Create a project contract to invoice for progress billings

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Important

This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012

Use these procedures to create a project and project contract, so that you can create invoices for the customer based on a percentage of work that is completed. The invoice amounts are automatically calculated for the budget categories of work that you set up for a project. The timing of invoices is set up when you negotiate the project contract with the customer.

Example

Your organization is a software development firm. You agree to develop a payroll accounting package for a customer for a total fee of $20,000. Your organization agrees to send an invoice to the customer as you complete specified percentages of work on the project. You set up project categories for the work to use in the billing process. You set up billing rules that automatically calculate the invoice amounts for the percentage of work that is completed for each category. The categories for the project include the following:

  • Consulting

  • Design

  • Installation

Your budget manager creates a budget for the project categories. The amount of completed work is automatically calculated as a percentage of actual work compared to the budgeted amounts.

Use these procedures to set up a contract, an associated project, and the billing rules to use to calculate invoice amounts for the budget categories of work that you set up for the project.

After you have created the contract and the project, you can set up the details of the project. For example, you can define the activities of the project and assign workers to the project.

Prerequisites

Before you create a project with billing rules, you must set up the following project information in the Project management and accounting parameters form:

  • Set up the number sequence to use when you create a billing rule.

  • Set up a fee journal to use by default for posting progress billings.

Create a contract for progress billings

Use this procedure to create a project contract for a Fixed-price project. You create a project invoice when the work completed on the project reaches a specified percentage.

  1. Click Project management and accounting > Common > Projects > Project contracts. Open a project contract from the list.

  2. In the Project contracts form, on the Action Pane, on the Project contract tab, click Project contract.

  3. In the New project contract form, complete the following fields:

    • Project contract ID

    • Name

    • Funding type

    • Funding source

    • Sales currency – By default, this is the currency to use for customer invoices associated with the project contract. You can modify the sales currency in a specific customer invoice.

    Click OK. This information is copied to the header of the Project contracts form.

  4. In the Project contracts form, complete the rest of the necessary information for the project. To change default values in the form, on the Action Pane, on the Project contract tab, click Edit.

Create a project for progress billings

Use this procedure to create a project and any subprojects associated with a contract.

  1. In the Project contracts form, on the Action Pane, on the Project contract tab, in the New group, click Project.

  2. In the Create project form, enter a project type of Time and material.

  3. Select a project group. A project group defines posting information for projects assigned to the group.

  4. Enter additional project information, such as the following:

    • Project ID

    • Project name

    • Project group

    • Project contract ID – This associates a project contract with the project.

      Note

      The Project contract ID field is automatically filled with the number of the project contract from the Project contracts form. You can change the project contract to a different contract number.

    • Customer

  5. Enter any additional required information, and then click OK to create the project.

  6. After you have created the project, set the project stage to In process. For more information about how to set a project stage, see Modify a project stage.

Create a budget for a project

Use this procedure to create the budget categories for the estimated costs in a project. The budget categories are used to automatically calculate the amounts to invoice a customer for the percentage of work that is completed for each category.

  1. In the Projects form, on the Action Pane, on the Plan tab, in the Budget group, click Project budget.

  2. Create a budget for the project. In the Project budget form, enter an estimated cost for each category in the project. The budget categories are used to automatically calculate amounts to invoice the customer for the percentage of completed work for each category.

Create billing rules for progress billings

After you have created the contract and the associated project, use this procedure to create the billing rules for the contract.

  1. Click Project management and accounting > Common > Projects > Project contracts. Select a project contract.

  2. In the Project contracts form, on the Project contract tab, in the Set up group, click Billing rule.

  3. In the Billing rules form, click New.

  4. Select a line type of Progress.

  5. In the Billing rule line details section, in the Contract value field, enter the total value of the contract.

  6. In the Project field, select the project that uses this billing rule.

  7. In the Category field, select the category to post the fee transaction to.

  8. You can assign the billing rule to additional projects. On the Project FastTab, in the Available projects section, select a project, and then click Add. The project is displayed in the Selected projects section.

  9. You can enter a percentage to calculate the amount that the customer withholds from payments on an invoice. On the Payment retention terms FastTab, select the funding source, and then, in the Retention percentage field, enter the retention percentage.

  10. Repeat this procedure to create additional billing rules for the project contract.

See also

Create billing rules

Project contracts (form)

Projects (form)

Billing rules (form)

Project management and accounting parameters (form)

Project budget (form)

Create and submit an original project budget