Defining Independent Contract Billing Lines

This chapter provides an overview of independent contract billing lines and discusses how to:

• Define contract billing lines for lump sum.

• Define contract billing lines for unit price.

• Define contract billing lines for milestone billing.

• Define contract billing lines for progress billing.

• Complete a milestone or progress billing event.

• Change a previously billed progress billing line.

• Define contract billing lines for time and material (T and M) or cost plus.

Understanding Independent Contract Billing Lines

This section lists a prerequisite, common fields, and discusses independent contract billing lines.

Prerequisite

Set up a contract master for the contract.

See Setting Up Contract Master Information.

Common Fields Used in This Chapter

Independent Contract Billing Lines

After you define the contract master information, you must define contract billing lines to generate invoices for your client. Contract billing lines specify the billing terms of the contract. You can set up independent and dependent contract billing lines. The billing line type determines whether the billing line is independent or dependent.

Independent contract billing lines include all of the information that the system needs to calculate a billing amount. You can use these billing line types to define independent billing lines on a contract:

• Lump sum

• Unit price

• Milestone billing

• Progress billing

• T and M and cost plus

Defining Contract Billing Lines for Lump Sum

This section provides overviews of lump sum billing lines, how lump sums calculate billing amounts, and recurring billing amounts, lists a prerequisite, and discusses how to:

• Set processing options for Contract Billing Line Details (P5202).

• Define a lump sum for manual calculation.

• Define a lump sum to calculate billing amounts.

• Define recurring billing amounts.

Understanding Lump Sum Billing Lines

Contract billing lines for lump sum define a fixed billing amount. When you set up a billing line on a contract for lump sum, your company agrees to bill the customer for a fixed amount, regardless of the actual costs that are incurred to complete the job.

You can define lump sum billing lines for which you must calculate the billing amount manually or that the system can use to calculate the billing amount automatically. For the system to automatically calculate the billing amount, you must define a cross-reference to link the lump sum billing line to a nonbillable account, multiple accounts, or a range of accounts. The accounts that you cross-reference include the information about the actual costs and projected final costs that the system uses in the calculation of the billing amount for lump sum.

When you define a lump sum for manual calculation, the system might display the following message:

Warning - Cross-Reference Not Setup.

You can ignore this message because you do not use the cross-reference information when you use a lump sum billing line for manual calculation.

When you define contract billing lines for lump sum, the system supplies the:

• Tax explanation, tax or geographical area, job, and accounts receivable company based on the contract master.

• Accounts receivable offset based on the owner address information.

• Revenue account based on the AAI BC01 for lump sum.

  Important! If the cost account on the cross-reference table is billable rather than nonbillable, the system creates billing workfile records during the workfile generation process. Also, the system processes the transactions on a T and M billing line and on the unit/lump sum billing line, resulting in the customer being billed twice for the same cost transaction.

Understanding How Lump Sums Calculate Billing Amounts

You use lump sum billing lines when you want to be billed based on a fixed schedule-of-values amount. When you define a lump sum billing line on a contract, your company agrees to invoice the customer a calculated amount, regardless of the actual costs that are incurred to complete the job.

You can define lump sum billing lines that the system uses to automatically calculate the invoice amount. The system calculates the invoice amount during the invoice generation process.

To calculate the invoice amount automatically, you must set up the processing options of the Invoice Generation program (R52121) as explained in this table:

When you create an invoice for the lump sum billing lines, you can specify one of these methods of calculation for the invoice amount:

• Percent complete.

• Percent of cost.

• Defined ledger type.

• The greater or lesser of the percent complete or percent of cost.

Percent Complete Method

When you specify the Percent Complete method, the system calculates the invoice amount as:

• Percent Complete = Actual Cost-To-Date ÷ Projected Final Cost (inception-to-date)

• Invoice Amount = Percent Complete × Schedule of Values

• Current Invoice Amount = Invoice Amount − Prior Billed Amount

  Schedule of Values is stored in the billing line details portion of a contract. Actual Cost-to-Date is located in the AA ledger. Projected Final Cost is located in the HA ledger.

