27Project Billing Configuration: General Project Billing Setup
This chapter contains the following:
Invoice and Revenue Method Components
Invoice methods and revenue methods control the way you create invoices and recognize revenue for contracts. During implementation you create the methods and assign them to bill plans and revenue plans. Any contract or contract line that uses the bill or revenue plan calculates the invoice or revenue amount according to the instructions in the invoice or revenue method.
Method Classification
Invoice method classifications and revenue method classifications are predefined by Oracle Fusion Project Billing. Select an invoice or revenue method classification to set the approach for calculating invoice or revenue amounts.
The following table describes the different invoice method classifications.
| Invoice Method Classification | Description |
|---|---|
|
Amount Based |
Generate invoices and revenue as billing events are completed. |
|
Percent Complete |
Generate invoices as progress is estimated. The percent complete invoice method automatically creates a billing event using an inception-to-date formula based on the calculation level in the bill plan. If the calculation level is contract line, the event is created for the contract and contract line. If the calculation level is associated project, the event is created for the contract line and its associated project and task. |
|
Percent Spent |
Generate invoices as progress is calculated, based on actual cost to date over budget cost. The percent spent invoice method automatically creates a billing event using an inception-to-date formula based on the calculation level in the bill plan. If the calculation level is contract line, the event is created for the contract and contract line. If the calculation level is associated project, the event is created for the contract line and its associated project and task. |
|
Rate Based |
Generate invoices as costs are incurred, using an invoice-specific set of bill rates, a burden schedule, or transfer price rates. The cost reimbursable classification method bills on cost directly, without applying any rate or markups. |
The following table describes the different revenue method classifications.
| Revenue Method Classification | Description |
|---|---|
|
Amount Based |
Recognize revenue as billing events are completed. |
|
As Billed |
Recognize revenue after invoices are finalized, using a common set of bill rates, a burden schedule, or transfer pricing for both invoicing and revenue. |
|
As Incurred |
Recognize revenue as costs are incurred, using a revenue specific set of bill rates, a burden schedule, or transfer pricing for both invoicing and revenue. |
|
Percent Complete |
Recognize revenue as progress is estimated. The percent complete revenue method automatically creates a billing event using an inception-to-date formula based on the calculation level in the revenue plan. If the calculation level is contract line, the event is created for the contract and contract line. If the calculation level is associated project, the event is created for the contract line and its associated project and task. |
|
Percent Spent |
Recognize revenue as progress is calculated, based on actual cost to date over budget cost. The percent spent revenue method automatically creates a billing event using an inception-to-date formula based on the calculation level in the revenue plan. If the calculation level is contract line, the event is created for the contract and contract line. If the calculation level is associated project, the event is created for the contract line and its associated project and task. |
|
Rate Based |
Recognize revenue as costs are incurred, using a revenue-specific set of bill rates, a burden schedule, or transfer price rates. Tip: Use this revenue classification method if you are
using a fixed price for invoices, or if you require different burden
schedules for invoices and revenue.
|
Intercompany Billing Option
If the invoice or revenue method will be used for intercompany contracts, enable the intercompany billing option to calculate the intercompany invoice or revenue amounts. Intercompany invoices and revenue use a rate-based classification method. Select a labor and nonlabor schedule for use when generating invoices or calculating revenue.
Intercompany invoices can use any type of invoice method classification.
Rate Definition
Select schedules for labor and nonlabor if your invoice or revenue method uses a rate-based classification method.
The schedule types for labor are Person and Job.
Invoice and Revenue Method Classifications
Only bill plans and revenue plans with certain combinations of invoice and revenue method classifications can be used on the same contract line. If you add a bill plan and revenue plan with an invalid invoice and revenue method classification to the same contract line, you will receive an error message when you submit the contract for approval.
The possible revenue method classifications are:
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Amount based
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As incurred
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As invoiced
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Percent complete
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Percent spent
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Rate based
The possible invoice method classifications are:
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Amount based
-
Rate based
-
Percent complete
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Percent spent
Invoice and Revenue Method Combinations
Valid bill plan and revenue plan combinations for a contract line are dependent on the invoice method classification and revenue method classification. Most invoice method and revenue method classifications are valid. The following table describes the invalid combinations.
| Revenue Method Classification | Invoice Method Classification | Valid Combination? |
|---|---|---|
|
As incurred |
Amount based |
No |
|
As incurred |
Percent complete |
No |
|
As incurred |
Percent spent |
No |
|
As invoiced |
Amount based |
No |
|
As invoiced |
Percent complete |
No |
|
As invoiced |
Percent spent |
No |
|
Rate based |
Rate based |
Yes, but a burden schedule is required for the bill plan and revenue plan. |
Project Invoicing Options
How Project and Contract Invoice Components Work Together
Project and contract components work together to create invoice distributions. The contract contains the instructions for calculating invoice amounts, and the project owns the cost transaction details. When you generate an invoice, invoice distributions are created for the contract.
