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:

Lump Sum Calculation Method	Description
Percent complete or percent of cost methods	Allows a cross-reference for the contract billing line to one or more cost accounts. The system uses the account cross-reference to determine the actual and projected final costs.
Defined ledger methods	Allows a cross-reference to only one nonbillable cost account. The system uses the account cross-reference to determine the percentage assigned to the account for the specified ledger type. You can specify a ledger type other than F percent (projected final costs) to control the calculation method.

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.