Percent of Cost Method

When you specify the Percent of Cost method, the system calculates the invoice amount as:

• Markup Amount = Schedule of Values − Projected Final Cost (inception-to-date)

• Markup Percent of Cost = Markup Amount ÷ Projected Final Cost (inception-to-date)

• Current Invoice Amount = Markup Percent of Cost × Actual Cost for Current Period

  Actual Cost for Current Period is calculated using the from date on the processing options of the Contract Billing Invoice Generation program (R52121).

  Projected Final Cost is calculated as inception-to-date, but if the annual close has not been completed the Account Balances table (F0902) contains only year-to-date information.

  Schedule of Values is stored in the billing line details portion of a contract. Actual Cost for Current Period is located in the AA ledger. Projected Final Cost is located in the HA ledger.

Defined Ledger Method

When you specify the Defined Ledger method, the system calculates the invoice amount as:

Invoice Amount = Schedule of Values × Percent Assigned to Defined Ledger

Schedule of Values is stored in the billing line details portion of a contract. Percent is located in the specified Defined Ledger type.

Understanding Recurring Billing Amounts

You can use recurring amounts to bill for a total fixed amount in smaller increments at a recurring frequency, such as weekly or monthly. For example, assume that your company rents a trailer for the job site. The total cost is 3,600 USD. The owner of the job agrees to reimburse your company at a rate of 300 USD per month.

Prerequisite

Define Recurring Billing Codes (UDC 52/RB).

Forms Used to Define Contract Billing Lines for Lump Sum

Setting Processing Options for Contract Billing Line Details (P5202)

Processing options enable you to specify the default processing for programs and reports.

Edits

These processing options enable you to specify whether the program issues a warning or error message when specific changes are made to the contract.

Display

This processing option enables you to determine whether the system displays tax information.

Default

This processing option enables you to specify whether to override the revenue/cost account based on the new contract's company and project or job when you add a new change order from an existing change order.

Print

This processing option enables you to specify the version of the Contract Print program (R5201) to use.

Defining a Lump Sum for Manual Calculation

Access the Contract Billing Line Detail Revisions form.

B L (billing line type)

Leave this field blank for the system to enter L for lump sum. Note. The value entered in the B L field controls which fields are available.

Note. If you leave the Tax Rate and Tx Ex fields blank, the system uses the tax information from the contract master.

If you omit the account number (business unit, object, and subsidiary), the system assigns the account number (business unit, object, and subsidiary) from the AAIs that are set up for item BC01.

Defining a Lump Sum to Calculate Billing Amounts

Access the T&M, Cost Plus, Unit Price and Lump Sum Cross Reference Revisions form.

You define a lump sum billing line as if you were defining it for manual calculation before you create a cross-reference to calculate billing amounts.

Complete the Business Unit, Sub, Obj Acct, Subledger, and Sub Type fields for one or more accounts.

If you leave the Subledger field blank, the system uses the blank subledger and not all subledgers.

Important! The account numbers that you specify in the cross-reference for lump sum and unit price billing lines should be nonbillable in the Account Master table (F0901). If you specify billable accounts, you risk double-billing the billing line. The results will be unpredictable.

Defining Recurring Billing Amounts

Access the Contract Billing Line Detail Revisions form.

Defining recurring billing amounts is very similar to defining a lump sum for manual calculation.

Cross-reference information is not required for billing lines that contain a recurring amount and code.

Defining Contract Billing Lines for Unit Price

This section provides an overview of unit price billing lines and discusses how to:

• Define unit price for manual calculation.

• Define unit price to calculate the billing amount.

Understanding Unit Price Billing Lines

Contract billing lines for unit price define a billing term that is based on a quantity and price per unit. When you set up a billing line on a contract for unit price, your company agrees to bill the customer for a quantity in place at a predetermined price per unit.

When you define a contract billing line for unit price, the system supplies the:

• Tax explanation, tax or geographical area, job, and accounts receivable company based on the contract master.

• Accounts receivable offset based on the owner address information.

• Revenue account based on the AAI BC02 for unit price.

You can define unit price billing lines for which you must calculate the billing amount manually at the time you generate invoices, or unit price billing lines that the system can use to calculate the billing amount automatically.

When you define a unit price for manual calculation, the system might display the following message:

Warning - Cross-Reference Not Setup

You can ignore this message because you do not use the cross-reference information when you use a unit price billing line for manual calculation.

