP item
in 
>
When to make it nonbillable
You make a WIP amount nonbillable when you incur cost to the project that is not included in the contract amount. When you make WIP nonbillable, it does not have a spent or billed amount associated it, but it does reflect the cost.
For example, you want to track your marketing and administration cost on the project, but your contract does not allow you to bill these expenses. You may make WIP nonbillable when you incur additional costs that you are unable to bill, perhaps because of project budget overruns.
To enter charges for these costs to a project, you do the following:
- Set up a phase with a billing type of Marketing or Nonbillable.
- Change the status of the billable WIP item to Nonbillable in Manage > Client Invoices.
The nonbillable costs are included on your project reports when you select to show cost, and they will affect the profit calculation for the project.
