Deferring Revenue for Billable Costs

NetSuite enables you to bill customers for costs you incur in the course of your work for them. With Advanced Revenue Management (Essentials), revenue from billable costs posts first to deferred revenue. To recognize the revenue, you must create revenue recognition journal entries. For information, see Generating Advanced Revenue Recognition Journal Entries.

Billable costs may be items, time, or other expenses. Configure billable items like other items for Advanced Revenue Management (Essentials). For more information about configuring items, see Item Configuration for Advanced Revenue Management (Essentials) and (Revenue Allocation).

For instructions on invoicing billable items, see Billing Items to Customers.

For instructions on invoicing billable time and expenses, see Billing Time to Customers and Billing Expenses to Customers.

For information about time and materials from projects, see Creating Sales Orders from Projects and Project Billing

Note:

Custom fields from the billable item, expense, and time subtabs are not copied to revenue arrangements.

Billable time and expenses automatically use the deferred revenue account you set in the accounting preference Default Deferred Revenue Account. You can, however, select a different deferred revenue account for billable time and expenses. The Track Billable Expense in field on expense accounts links to an income or other income account. You can set the deferred revenue account to use with that income or other income account. The deferred revenue account on the income account takes precedence over the deferred revenue account in the accounting preferences.

To link an account for billable expenses or time to a deferred revenue account:

Go to Financial > Lists > Accounts.
Click Edit next to the expense account where the billable expense or time is posted.
On the account record, select an income account from the Track Billable Expense in list, and click Save.
On the Chart of Accounts list, click Edit next to the income account you selected in the previous step.
On the account record, select a deferred revenue account from the Deferral Account list, and click Save.

Billable costs appear on the Billable Items, Billable Expenses, and Billable Time subtabs when a customer invoice is created. The user who creates the invoice must click the appropriate subtab and check the line items to bill the customer for. Items and expenses appear as normal line items on the invoice. The customer sees only a selling price that includes the markup spread over the expense items. When the invoice is viewed in NetSuite, however, markup is a separate entry, and the system creates a separate revenue element for it.

Billable time and billable expenses use the default standard revenue recognition rule and revenue plans are created on revenue arrangement creation by default. You can change these defaults by editing the revenue element lines on the revenue arrangement. If revenue plans have been created automatically, you must delete existing revenue plans and update revenue plans after your changes are saved.

Billable costs are excluded from allocation by default. Billable items can be allocated if fair value prices are configured. To include billable items in allocation, edit the revenue arrangement and change the allocation type for the revenue element. For more information, see Revenue Reallocation for Revenue Arrangements.

To link an account for billable expenses or time to a deferred revenue account:

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