To automatically calculate the billing amount for a unit price billing line, you must set up a cross-reference from the billing line to the account that contains the quantities in place. The system uses the account to determine the actual quantity in place to date from the AU (actual units) ledger.

When you set up a cross-reference for a unit price billing line, remember that:

• The system uses only the account on the first line of the cross-reference table to calculate the billing.

• You cannot use positional wildcards when you enter the account.

  However, you can enter an asterisk (*) in the Subledger field to calculate unit price for all subledgers that are attached to the specified business unit, object, and subsidiary.

• Payroll and equipment information is not applicable.

The system calculates the billing amount based on this formula sequence:

• Earned Units-to-Date = Actual Quantity-in-Place-to-Date

• Current Units = Earned Units-to-Date − Previously Billed Units

• Unit Price = Schedule of Values ÷ Scheduled Units

• Current Billing Amount = Current Units × Unit Price

  Note. Earned units-to-date is calculated as inception-to-date, but if an annual close has not been completed, the Account Balances table (F0902) contains only year-to-date information.

Verifying Job Accounts and Budgets

On the T&M, Unit Price and Lump Sum Cross Reference Revisions form, you can verify the budget information for a job and determine the correct account to cross-reference for the quantity in place by choosing Orig Budget Entry from the Form menu. The system displays the Work with Job Master form from the Job Cost system. From this form, you can review budget information by choosing Job Budgets from the Row menu.

Locating Account Information

On the T&M, Unit Price and Lump Sum Cross Reference Revisions form, if you don't know the account number that you want to include in the cross-reference for a contract billing line, you can locate and select accounts from a list of the accounts that you have set up for the system. To do this, select SelectAccountNo from the Row menu. The system displays the Account Master Search form.

Important! If the cost account on the cross reference table is billable rather than nonbillable, the system creates billing workfile records during Workfile Generation. Also, the system processes the transactions on a T and M billing line and on the unit/lump sum billing line, resulting in the customer being billed twice for the same cost transaction.

Forms Used to Define Contract Billing Lines for Unit Price

Defining Unit Price for Manual Calculation

Access the Contract Billing Line Detail Revisions form.

Note. If you leave the Tax Rate and Tx Ex fields blank, the system uses the tax information from the contract master.

If you omit the account number (business unit, object, and subsidiary), the system assigns the account number (business unit, object, and subsidiary) from the AAIs that are set up for item BC02.

Defining Unit Price to Calculate the Billing Amount

Access the T&M, Cost Plus, Unit Price and Lump Sum Cross Reference Revisions form.

You define a unit price billing line as if you were defining it for manual calculation before you create a cross-reference to calculate billing amounts.

Complete the Business Unit, Sub, Obj Acct, Subledger, and Sub Type fields for only one cost account.

You can enter an asterisk (*) in the Subledger field to calculate units for all subledgers that are attached to the business unit, object, and subsidiary that you specify.

Important! The account numbers that you specify in the cross-reference for lump sum and unit price billing lines should be nonbillable in the Account Master table (F0901). If you specify billable accounts, you risk double-billing the billing line. The results will be unpredictable.

Defining Contract Billing Lines for Milestone Billing

This section provides an overview of milestone billing lines and discusses how to:

• Define billing lines for milestone billing.

• Define billing events for milestone billing.

Understanding Milestone Billing Lines

When you define a contract billing line for milestone billing, your company agrees to bill the customer only after you reach a specific milestone or complete a billing event in the course of a job.

This pie chart illustrates the setup of a milestone billing line:

Milestone billing line

When you set up a contract billing line for milestone billing, the system supplies the:

• Tax explanation, tax or geographical area, job, and accounts receivable company based on the contract master.

• Accounts receivable offset based on the owner address information.

• Revenue account from the AAI BC04 for milestone billing.

Billing Events for Milestone Billing

You can define a billing event as either the completion of a specific phase of work or a specific billing date. To do this, you cross-reference each of the billing events that make up the billing line for the milestone billing with a specific date and the milestone amount or percentage that you want to bill for that event. The total percentage of all the billing events for the billing line must equal 100 percent. In addition, the amounts of all billing events must equal the schedule of values.

