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Evo-ERP and DBA Classic >> Sales >> Progress Billing
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Message started by dkinser on 04/29/09 at 11:55:47

Title: Progress Billing
Post by dkinser on 04/29/09 at 11:55:47

Our company has been doing more and more progress billing and we are looking for suggestions on how to handle this cleanly.

For example:

Customer orders (1) gearbox for $100,000.00. Our terms dictate they pay 20% at placement of order, 30% upon release for fabrication, balance net 30 after shipping.

So, how do we go about selling one item with three different payments applied?

Thanks

Title: Re: Progress Billing
Post by cathyh on 04/30/09 at 07:22:30

You can enter the first two payments as deposits on the sales order through AR-N. You can print the sales order with deposits applied if they want a current amount owed. When the item is shipped and final payment is received, you apply both the payment and the two deposits.

Title: Re: Progress Billing
Post by dkinser on 04/30/09 at 07:28:18

Thanks Cathy,

The issue for us is as a deposit it doesn't show as revenue. We want it to become revenue and not simply sit on it till the end of the order. Many of the gearboxes we build have lead times of 16-20 weeks.

So the question would be how to show it as revenue?

Title: Re: Progress Billing
Post by Lynn_Pantic on 04/30/09 at 07:41:59

It gets stickier (from an accounting standpoint) because it really is not correct to show revenue without also posting the associated COGS and the 25% upon order placement is prior to incurring any COGS so it really IS a deposit. The 30% upon release for fabrication may have engineering costs associated with it so it could be tracked and billed as a separate Engineering item using a separate part number and work order to track engineering costs. Progress billing during actual production gets even trickier because you should relieve the work order of a percentage of COGS as you invoice progress billings.

Title: Re: Progress Billing
Post by cathyh on 04/30/09 at 07:47:12

I don't think (legally) there is a way to show a payment on a future sale of a line item (you haven't shipped them anything) as revenue- it is a liability (you will have to pay it back if the sale never happens for some reason).
You would have to invoice them for something in order for it to be considered revenue, but invoicing for a sale that hasn't happened is not a good idea.

Title: Re: Progress Billing
Post by podell on 05/11/09 at 13:34:42

We do these all the time and have ended up doing manual invoices from Word or Excel. Upon receipt, we enter their payment as a deposit, which is linked to the sales order. Then at time of shipment the deposits show up on the invoice. Seems to work good for us.

Title: Re: Progress Billing
Post by cathyh on 05/12/09 at 07:19:10

Lynn's post explains it much better!

We do essentially what Penny does, but we use the sales order to print a pro forma invoice (we have a rtm for acknowledgement with "Pro Forma Invoice" in the title) which shows the balance after the deposit. but this does not accomplish the original need, of showing a payment as revenue and not a deposit.