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Breaking the Code of Unbilled Accounts Receivable
Tony Bowser, Sr. Systems ConsultantSam Heman-Ackah, Sr. Systems ConsultantWJ Technologies L.L.C.GC-254
Understanding Unbilled and its components Unbilled calculation Business drivers for Unbilled Components of Unbilled Accounts
Costpoint and Unbilled Unbilled Setup Unbilled Analysis Correcting Unbilled Amounts One of the ten critical month end reconciliations of Costpoint
Agenda
A. Revenue - Billings
B. Revenue generator for your consultants
C. Place to store exaggerated earnings
D. Conversation stopper at social gatherings
E. All of the above
What is Unbilled?
Costpoint is unique in that billing and revenue are separate calculations
Unbilled is simply revenue – billings
It is known by a couple of names outside of Costpoint – Including Contracts In Process, Deferred Revenue
Created as the offsets of: Revenue entry
(DR Unbilled ,CR Revenue) and Billing entry
(DR Accounts Receivable , CR Unbilled)
What is Unbilled?
Contract types such as scheduled and milestone contracts Difference between revenue and billing formulas, particularly estimate
to/at complete Timing of month end close for revenue recognition and billing cycle Transactions not billed Differences in provisional rates for billing and target or actual rates for
revenue Fee reserves recognized at contract end
Why Do GovCons Have Unbilled?
What are the best business practices for managing Unbilleds from a business perspective?
Careful attention to the two sides of the equation – Monitoring and properly recording expected revenue Making sure that bills are sent on a timely basis
Closing out contracts timely
Unbilled: Best Business Practices
STAY ON TOP OF UNBILLED
IT CAN REALLY ADD UP
Graphical Unbilled Change by Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
4,000
5,000
Revenue
Billing
Unbilled
Any billing posted adjusts the unbilled balance on the G/L Subsequent billings typically bill the transaction cost from a
prior period or sub period that had been used in revenue calculations
In an ideal world, subsequent bills would bill all costs from the prior month, at the same rate calculated for revenue, leaving unbilled at zero
Unbilled Drivers: Subsequent Billings
Current Year and Prior Year Rate Variances can affect the unbilled in a couple of ways: Fee may be calculated at a different rate than billing Contracts may have specific provisional billing rates Prior year rates might not be approved, where revenue has
been recorded at actual rate, and billing at a provisional rate awaiting approval
Unbilled Drivers:Rate Variances
Retainage amounts can be included in current revenue formulas even if they are not billable until milestones are met
Unbilled Drivers:Retainage
Transactions Not Billed (Hours and Cost) If cost or hours have not billed:
Costs or hours on hold Costs or hours over ceiling if billing and revenue have different ceilings Costs or hours written off in billing (requires revenue adjustment)
Unbilled Drivers:Transactions Not Billed
Revenue adjustments are manual changes in Costpoint calculated revenue
Revenue adjustments will be included in any revenue posting, thus updating unbilled
Revenue adjustments by definition, are not driven specifically by transactions, and thus are not included in transactions that are used for billing calculations
Often used at contract closeout where unbilled is removed from books
Unbilled Drivers:Revenue Adjustments
Unbilled Account– General Ledger Unbilled is a project required account
Unbilled Account- Projects The unbilled account should always be connected to a Project Account
Group with the Function Code of “UNBILLED-GENERL”
Costpoint Account Perspective
The following types of Bills and Revenue Calculations may lead to unbilled amounts that need to be carefully monitored:
Bills: Scheduled Bills Milestone Bills
Revenue: Estimate at Complete (EAC) Estimate to Complete (ETC) Percent Complete
Unbilled – Costpoint Formula Impacts
Timing – Unbilled Reconciliation
Timing After calculating revenue and billing for a given period but
before calculating revenue for the subsequent period
Note that the unbilled analysis is Step 22 in the recommended closing the month end process
Subperiod End
Revenue
Next Subperiod
Calculate Bills
Post Calc Billings
Calculate Unbilled
UNBILLED RECEIVABLES
REPORT
Unbilled Receivable Analysis Summary Report Purpose: Validation of Unbilled Balances from Project Ledger to
General Ledger Balance
Unbilled Receivable Analysis Detail Report Purpose: Provide components of the Unbilled Balance
Revenue worksheet Purpose: Highlight possible causes of Unbilled
Tools – Unbilled Reconciliation
Using Costpoint’s Unbilled Tools
Costpoint provides an entire menu section under Billing to assist in analyzing unbilled balances.