The system calculates the billing amount for a completed billing event based on this formula for percent-based milestones:

Schedule of Values × Percentage for the Milestone

The system uses the milestone amount for a completed billing event for amount-based billing events. The schedule of values for the milestone billing is the amount of the overall billing for the contract.

You can also cross-reference a draw to a billing line for milestone billing.

See Understanding Prepayments for Contracts.

When you define a milestone billing line, the system might display the following message:

Warning - Cross-Reference Not Setup

The system also highlights the X-Ref field until you enter cross-reference information for the billing line to define billing events.

Forms Used to Define Contract Billing Lines for Milestone Billing

Defining Billing Lines for Milestone Billing

Access the Contract Billing Line Detail Revisions form.

B L (billing line type)

Enter the billing line type of M or 6 for milestone billing lines.

Note. If you leave the Tax Rate and Tx Ex fields blank, the system uses the tax information from the contract master.

If you omit the account number (business unit, object, and subsidiary), the system assigns the account number (business unit, object, and subsidiary) from the AAIs that are set up for item BC04.

Defining Billing Events for Milestone Billing

Access the Milestone Billing Line Revisions form.

Event Name	Enter the name, number, or other identifier of the event for the milestone/progress billing percentage.
% Sched (percent - schedule of values)	Enter a value indicating the percent complete of the contract billing line in relationship to the schedule of values. The total of the % Sched field for all rows that you complete must equal 100 percent.
Milestone Amount	Enter a number that identifies the amount that the system will add to the account balance of the associated account number. Enter credits with a minus sign (–) either before or after the amount.
Estimated Date Complete	Enter the estimated date for completion of this milestone or progress event.
Seq No (sequence number)	Enter a number to specify the sequence of information.

Note. If you selected the Percent option, complete the % Sched field. If you selected the Amount option, complete the Milestone Amount field.

Defining Contract Billing Lines for Progress Billing

This section provides an overview of progress billing lines and discusses how to:

• Define billing lines for progress billing.

• Define billing events for progress billing.

Understanding Progress Billing Lines

When you define a contract billing line for progress billing, your company agrees to bill the customer only after you reach a specific percentage of completion of work in the course of a job.

This bar graph illustrates the setup of a progress billing line:

Progress billing line

When you set up contract billing lines for progress billing, the system supplies the:

• Tax explanation, tax or geographical area, job, and accounts receivable company based on the contract master.

• Accounts receivable offset from the owner address information.

• Revenue account from the AAI BC05 for progress billing.

Billing Events for Progress Billing

You can define a billing event as a cumulative percentage of completion of work by an estimated date. To do this, you cross-reference each of the billing events that make up the billing line for the progress billing with a completion percentage.

When you define the billing events for progress billing:

• Each billing event represents a cumulative percentage of work completed for the job.

• The final billing event must be 100 percent to bill the entire schedule of values amount for the billing line.

The system calculates the billing amount for a completed event based on this formula:

Schedule of Values × Cumulative Percentage of Completion − Total of Previously Billed Amounts

The schedule of values for the progress billing is the amount of the overall billing for the contract.

You can cross-reference a draw to a billing line for progress billing in order to set up a billing line for prepayment.

See Understanding Prepayments for Contracts.

When you define a progress billing line, the system might display the following message:

Warning - Cross-Reference Not Setup

The system also highlights the X-Ref field until you enter cross-reference information for the billing line to define billing events.

Forms Used to Define Contract Billing Lines for Progress Billing

Defining Billing Lines for Progress Billing

Access the Contract Billing Line Detail Revisions form.

B L (billing line type)

Enter the billing line type of P or 7 for progress billing lines.

Note. If you leave the Tax Rate and Tx Ex fields blank, the system uses the tax information from the contract master.

If you omit the account number (business unit, object, and subsidiary), the system assigns the account number (business unit, object, and subsidiary) from the AAIs that are set up for item BC05.

Defining Billing Events for Progress Billing

Access the Progress Billing Line Revisions form.

Event Name	Enter the name, number, or other identifier of the event for the milestone/progress billing percentage.
% Sched (percent - schedule of values)	Enter a value indicating the percent complete of the contract billing line in relation to the schedule of values. The total of the % Sched field for all rows that you complete must equal 100 percent.

