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SUMMARY:
Understanding Billable Amounts in Clients &
Profits.
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There is a concept in Clients & Profits programs
which, once understood, makes interpreting Clients &
Profits job reports very simple. Read carefully the
following equation: Gross (not net) costs minus billings
equals billable. Once you fully understand this
"formula", Clients & Profits job reports become very
clear and easy to use.
Gross Costs Defined
Accounts payable invoices and direct disbursement checks
are assigned a gross amount during data entry when
distributed to a job and task. Note that net cost times
markup percentage equals gross cost.
The gross amount for a time sheet is defined as number of
hours x billing rate. (The net cost for a time entry is
number of hours x cost rate.)
Billings Defined
Billings are simply accounts receivable invoices added
against a particular job/task.
Note again: Gross Costs minus Billings equals Billable.
Think about the following three reports in terms of this
formula.
The Job Summary
Note carefully that the costs column on the job summary
is showing net, not gross, costs. The gross costs are not
shown on the job summary. To apply the above "formula"
and arrive at the billable figure on the job summary, it
is necessary to look at two other job reports:
Job Costs Reports
This report details every cost on the job ticket. It
shows both net and gross costs. Net cost is your cost.
Gross costs are amounts to be billed to your
customers.
Note that in some versions, the gross costs column on the
Job Costs report is labeled billable. This is not to be
confused with the billable column on the job summary
report. Billable on the job costs report means total
gross costs, before any billings. Billable on the job
summary means gross costs minus billings to date; the
"formula" applies.
Let's add to our formula. Gross costs (billable column on
the job costs report) minus billings equals billable (as
shown on the job summary).
The Job Billings Report
This report simply shows all accounts receivable invoices
applied to the job in question. This equals the billings
column on the job summary.
The Unbilled Column
Based on the previous discussion, you can see that the
billable column on the job summary represents gross costs
entered against the job that have not been billed.
Note that the billable figure could easily be a negative
number. This would mean that billings have been applied
against the job in excess of gross costs. As costs are
added, the billable column will climb toward zero. This
is a key point in understanding the reports.
For example:
- Assume $100.00 is billed against task PRIN on job
number 001. There have been no costs entered against
this task. The job summary will show a negative
$100.00 billable amount for this task.
- Next an a/p invoice is added with a net $25.00
cost and gross $50.00 cost against job 001, task PRIN.
The job summary will now show costs of $25.00,
billings of $100.00, a billable amount of negative
$50.00.
- If a second a/p invoice is added with a net $25.00
and gross $50.00 cost against this same job and task,
the billable amount for task PRIN will climb to zero
on the job summary . The job summary will now show
costs of $50.00, billings of $100.00, and billable
$0.00.
In other words, when all gross costs are fully billed,
the billable amount on the job summary will equal
zero.
Other Job Reports
Other job reports are also based on this same concept.
When interpreting other Clients & Profits reports, in
particular ask yourself if you are looking at net or
gross costs. Costs (net and gross), billings, and
billable are integral parts of all Clients & Profits
programs.
