Revenue and Invoicing for Contract Billing Lines
The processes of revenue recognition and invoicing depend on whether the contract billing lines are for costs that are related to time and materials.
For T and M or cost plus contract billing lines, you process revenue recognition and invoicing for the portion of a contract that you bill for the actual costs of goods and services plus specific markup amounts for the work. The actual costs include payroll-based costs, such as labor and burden, and non-payroll-based costs, such as the equipment and material required to complete the contract.
For non-T and M contract billing lines, you process revenue recognition and invoicing for the portion of the contract that is not related to time and material, such as fixed fees, prepayments, and quantities. These contract billing lines are for costs that are not related to time and materials (non-T and M):
Lump sum.
Milestone and progress billing.
Direct and rated draws.
Unit price.
Fees.
If the contracts for your company include billing lines for time and material, you begin the invoicing process by accumulating costs. When you accumulate costs, the system creates workfile transactions. You can use the workfile transactions to create invoices automatically.
If your company does not bill for time and material, you do not need to accumulate costs. Instead, you begin the invoicing process by creating invoices automatically. When you create invoices automatically, the system calculates billing amounts based on the non-T and M contract billing lines that you set up for the contracts.
You can always create invoices manually, regardless of whether the contracts include costs for time and materials.
Revenue is calculated only for these billing line types:
T and M or cost plus
Lump Sum
Unit Price
Fee
Percent complete
Percent of billing