Completing a Milestone or Progress Billing Event

This section provides an overview of the completion of milestone or progress billing events and discusses how to specify a completion date for a milestone or progress billing event.

Understanding the Completion of Milestone or Progress Billing Events

To generate an invoice for a milestone or progress billing line when you complete a milestone for a contract or to generate an invoice for a specified percentage of completion for the contract, you must specify the actual completion date for the milestone or progress billing event.

When you generate invoices, the system compares the cut-off date for the generation with the actual completion date. If the generation date is the same or later, the system processes the billing event for the milestone billing line. At this point in the billing process, you cannot change the billing amount.

When you generate an invoice for an event, the system updates the Billed Flag field on the Milestone Billing Line Revisions form or Progress Billing Line Revisions form to Y. The billing event is then protected and you can no longer change the information for the event.

Form Used to Complete a Milestone or Progress Billing Event

Specifying a Completion Date for a Milestone or Progress Billing Event

Access the Milestone/Progress Event Completions form.

To specify that the milestone was completed on the current system date, select the billing line and then select Mark/Unmark Compl (Mark/Unmark Complete) from the Row menu to mark the line as complete. The system updates the Actual Complete Date field with the system date and enters 1 in the Cmp Flag (Complete Flag) field.

To specify that the milestone was completed on a date other than the current system date, enter a date in the Actual Complete Date field and enter 1 or Y in the Cmp Flag field.

Changing a Previously Billed Progress Billing Line

This section provides an overview of changes to previously billed progress billing lines and discusses how to replace a previously billed progress billing line.

Understanding Changes to Previously Billed Progress Billing Lines

After a progress billing line has been billed, you cannot make any changes to the billing line. To change it, you must create a new billing line. This new billing line can be on a new change order or on the same change order as the original progress billing line.

When you create a new progress billing line, you can use the schedule of percent complete to override a previously defined progress billing line in the same contract. To do this, you must:

• Define the progress billing line on a subsequent change order for the contract or on the same change order as the original progress billing line.

• Define the percent complete for billing for the new billing line.

• Cross-reference the new billing line for progress billing to the previously defined progress billing line.

The system automatically assigns I (inactive) to the Billed Flag field on the Progress Billing Line Revisions form for the remaining unbilled percentages for the cross-referenced billing line. The system uses the cross-referenced progress billing line to create a billing amount.

Forms Used to Change a Previously Billed Progress Billing Line

Replacing a Previously Billed Progress Billing Line

Access the Contract Billing Line Detail Revisions form.

To change a progress billing line after it has been billed:

1. Create a new progress billing line and define a billing event to specify the percent complete for that billing line.

2. Select a progress billing line that has already been billed and select Progress X-Ref from the Row menu to access the Progress Cross-Reference Revisions form.

   The system displays the progress billing lines for all billing lines and change orders other than the progress billing line that you selected.

3. Select the new line to be used for the billing process, and then click Select/ Delete.

   The system places an X in the X Ref (cross-reference) field for the new billing line.

4. Close the Progress Cross-Reference Revisions form.

5. Click OK on the Contract Billing Line Detail Revisions form.

6. (Optional) To verify that the progress billing was cross-referenced, access the Progress Billing Line Revisions form for the progress billing line that has already been billed.

   On the Progress Billing Line Revisions form, notice that the Billed Flag field contains an I, indicating that this billing line is cross-referenced to another billing line and is inactive.

Defining Contract Billing Lines for T and M or Cost Plus

This section provides an overview of T and M and Cost Plus billing lines and discusses how to:

• Define T and M and cost plus billing lines.

• Define a cross-reference for a T and M or cost plus billing line.

Understanding T and M and Cost Plus Billing Lines

Contract billing lines for T and M define billing terms that are based on the actual costs of goods and services that you use to complete the job. The actual costs for a contract can include payroll-based costs, such as labor and burden, and costs that are not based on payroll, such as equipment usage and materials.

When you set up a billing line on a contract for time and material, your company agrees to bill the customer for the costs of goods and services that are related to the contract, plus any applicable markup amounts, plus any applicable fee.

