From project to cash
This guide follows one engineering study from the signed award to recognized revenue. The customer funds the study's labor and material as a line of $250,000, and pays a of $90,000 for the final report, in three billing events of $30,000.
Two kinds of contract
Sales → Agreements has two lists: Service Contracts and Project Contracts. Both hold the same contract record, with the same "Draft", "Active" and "Ended" statuses, Confirm and Amend. What differs is what the contract bills from.
- A bills Service items on a planned invoice schedule: recurring and one-time lines over a term that can renew.
- A bills the work of one project over a period of performance. Each line is a contract line item number (CLIN) with a billing method: Time & Materials, or Fixed Price.
A contract never mixes the two kinds of line.
A service contract refuses a Time & Materials or Cost Plus line, and a project contract refuses a recurring line. The study's two CLINs are therefore one project contract. A subscription for the same customer is a second contract, a service contract.
Set up the project
A project contract bills a project whose is Contract. Set it in the project's Overview, under More → Accounting → Cost treatment. Every charge to a Contract project then posts to the project's Cost Account, else to the Project WIP default account, until the revenue run moves it to cost of goods sold. The projects reference covers the other treatments.
Next, mark the . Open the element that holds the study's work, and turn on Billing element in its Work properties. The switch shows only on a Contract project. A line bills the work charged to its billing element and to every element below it, so one switch covers the whole study.
Last, give each a Bill Rate in its Rates grid, at Projects → Labor Categories. A Time & Materials line prices an hour at the line's own rate for the employee, then its rate for the category, then the category's bill rate. An hour with no rate at all waits "On Hold" with the reason "No bill rate".
A Contract project shows its Billing page before any contract exists.
Billing shows under Costs in the sidebar of every Contract project. With no project contract, the page says "No project contract bills this project" and offers New Project Contract, with the project already picked. The Overview's Needs attention card shows the same row.
Create the project contract
Start with New Project Contract on the project, or Add Project Contract on the Project Contracts list. The setup has four steps.
- Details. The Customer, the Project (required), a Name, the customer's Contract Number and the Period of Performance: Start Date and End Date. Next saves the contract as a draft.
- Lines. One line per CLIN. Add Line opens the line form: the Billing Method, the Item the invoice names (a Service, or a Part you deliver, as in a prototype CLIN), the Billing Element, the Funded Amount and the Ceiling. A Time & Materials line also takes a Handling (%) on material, and a Cost Plus line a Fee (%). A Fixed Price line takes a Price instead.
- Invoicing. Bill To, Invoice Contact, Invoice Address, Ship To and Payment Terms, then the Billing Period and the invoicing mode. Carbon invoices each calendar billing period after it ends.
- Review. A summary, and a list of what the setup still lacks.
The study's Fixed Price line adds a Billing Events grid to the Invoicing step. Each row is one invoice of a Fixed Price line, and the rows must add up to its price. Split the $90,000 row into three rows of $30,000 and move each to the date the report reaches its milestone.
Each line also earns its revenue by a . A Time & Materials line uses Right to Invoice. A Cost Plus line uses Right to Invoice or Percent Complete. A Fixed Price line uses Daily or Percent Complete, and Percent Complete needs a billing element. Time & Materials is in every plan; Cost Plus and Percent Complete need the Business plan.
The Review step links each gap to where you fix it. A red gap keeps Confirm disabled, because the server would refuse the contract anyway:
- no line;
- a Time & Materials or Cost Plus line with no billing element, or with an element not marked as a billing element;
- a project whose cost treatment is not Contract;
- a contract currency other than the base currency;
- billing events that do not add up to their line's price.
An amber gap is only a warning: a labor category with no bill rate and no contract rate, or an empty Project WIP, Deferred Revenue, Contract Assets or Contract Loss Provision default account. The first posting that needs the account fails.
Nothing bills until you confirm.
A Draft project contract bills nothing, and the project's Needs attention card names it until it is confirmed. After Confirm, add or end a line with Amend. Change the funding at any time with Edit Funding, in the ⋯ menu of the line's billing page.
Charge the work
The contract bills only what the project records. Employees log hours on My Time against a , the study or one of its elements, with a labor category. Issue material and Charge cost in an element's ⋯ menu charge stock and other costs. A job or a purchase order line with the study's charge number charges it too. The projects reference lists every source.
Each cost charged under the billing element becomes a . A Time & Materials item is made when the cost posts. Cost from a job's completion or backflush gets its item at the next billing run. A Cost Plus item is made by the billing run. Generate Billable Items on the line's billing page makes the missing items at once.
A Time & Materials line bills no machine, overhead or burden cost.
The bill rate prices the whole hour, so it already covers them. Material and other direct cost bill at cost plus the line's handling percentage.
