Project Billing Types in NetSuite Project Accounting
Project Accounting in NetSuite allows organizations to maintain tight control over their projects to ensure they are completed on-time and on-budget. Through NetSuite’s Project functionality, project activities can be connected and integrated with company financials, which helps to ensure accurate accounting and billing throughout the project lifecycles. Project Accounting combines job costing, project budgeting, and project billing. NetSuite has several different billing types that organizations can choose from to best suit their particular needs.
Fixed Bid Interval
Fixed Bid Interval billing is the simplest of the billing types and is most similar to standard billing schedules outside of Project Accounting. With this billing type, you bill fixed amounts at designated time intervals. You determine the intervals at which you want to bill in the billing schedule.
Once the intervals are set, billing will be performed based on the percent of work completed. This amount is affected by hours entered against the project. For example, if 2 hours were entered against a project from a total of 8 hours, the percent of work completed would be 25%.
When the Sales Order is billed, the Invoice will be generated reflecting the 25% of work completed.
Fixed Bid Milestone
Fixed Bid Milestone billing allows organizations to bill based upon completion of project tasks, or milestones. The advantage of using this billing type is that billing will only occur when actual project work has been done. The milestones are configured in the work breakdown structure of the project when it is set up.
Time will be entered against the project and once a milestone is completed, a Sales Order will be ready to bill that only includes amounts related to that particular milestone.
Time and Materials
Time and Materials billing is based on hours logged and approved against a project. Similarly to Fixed Bid Interval, time intervals are set up for when an organization wants to bill. However, there is no fixed price set for the project and for each interval, the hours logged and approved against the project are what is billed to the customer, even if it is more than the estimated hours.
Charge-based billing is a new billing type that was introduced to NetSuite in 2019. It lets you choose different billing methods for different project activities by creating charge rules. This offers organizations significant flexibility when it comes to how they bill and recognize revenue.
Charge rules define how the project will be billed and include:
- Fixed Fee – charges are created on fixed dates, when milestones are reached, or on project progress
- Time-Based – charges are created based on time entries from employees or vendors
- Expense-Based – charges are created based on expense reports from employees
- Purchase – charges are created based on purchase transactions for non-inventory and service items associated with the project
Based on the activities on a project, charges are generated for review and approval prior to billing. Once the charges are approved, they can be included on a Sales Order.
Charge-based billing also allows for different methods of revenue recognition based on the charge rules assigned to the project using revenue rules. This includes:
- As Charged – recognizes revenue for amounts as they are charged
- Percent Complete – recognizes revenue based on project completeness
- Fixed Amount – recognizes revenue on a defined schedule
- Labor-Based – recognizes revenue based on time entries
Project Accounting in NetSuite offers the flexibility to bill projects in a variety of different ways depending on what best suits a particular organization’s needs and preferences. With the addition of Charge-Based Billing, this opens the doors even more for varied and customizable ways in which organizations can bill projects and recognize revenue.
If your organization uses project billing, Rand Group can assist in examining your billing processes and helping you to make improvements and efficiencies using the full breadth of NetSuite’s Project Accounting capabilities. Rand Group is an experienced NetSuite partner and has over 20 years of experience helping our clients achieve business success using technology. Contact one of our representatives today for more information.
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