Dynamics 365 for Operations: The numerous uses for project contracts is staggering

Blog Series Part 5 – Contract Progress Billing Rule

As you may recall, in Part 3 of this series I showed you how to set up billing rules based on a contract. Today’s blog will cover how the progress billing rule is billed through the contract by generating a project invoice proposal.

What is progress billing?

Progress billing allows you to create invoices for the funding sources based on a percentage of work completed. This billing rule can be created for both fixed fees and time and material project groups. The percent complete can be either manually updated or calculated by the system, depending on how you configure the rule.

How to set up progress billing:

Progress billing can be set up for multiple projects. It simply depends on the type of contract. However, for demonstration purposes, the example below will show you how to set it up for a single project.

NOTE: If you are setting this rule up for a fixed fee project, ensure that a fee journal is created before setting up the contract.

1. Create a project contract. (Steps covered in previous blog).
2. Create the project for this contract. (This step also covered in the linked blog above)
3. Release the project so that transactions can be posted to the project.
4. In the Billing rule FastTab > select ‘New’.
5. Select ‘Progress’ in the Line type field.

6. In the Billing rule line details FastTab, enter the contract value.
7. Select the project you just created in the Project

Note: If you are manually updating the percent complete, the system calculated progress section below can be skipped.

Set up system calculated progress complete:

If you want the system to calculate the percent complete, it will compare the project budget vs. actuals. You must create a project budget (Microsoft instructions here) with the chargeable categories that you will add below. As transactions for the selected categories are booked to the project, the percent complete calculation will update, according to the budget that you set up.

1. In Project FastTab, select the project that you just created in the Available Project grid.
2. Select the right arrow to move the project to the Selected project

3. Select the ‘Chargeable categories’ hyperlink.

4. Select the categories that you want to be chargeable to this contract in the ‘Available categories’ grid.
5. Select the ‘right arrow’ to move the categories to the ‘Selected categories’ grid.

NOTE: Any transactions booked against the selected projects in this contract, for categories not selected here, will not be chargeable, and will not be available to be selected during the contract invoice proposal process.

Set up manual calculated progress complete:

If you want to manually calculate the percent complete on a progress billing rule, you need to follow the below steps to make the manual update.

1. Go to the contract and select the Maintain tab > Process > Manage contract status

2. Select the ‘billing rule’ that needs to be updated (if there are multiple).
3. On the Contract status form select ‘Update percentage’.

Note that Update units delivered, and Update milestone status is not available, because neither apply to the billing rule set up on the contract.

4. Update the Percent to bill field (here I have entered 30% complete).
5. Select OK.

Create a contract invoice proposal

Whether you set up the billing rule to be calculated systematically or manually, the invoice proposal process is the same. Once you have either booked transactions against the project for systematically calculated; or updated the percent complete manually, once complete, you are ready to generate an invoice proposal.

1. Go to the Contract > Maintain > New > Invoice proposal
   

2. On the Invoice proposal form below, select ‘Display available transactions automatically’ to ensure that all transactions that are available to be billed on the contract are displayed.
3. Notice that the Project contract field auto-populated because you are billing directly from the contract.
4. Select the ‘Billing rule(s)’ that you want to generate the invoice proposal for.

Notice that you can generate the invoice proposal for numerous billing rules, which is another added advantage to using the contract billing functionality.

5. In the example below, I am selecting the billing rule that I previously manually updated. In the Invoice amount field, the ‘$36,000’ is the 30% complete that I updated.
6. If previous invoices had been created, the Invoiced field would be populated to represent those invoices.
7. Select OK to generate the invoice proposal.

8. You can select specific ‘Invoice templates’ and ‘Invoice formats’ if you have them loaded.

9. On the Invoice proposal transaction summaries FastTab, the transactional data for the information is displayed.
10. Ensure the information on the proposal is correct.
11. Select Post.

12. On the Post-invoice proposal ensure the Posting is toggled to
13. Select whether you want the ‘Print invoice’.
14. Select OK.

View project transactions:

1. To view the transaction, go to the Contract > Maintain tab > Related information > Posted transactions.

2. From here you can View transaction, View Voucher, View ledger updates to see if the transaction posted as expected.

This blog covered Progress Billing Rules for Project Contracts. Stay tuned for more blogs as we dig a little deeper into billing from the project contracts, or check out our related training available at academy.rsmus.com.

Sarah Strate