You enter the payroll-based costs through Payroll and Time Accounting. You enter the costs that are not based on payroll through one of these JD Edwards EnterpriseOne systems: Capital Asset Management, Inventory, or Accounts Payable. You post the transactions for these costs to the Account Ledger table (F0911) in JD Edwards EnterpriseOne General Accounting. JD Edwards Contract Billing uses the transactions as the source for costs related to time and material.

You set up cost plus lines the same way as T and M lines. However, instead of billing the base cost plus markup amounts, cost plus lines bill the base cost plus any applied burdens, plus any specified fee. When you build the workfile for cost plus lines, the system copies both the source transactions from the F0911 records and any existing burdening transactions in the Burdening Detail Ledger table (F52G11) that are associated with the source transactions.

See Processing Burdening.

Cross-References for T and M and Cost Plus

You must cross-reference each contract billing line for time and material to the accounts in the general ledger that contain the related costs. The system calculates billing amounts for T and M and cost plus billing lines based on the information in the cross-referenced accounts.

You can define a cross-reference for T and M and cost plus billing lines to one or more billable cost accounts. The system uses the account cross-reference to:

• Create workfile transactions for costs related to time and material when you accumulate costs for JD Edwards Contract Billing.

• Retrieve billing AAIs to create the journal entries for billing and revenue recognition

When you define a T and M or cost plus billing line, the system might display the following message:

Warning - Cross-Reference Not Setup

The system also highlights the X-Ref field until you enter cross-reference information for the billing line to define billing events.

Each billable cost account and its related cross-reference information must be unique for the T and M or cost plus billing lines that relate to a specific contract and change order.

You can use the same account number in different change orders for the same contract. When you do so, the system bills all future costs that are related to the previously defined T and M or cost plus billing lines with the same cross-reference information on the most recently defined T and M or cost plus billing line.

When you define T and M and cost plus billing lines, the system supplies the:

• Tax explanation, tax or geographical area, job, and accounts receivable company based on the contract master.

• Accounts receivable offset based on the customer address information.

Forms Used to Define Contract Billing Lines for T and M or Cost Plus

Defining T and M and Cost Plus Billing Lines

Access the Contract Billing Line Detail Revisions form.

Note. If you enter billing lines for a contract that you entered in the Create/Edit Project and Government Contracts program (P52G01M), and the billing line type does not match the billing method on the funding level for the contract, the system generates a warning.

Note. If you leave the Tax Rate and Tx Ex fields blank, the system uses the tax information from the contract master.

Defining a Cross-Reference for a T and M or Cost Plus Billing Line

Access the T&M, Cost Plus, Unit Price and Lump Sum Cross Reference Revisions form.

Job Type	Enter a code from UDC 07/G. You can associate pay and benefit information with a job type and apply that information to the employees who are linked to that job type.
Job Step	Enter a code from UDC 07/GS to designate a specific level within a particular job type. The system uses this code in conjunction with job type to determine pay rates by job in the Pay Rates table.
Pay Type	Enter a code that defines the type of pay, deduction, benefit, or accrual. Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999.
Employee Number	Enter the address book number of the employee to define payroll information.
Home Business Unit	Enter the number of the business unit in which the employee generally resides.
Cost Pool	Enter a value from category code 12, which is associated with the Business Unit Master file (F0006). This is a user-defined code (00/12) for use in flex account mapping and in printing selected information on reports.
Equipment Worked	Enter the ID number of the equipment that an employee used to perform a job. For example, an employee might drive a company dump truck or operate a printing press. Use this field to distribute the cost of using the equipment to the proper account in the general ledger.
Rate Group	Enter a code from UDC 12/CO to group similar items for billing. If you are using JD Edwards Capital Asset Management, you must use this category code for rate group purposes only.

Note. You can use wildcards in the Sub (subsidiary) and Obj Acct (object account) fields to indicate a range of values. For example, you can use 13** in the Obj Acct field to specify all objects from 1300 through 1399. The system validates the values that you enter to ensure that no accounts overlap. If you leave the Obj Acct field blank, the system searches for a blank object account. To specify that the system search for all object accounts, use *ALL or ****. You can also use these wildcards in the Sub field.

You use these fields to define payroll information:

Job Type

Job Step

Pay Type

Employee Number

Home Business Unit

Cost Pool

You use these fields to define equipment information:

Equipment Worked

Home Business Unit

Cost Pool

Rate Group