Manage project invoice proposals
Applies To: Project Operations for resource/non-stocked based scenarios
Project invoice proposals can be processed by your billing department when the following two conditions are met:
- The Project manager confirms the proforma invoice in Microsoft Dataverse.
- All time and material unbilled sales transactions that are included in the proforma invoice are posted using the Dynamics 365 Project Operations Integration journal.
Use the following steps to complete a project invoice proposal in Dynamics 365 Finance.
- Review billing information for time and material transactions and post the Project Operations Integration journal.
- Review billing information for fixed price billing milestones.
- Review and format a project invoice proposal.
- Post and print project invoices.
Manage billing information in the Project Operations Integration journal
Project actuals created in Dataverse are reviewed and posted in Finance by the Project accountant. For more information about working with the Integration journal, see Integration journal in Project Operations.
Cost actuals and unbilled sales actuals are added to the Integration journal as separate lines:
- The unit cost price and cost amount on the Cost actual default from the project actual cost transaction in Dataverse.
- The unit sales price and sales amount on the Unbilled sales transaction defaults from the project actual unbilled sales transaction in Dataverse.
Billing sales tax
Sales tax calculation for billing is determined by the Billing sales tax group and Billing item sales tax group field combination on an unbilled sales record on the Project Operations Integration journal line. The system defaults these field values based on settings on the Financials tab on the Project management and accounting parameters page.
Sales tax group method determines the billing sales tax group defaulting logic:
- Project: Will always default the billing sales tax group from the project. You can review or change the default billing sales tax group on a project by selecting Show default accounting on the All Projects page.
- Project contract: Will always default the billing sales tax group from the project contract. You can review or change the default sales tax group on a project contract by selecting Show default accounting on the Project contracts page.
- Customer: Will always default the billing sales tax group from the customer.
- Search: Will search across all the above entities and select the first value available. Search starts with the Project entity, then the Project contract entity, and finally the Customer entity.
Item sales tax group method determines the billing item sales tax group defaulting logic:
- For time, expense, and fee transaction types, the billing item sales tax group will always default from the Project category entity.
- For material transaction types, the billing item sales tax group defaults based on the Item sales tax group method setting in Project management and accounting parameters. The item number defaults the item sales tax group from the Released product entity. The category defaults the item sales tax group from the Project category entity.
Financial dimensions
The financial dimensions for unbilled sales records in the Project Operations Integration journal default from the Project entity. Financial dimensions can be reviewed and adjusted by selecting Distribute Amounts. If you need to change the financial dimensions of the unbilled sales record after the Integration journal is posted but before the Proforma invoice is confirmed, go to All Projects > Manage > Posted transactions, select the transaction, and then select Process > Adjust accounting.
Exchange rates
The unbilled transaction currency in Dataverse is used as the transaction currency in Finance and converted to the company's accounting currency by using exchange rates defined in Finance.
A project contract might require that a constant (fixed) exchange rate is used for the life of the agreement. In some cases, a fixed rate agreement can be required to meet contractual or regulatory requirements. The fixed exchange rate is then applied when any sales amounts in the configured currency are converted into the revenue entries for the company's accounting currency.
Overview of the fixed exchange rate feature
As of the 10.0.41 release, the Enable the use of Project fixed exchange rate agreements for resource/non-stocked deployments feature is available to support the requirement. After this feature is enabled, the Action Pane on the Project contracts page in the finance and operations architecture includes a button that can be used to set up a fixed rate agreement. Additionally, a sales currency, an exchange rate, and an optional reference agreement number can be entered to enable a fixed rate agreement.
By default, if a fixed rate agreement isn't configured for a given project contract, the system uses the exchange rate that is configured for the legal entity.
The following documents can be used with fixed rate agreements:
- Journals
- Time entries
- Material usage logs
- Milestones and retainers
- Expenses
- Expense reports
- Vendor invoices
- Estimates such as hours, time, and materials
Note
If a fixed exchange rate is enabled in a project that has existing transactions, existing draft integration journal lines or pending project invoices will begin to use the new rate.
Example scenario
Contoso is based in the United States and uses the US dollar (USD) as its accounting currency. It's delivering a project for Coho Winery, which is based in the United Kingdom. The British pound (GBP) is used as the contract sales currency. GBP-to-USD exchange rates regularly fluctuate between 1.2 and 1.4. Therefore, the companies agreed to a fixed rate of 1.25 for their business dealings for the life of the contract and project.