Expenditure items and events are the transactions for projects and contracts. Invoice method classifications determine how transactions are invoiced. The invoice method determines how invoice amounts are derived.
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Enter an invoice method on a bill plan, which you create for a contract and assign to contract lines to provide a set of instructions for creating an invoice.
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Create billing controls for a contract or contract line to define the valid transaction dates, billing resources, and amount limits for transactions associated with the contract.
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Generate invoices to calculate the invoice amounts for a contract.
The following figure illustrates the components of a project and a contract that determine invoice amounts, and the relationships between the components.
Invoice Method Classification
Assign a predefined invoice method classification to an invoice method. The invoice method classification determines whether the invoice amount is calculated based on rates, amounts, or progress.
Invoice Method
Create invoice methods for bill plans to use for determining the approach for generating invoice amounts. The invoice methods contain invoice generation instructions in the form of the invoice method classification and rate definition schedule types. Rate definition schedule types determine whether the rate source for invoicing comes from rate schedules, burden schedules, or transfer price schedules.
You must assign an invoice method to a bill plan, which contains the invoice generation instructions for a specific contract or contract line. An invoice method can be used by more than one bill plan.
Bill Plan
Create a bill plan within a contract that uses the invoice method you require. Assign the bill plan to one or more contract lines.
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Contracts on hold
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Contract lines on hold
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Contract lines with a bill plan on hold
Previously generated invoices can still be updated, submitted for approval, approved, rejected, released, and transferred when the contract, contract line, or bill plan is on hold.
Billing Control
A billing control defines the types of permitted transactions (using billing resources), transaction date range, and maximum invoice (and revenue) amounts for a contract or contract line. Create a billing control within a contract at either the contract or contract line level. The inception-to-date (ITD) invoice amount can't exceed the hard limit amount of a billing control. If the ITD invoice amount exceeds the soft limit, invoice generation will still occur, but you will receive a warning the first time this occurs.
Expenditure Item
The project and task for an expenditure item are matched to the associated contract line during invoice generation. Invoicing can occur if the transaction date, billing resource, and amount for the expenditure item pass the contract billing controls. If the expenditure item is mapped to more than one eligible contract line, the processing order is determined as follows:
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The contract billing sequence determines the processing order of multiple contracts.
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The contract billing controls determine the processing order of multiple contract lines within a single contract.
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The contract contribution percentage determines the eligible invoice amount for each contract line.
Oracle Fusion Project Billing creates a billing transaction for each unique combination of expenditure item and contract line. The billing transaction is the source for creating invoice distributions.
Event
Invoice events are automatically created during invoice generation if the invoice method is percent spent or percent complete. Manual events are also processed during invoice generation. Oracle Fusion Project Billing creates a billing transaction for each automatic or manual event. The billing transaction is the source for creating invoice distributions.
Specify the Unit of Measure for Invoice Lines Sent to Oracle Receivables
The Specify Unit of Measure for Invoice Lines Sent to Oracle Fusion Receivables profile option indicates the unit of measure to use for all invoice lines transferred from Oracle Fusion Projects to Oracle Fusion Receivables. This profile option is required in order to use Oracle Fusion Project Billing. If you are using Oracle Fusion Projects without Oracle Fusion Receivables, you do not need to set this profile.
Oracle Fusion Receivables requires a unit of measure for each invoice line. Oracle Fusion Projects creates each invoice line with a quantity of 1, a unit of the unit type you specify in your profile option, and an amount equal to the currency amount of the invoice line as it appears in Oracle Fusion Projects.
Unit of Measure Class
Define a unit of measure class before you define a unit of measure. Oracle Fusion Receivables requires that you associate each unit of measure you define with a unit of measure class. You must define a unit of measure class before you can set the profile option.
Unit of Measure
The default unit of measure value is Each. Define a unit of measure of Each in Oracle Fusion Receivables to use with this profile option.
Invoice Formats
An invoice format determines how Oracle Fusion Projects creates an invoice line. You can define different formats for labor, nonlabor and event invoice line items, and specify if you want to use the format for customer invoices, internal invoices, or both. Additionally, you can specify how you want to summarize expenditure items, and the fields you want an invoice line to display. You can also include free-form text on an invoice line.
You can use customer invoice formats only for regular contract invoices, and internal invoice formats only for invoices generated by intercompany and interproject contracts. You can also use an invoice format for both customer and internal invoices.
You configure the following components of an invoice format:
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Format type
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From and to dates
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Grouping option
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Customer or internal invoice option
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Fixed format
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Start and end position
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Text column
Format Type
The format type controls the invoice formats you see for labor, nonlabor and events when you enter invoice formats using the Projects window.
