I'm reaching out today to see how to recognize revenue for fixed fee billing projects in Acumatica. When I run billing for a fixed fee/percent complete project, it will immediately recognize the entire amount billed as revenue, even if it is a downpayment before work on the project even starts. I've been trying to build an allocation rule that will move that amount to deferred revenue and move the balance back into revenue as we put time and materials into the project, but I haven't had much success with it. I'm curious as to how some of you go about this and any ideas would be greatly appreciated.
Thank you,
Best answer by mdavolt
Ben,
When you do the billing Acumatica is not like many of the construction softwares out there. It will debit AR and if appropriate, Retainage and credit your income. At the end of your financial period you will runt your work in process. It will calculate the earned revenue as follows Costs to date divided by the Budgeted costs ( or forecasted costs if you are using that aspect of the system) to get your percentage of the project complete. multiplied by the contract value for the revenue earned. This is compared to the billed to date and the the delta is your over/under billing ( formal name Contract Asset/Contract Liability) . this adjustment is booked at the end of the month for Financials. In addition to the report(s) int he systen WIP & construction bonding, Velixo has some WIP reports available. Hope this helps.
@benmccabe Thanks for the question. Allocation rules can be complex. Here is a video on a basic allocation for revenue recognition. We do have documentation for a more complexed allocation if you are tracking your revenue budget with cost code or item. A business event could help with a partial entry. Your partner should be able to help you get this going. Have them reach out to me directly and maybe we can set up a meeting to discuss options.
When you do the billing Acumatica is not like many of the construction softwares out there. It will debit AR and if appropriate, Retainage and credit your income. At the end of your financial period you will runt your work in process. It will calculate the earned revenue as follows Costs to date divided by the Budgeted costs ( or forecasted costs if you are using that aspect of the system) to get your percentage of the project complete. multiplied by the contract value for the revenue earned. This is compared to the billed to date and the the delta is your over/under billing ( formal name Contract Asset/Contract Liability) . this adjustment is booked at the end of the month for Financials. In addition to the report(s) int he systen WIP & construction bonding, Velixo has some WIP reports available. Hope this helps.
My name is Irina, and I am a Business Analyst on the Acumatica Project/Construction team. I am currently working on automating the Completed (%) calculation for the Revenue Budget.
When I run billing for a fixed fee/percent complete project
Could you please share with me information on how do you calculate the Completed (%) or Pending Amount on the Revenue Budget line before billing?
That percentage complete (costs to date divided by expected costs at completion) is multiplied by the Revised Budgeted Revenue Amount.
Exception to consider: in your logic: If a contract is forecasted to have a loss, then the entire loss must be recognized in the period it is known.
More info you may want to know:
Actual Costs to date as of period cut off divided by the cost budget will give you your percentage of the project completed. (Note if the company is using the forecasting in the system this will be the forecasted costs instead of the budget).
I would make sure to include a button to include pending change orders depending on the client’s workflow. in reality many contractors have two types of pending change orders. Authorized but not signed vs pending approval.
Typically, if authorized companies will begin doing work and include these amounts in the revenue and cost budgets.
It would be so easy if companies didn't do the work until the change order was signed, but that is not the reality. The unintentional consequences of not included these authorized but not signed, pending change orders, is you will overstate how far along you are in the project and therefore recognize/report a greater percentage of completion on the base contract.
Probably more than you wanted for an explanation. Didn't want to be short sighted in my response