In Project Operations, a project contract is established. For this project contract, a fixed rate agreement is configured that uses the GBP currency and an exchange rate of 1.25. Contoso set up a Time and Material project with time and expenses that accrue revenue to generate work in progress (WIP) financial entries.
On the project, tasks are created to plan for the various project stages. Julia Funderburk will complete the first task, requirement gathering. This task has an estimated duration of seven hours. You can open the All projects page in the finance and operations infrastructure, select the project, and then select Hour forecasts on the Plan tab of the Action Pane. The page shows the entry for the seven-hour forecast. Select General ledger preview, The Overview tab shows the estimated costs and a line for 2,187.50 GBP of revenue for the Project - invoiced revenue posting type. Select the General tab to view the breakdown of sales. This breakdown shows seven hours of effort and the sales price of 250. The total sales amount of 1,750 is calculated by using an exchange rate of 125.
Contoso's revenue in its accounting currency is calculated in the following way:
7 hours × 250 GBP price × 1.25 exchange rate = 2,187.50 USD
After the project begins work, Julia logs her time for the first four hours of work on the first project invoice. On August 27, she creates a time entry for four hours against the requirement gathering task. After that entry is approved, it's created as an integration journal during the next processing of import from staging table. The integration journal shows two lines: one for cost and one for sales. The following table shows what these lines look like.
| Document type | Resource name | Hours | Cost amount | Sales amount | Sales currency | Price exchange rate |
|---|---|---|---|---|---|---|
| Usage | Julia Funderburk | 4 | 480 | 0 | USD | 100 |
| Usage | Julia Funderburk | 4 | 0 | 1,000 | GBP | 125 |
For the cost line, the cost remains in the company currency (USD). Therefore, no exchange rate is applied. For the sales line, the price exchange rate reflects the fixed exchange rate.
Posting of the integration journal results in the following items:
- Posting of the project cost
- Entry to Project – WIP – Sales Value
- Entry to Project Accrued Revenue for the WIP by using the fixed exchange rate
| Account | Name | Amount in transaction currency | Amount in accounting currency | Exchange rate | Posting type |
|---|---|---|---|---|---|
| 600300 | Payroll allocation | -480 | -480 | 1 | Project - payroll allocation |
| 540100 | Cost of Project - Labor | 480 | 480 | 1 | Project - cost |
| 161300 | WIP - Sales Value | 1,000 | 1,250 | 1.25 | Project - WIP - sales value |
| 420200 | Accrued revenue | -1,000 | -1,250 | 1.25 | Project - accrued revenue |
When the invoice proposal is generated, it has a single line for the four hours at a sales price of 250, for a total sales amount of 1,000 GBP. The customer invoice is in GBP.
Posting of the invoice proposal results in a customer invoice that has the following items:
- Reversal to Project – WIP – Sales Value
- Reversal to Project Accrued Revenue for the WIP by using the fixed exchange rate
- Entry for Invoiced Revenue by using the fixed exchange rate
- Entry for Customer Balance by using the fixed exchange rate
4 hours × 250 GBP price × 1.25 exchange rate = 1,250 GBP
| Account | Name | Amount in transaction currency | Amount in accounting currency | Exchange rate | Posting type |
|---|---|---|---|---|---|
| 161300 | WIP - Sales Value | -1,000 | -1,250 | 1.25 | Project - WIP - sales value |
| 420200 | Accrued revenue | 1,000 | 1,250 | 1.25 | Project - accrued revenue |
| 411100 | Revenue - Labor | -1,000 | -1,250 | 1.25 | Project - invoiced Revenue |
| 130100 | Accounts Receivable | 1,000 | 1,250 | 1.25 | Customer balance |
Manage the financial attributes of billing milestones
Project contract lines using the fixed price billing method are invoiced through Fixed price milestones. The Project accountant can review billing milestones in Finance by going to Project management and accounting > All projects > Manage > On-account transactions.
Billing sales tax
The Sales tax group and Item sales tax group values default from the settings when a new billing milestone is created in Dataverse. The system defaults the values to these fields based on settings on the Financial tab on the Project management and accounting parameters page.
Sales tax group method determines the defaulting logic of the Billing sales tax group:
- Project will always default the billing sales tax group from the project. You can review or change the default sales tax group on a project by selecting Show default accounting on the All Projects page.