Review and bill
Review the items on the Billing tab of Projects → Approvals. Approvals shows in the Projects menu while billable items wait as "Unbilled" or "On Hold", for a user who can update projects and view sales, and its count includes them. The project's Overview links the same tab from Needs attention. Select items and choose Hold, Release, Write Off or Edit Price. The project's Billing page lists the same items for one project.
The daily billing job then drafts one invoice per contract for its Time & Materials and Cost Plus lines. It takes the Unbilled items posted up to the end of the latest billing period, and stops at each line's funded amount. Items past it stay Unbilled with the reason "Funding limit". Each billing event of the Fixed Price line is drafted on its own date. Invoice on the contract page drafts whatever is due now, both kinds.
Billing never passes what the customer funded.
When the Time & Materials line has billed $250,000 of items, the rest wait as Unbilled. Raise the funding with Edit Funding, and the next run bills it.
Each drafted invoice follows the contract's invoicing mode, then posts like any other sales invoice. On the contract page, the Project Billing card lists every invoice with its Backup: the items behind it, exportable to CSV.
Once the contract is confirmed, the project's Overview shows a Contract card under Budget. A funding bar and five figures show where the study stands: Funded, Cost, Billed, Unbilled and Revenue.
Earn the revenue
Revenue follows the work, not the invoice. The monthly revenue recognition run, at Accounting → Revenue Recognition, recognizes each line by its revenue method. A Right to Invoice line earns its billable items posted by the month end, less written-off items. A Percent Complete line earns its price times the cost to date over the estimate at completion.
The same run moves the line's cost from Project WIP to cost of goods sold, so revenue and its cost land in the same month. Revenue billed in advance comes out of ; revenue not billed yet goes into .
A Draft run shows a Journal card: what posting the run will write, by account, with its debits and credits totalled. Read it before you post. The project billing reference covers the loss provision and the Percent Complete estimate.
A prototype CLIN
Suppose the award adds a prototype: one sensor housing, built in your shop and handed to the customer. A project contract line can name a Part for this. You build it with a job and hand it over with a delivery, both from the line.
- Add the CLIN. On the Lines step, choose the part in Item. A part line shows a Quantity, the units to deliver. On a Fixed Price line, the Unit Price is the price of one unit.
- Build. After Confirm, open the line's page. The contract opens a Fixed Price line on it; a Time & Materials or Cost Plus line opens on its billing page, with Line Details in the ⋯ menu. Click Build, check the Task, Quantity, Due Date and Location, and click Create Job.
- Run the job like any other job.
- Deliver. Once the job completes units, the line's button changes to Deliver. It opens the contract's draft shipment with the completed units filled in. Type each Serial Number, then Post it with the Delivered on date.
Build chooses every setting for you. The job is charged to the task, defaulting to the line's billing element, and it consumes to the project. Carbon also adds a plan line for it on the task. The line page lists its jobs and deliveries and shows one button for the next step: Deliver while completed units wait, else Build while the jobs do not cover the quantity. From the task, Create Job in a Make to Order plan line's ⋯ menu makes one for that plan line, and links it to the line when exactly one part line with that item bills the task. Add Job under the task's children opens the job form for any other job on the task.
The delivery records custody; the job already used the part.
A job that consumes to the project puts nothing into stock when it completes. So the delivery moves no stock and posts no journal: it records the units, the serial numbers and the date. You cannot deliver more units than the line's jobs completed and its earlier deliveries did not hand over.
The task shows the job, not its bill of materials. On Estimated, the plan line's card names the job, linked, and its cost so far. On Actual, all of the job's cost is one card. The Plan tree's card shows the job and its progress, such as "J-104 · 1 of 1", and the Overview's Needs attention adds a row when a completed job's units are not delivered, a job finishes after its task's target date, or every job of an open task is complete.
How the prototype bills follows the line's billing method:
| Billing method | What bills |
|---|---|
| Time & Materials | The job's cost under the billing element, as billable items. A shop hour is priced like a logged hour, with the employee's labor category. |
| Cost Plus | The job's cost plus the fee, as billable items. |
| Fixed Price | The delivered units' share of the next billing event moves to the delivery date, so the invoice follows the delivery. Voiding the delivery moves it back, until that event is invoiced. |
The shipment's Packing Slip prints as a Receiving Report: the contract number and, for each CLIN, its description, quantity, unit and serial numbers. Type it into WAWF; Carbon has no EDI export. Under DCAA timekeeping, shop time on the job becomes draft hours on the employee's My Time, on a row that names the job and the operation, certified with the week. A person with no labor category cannot record it. Editing or deleting the production event updates its draft hours. Once they are submitted, reject the entry first; once they are posted, correct it to the event's hours.
The study now runs one way each month: the team charges the work, a reviewer releases the items, the billing job drafts the invoice, and the run earns the revenue. The project billing reference has every field and rule.