From and To Dates
The from and to dates determine the period during which the invoice format is active.
Grouping Option
A grouping option specifies the way invoice distribution lines are grouped together to form an invoice line.
Customer or Internal Invoice Option
If you are using intercompany or interproject billing, create an internal invoice format to summarize cross-charge transactions. Depending on the requirements of the receiver business units, you may need to define several internal invoice formats. All internal formats automatically have a fixed format.
If you create an internal invoice format, you must select contract line as an attribute. This is to ensure that no two contract lines can be combined into a single invoice line, as they could be tied to different receiver projects or tasks, and would need to be created as separate invoice lines to post to the correct receiver project or task.
Although one invoice format can support both customer and internal invoices, the list of values for the Field Name only includes those values that are shared by the two formats.
Fixed Format
A fixed format prohibits distributions from being moved to other invoice lines. Intercompany and interproject invoices must have a fixed format.
Start and End Positions
The start and end positions are values between 1 and 240 that specify where the text in the Field Name appears on the invoice line.
Text Column
Enter the text in this column that you want to display on the invoice.
FAQs for Project Invoicing Options
What's an invoice method?
Rule defined by the implementation team that determines the calculation method of invoice amounts for contracts during invoice generation.
What's an invoice method classification?
Predefined classification for an invoice method that determines the basis for calculating invoice amounts.
The predefined invoice method classifications are: amount based, percent complete, percent spent, and rate based.
Assign an invoice method classification to an invoice method.
Project Revenue Options
How Project and Contract Revenue Components Work Together
Project and contract components work together to create revenue distributions. The contract contains the instructions for calculating revenue amounts, and the associated project contains the cost transaction details. When you generate revenue, revenue distributions are created for the contract.
Expenditure items and events are the transactions for projects and contracts. Revenue method classifications determine how transactions recognize revenue.
The revenue method determines how revenue rates are derived. Enter a revenue method on a revenue plan, which you create for a contract and assign to contract lines to provide a set of instructions for recognizing revenue.
Create billing controls for a contract or contract line to define the valid transaction dates, billing resources, and amount limits for transactions associated with the contract.
Generate revenue to calculate the revenue amounts for a contract.
The following figure illustrates the components of a project and a contract that determine revenue amounts, and the relationships between the components.
Revenue Method Classification
Assign a predefined revenue method classification to a revenue method. The revenue method classification determines whether the revenue amount is calculated based on rates, amounts, or progress.
Revenue Method
Create revenue methods for revenue plans to use for recognizing revenue. The revenue methods contain revenue recognition instructions in the form of the revenue method classification and rate definition schedule types.
You must assign a revenue method to a revenue plan, which will give the revenue recognition instructions to a specific contract or contract line. A revenue method can be used by more than one revenue plan.
Revenue Plan
A revenue plan contains a set of instructions for recognizing revenue on a contract or contract line. Create a revenue plan within a contract that uses the revenue method you require. Assign the revenue plan to one or more contract lines that are enabled for billing.
Billing Control
A billing control defines the type of permitted transactions (using billing resources), transaction date range, and maximum invoice and revenue amounts for a contract or contract line. Create a billing control within a contract at either the contract or contract line level. The revenue amount cannot exceed the hard limit amount of a billing control. If the revenue amount exceeds the soft limit, revenue recognition will still occur, but you will receive a warning.
Expenditure Item
The project and task for an expenditure item are matched to the associated contract line during revenue generation. Revenue recognition can occur if the transaction date and billing resource for the expenditure item pass the contract billing controls.
If the expenditure item is mapped to more than one eligible contract line, the processing order is determined as follows:
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The contract billing sequence determines the processing order of multiple contracts.
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The contract billing controls determine the processing order of multiple contract lines within a single contract.
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The contract contribution percentage determines the eligible amount of revenue to recognize for each contract line.
Oracle Fusion Project Billing creates a billing transaction for each unique combination of expenditure item and contract line. The billing transaction is the source for creating revenue distributions.
Event
Revenue events are automatically created during revenue generation if the revenue method is percent spent or percent complete.
Manual events are also processed during revenue generation. Oracle Fusion Project Billing creates a billing transaction for each event. The billing transaction is the source for creating revenue distributions.
FAQs for Project Revenue Options
What's a revenue method?
Rule defined by the implementation team that determines the calculation method of revenue amounts for contracts during revenue generation.
What's a revenue method classification?
Predefined classification for a revenue method that determines the basis for calculating revenue amounts.
The predefined revenue method classifications are as-billed, as-incurred, amount based, percent complete, percent spent, and rate based.
Assign a revenue method classification to a revenue method.