- Project contract will always default the billing sales tax group from the project contract. You can review or change the default sales tax group on a project contract by selecting Show default accounting on the Project contracts page.
- Customer will always default to the billing sales tax group from the customer.
- Search will search across all the entities in this list and select the first value available. Search starts with the Project entity, then the Project contract entity, and then the Customer entity.
Fixed price milestone item sales tax group is used as the default value in the Item sales tax group field for the billing milestone. The accountant can review and modify this value on the On-account transactions page. The system uses the value from the on-account transaction when creating a project invoice proposal line.
Financial dimensions
Default financial dimensions for the fixed price billing milestone are set on Project contract lines. Go to Project contracts > Show default accounting and on the Contract lines tab, select price contract line, then set the financial dimension values that you want to use as the default.
The Project accountant can edit the sales tax and financial dimensions information on invoice milestones up until the Project invoice proposal is created.
Create project invoice proposals
Project invoice proposals can be reviewed in the Project management and accounting module by going to Project invoices > Project invoice proposals.
The Project invoice proposal header is created in Finance when the Proforma invoice is confirmed in Dataverse. For easier reconciliation, the system sets the Project invoice proposal number in Finance to the same number as the Proforma invoice ID in Dataverse. Because Proforma invoices are not necessarily confirmed in the same order they are created, the Project invoice proposal number sequence in Finance must allow for changes to lower and higher numbers. Configure number sequences using the following steps:
In Finance, go to Organization Administration > Number sequences > Number sequences.
In the Area filter, select Projects.
In the Reference filter, select Invoice proposal.
Use the Company field to filter each legal entity with Project Operations Dataverse integration enabled.
Open Number Sequence details. On the General tab, set the following values:
- Allow user changes: To a lower number = Yes
- Allow user changes: To a higher number = Yes
Project invoice proposal lines are added by the system using the periodic process Import from staging table (Project management and accounting > Periodic > Project Operations integration > Import from staging table). This process can be run manually or by using a periodic schedule. The system won't add lines to the invoice proposal document until all the lines are ready to be invoiced. Time and material transactions are ready to be invoiced only when they are posted using the Project Operations Integration journal.
Format and print invoice proposals
The Project accountant can customize a project invoice printout by using the Format invoice proposal page and print management capabilities.
Format invoice proposals
The Format invoice proposals page allows custom grouping transactions to display in the customer project invoice.
On the Project invoice proposal page, select Print > Format invoice proposal.
Select New to create a new grouping for the Project invoice printout.
In the Detail/Summary field, select options for this grouping:
- Select Detail to print the transaction details of the customer invoice.
- Select Summary to print the transaction summary of the customer invoice.
Note
The selection in the Detail/Summary field on the Format invoice proposal page overrides the option selected in the Invoice format field on the Invoice proposals page to print a detailed invoice or a summarized invoice.
- Select the transaction lines to include in this section on the Available transactions tab and select Include transactions to move them to the Selected transactions tab.
- Select Move up and Move down to change the order of the sections.
- Select Print preview to preview formatted invoice.
Print management
Print management uses different report files to print, specify destinations, and customize footer text for the invoice. Print management can be set up at the module level, however these settings can be overridden for a specific customer, contract, or invoice proposal. To access this function on the Project invoice proposal page, select Print > Print management.
Print management setup is displayed as a tree view, where each node level displays the available documents to adjust. You can assign custom printouts at the module, customer, contract, or invoice proposal document level. To modify the original document printout, expand the desired node and select Original item. In the Report format field, select the report format to be used for printing. You can use custom report formats by using Business Document Management framework.
Post invoice proposals
After the invoice has been reviewed and edited, and the invoice proposal lines are satisfactory, check the invoice totals and sales tax. In the Details group, select Totals and then select Post to post the invoice.
To view the invoice before posting, clear the Posting check box. Pro forma will be printed on the invoice to signify it is a sample invoice. To print the invoice, select the Print invoice check box.
In addition to the Invoice proposal page, invoice proposals can also be posted by running the periodic job, Post invoice proposals. To find this job, go to Project management and accounting > Periodic > Project invoices > Post invoice proposals.
This page shows all the invoice proposals that are ready for posting. You can schedule posting invoice proposals by selecting Batch. Set the Batch processing parameter to Yes and set the recurrence of batch processing by selecting Recurrence.