CP 6
Create Unbilled Analysis Report Tables
1. Range of Projects
2. Ending Subperiod
3. Subsequent Billing Subperiod
4. Unbilled Analysis Report
5. And/Or Unbilled Reason Code Table
The Unbilled Analysis Report – Summary
The Summary Unbilled Analysis Report contains the basic unbilled equation, and a comparison to the G/L
ITD Revenue – ITD Billings = Unbilled Unbilled from G/L Should be no difference between two columns
In practice, when it is not zero typical reasons are…
The Unbilled Analysis Report - Summary
Revenue in Prior Year Cost and Revenue not properly initialized during implementation
Affects ITD Revenue Column
Billings in Project Bill Summary not properly initialized during implementation
Affects ITD Billings Column
Journal Entries to Unbilled, Billing, or Revenue Affects General Ledger
Misidentification of the Unbilled account in the Project Account Group Affects General Ledger
Reasons Why Unbilled Variance Would be different GL to Projects
The Detailed Unbilled Analysis Report contains the data for the most probable causes of unbilled variance.
The report is very wide and small. It requires legal paper to print out
Note that the report is not a straight mathematical equation. Unbilled hours, which are used in T&M contracts, print on the report as a column as well
The Unbilled Analysis Report - Detail
The Unbilled Analysis Report – Detailed
Unbilled Detailed Breakdown
Unbilled Balance
Transactions Not Billed
Subsequent Billings
Rate Variances
Unbilled per GL – General Ledger Balance
Subsequent Billings – Costpoint looks at the month after the report to determine what has been billed
Warning - the subsequent bill may contain current month costs
Current Year Rate Variance
Project Ledger Burden vs. Billing Amounts
Prior Year Rate Variance
Project Ledger Prior year History Burden vs. Billing Amounts
Transactions not Billed Cost and Hours (2 columns)
Amounts remaining in open billing detail for prior months
Understanding Components of the Unbilled Analysis Report
Costpoint allows customization of the Unbilled analysis. Unbilled Reason Codes can be added, which then show on the Unbilled Reason Codes report which combines both the system and customized columns.
Customization of theUnbilled Report
Adding Unbilled Reason Codes –Costpoint 6
Add Amounts to Unbilled Reason Codes – Costpoint 7
Unbilled Reason Codes Sample Report – Costpoint 6
The revenue worksheet is useful for a few reasons in unbilled analysis
Details components of how Costpoint is calculating revenue Details effects of ceilings on calculations which is important if revenue
and billing ceilings are not the same Contains details of revenue adjustments and other fees which may or
may not be included in your billings
Revenue Worksheet
The Revenue Worksheet
There are two primary areas for correcting unbilled amounts, if all the transactions have been entered into the appropriate ledgers
Revenue Adjustments Revenue adjustments must be entered into the Revenue Setup screen Typically used when known adjustments are required, such as closeout
Billing Adjustments Bills which are deemed to be uncollectable, should be written off through
accounts receivable, adjust A/R underpayments
Correcting Unbilled Amounts and Closing Contracts
Do
Do run the unbilled analysis monthly after your billing cycle is complete, but before you compute revenue
Do post invoices on a timely basis
Reconcile revenue monthly
Don’t
Do not post AJEs to revenue accounts. Revenue adjustments must be run through revenue setup.
Do not post AJE billing adjustments. Run any bills, or adjustments through the billing module.
Do not post AJEs to the unbilled account, ever…
What to Do and What Not to Do
Questions
Visit WJ Technologies at our booth in the Expo Hall
and
Join us during our Partner Showcase
GC-500 GCS Premier Partner Showcase: October 16th, 4:30 to 5:30 pm
GC-501 Costpoint Partner Showcase: October 16th, 3:15 to 4:15 pm
Sam Heman-Ackah II, CPA
703-885-8164
Tony Bowser
703-885-8165
WJ Technologies L.L.C.
www.wjtechnologies.com
Learn More…
Thank You!
