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Guide to NetSuite Charge based billing
You know how difficult it is to manage and bill projects if you are a project manager who submist invoices for services rendered. The procedure is ripe for errors, with multiple negotiated hourly rates, project milestones, and set quantities.
NetSuite Project Accounting enables businesses to keep a tight grip on their projects and ensure that they are delivered in a timely manner and on budget. Project activities can be connected and integrated with corporate financials using NetSuite's Project Accounting technology, ensuring proper accounting and billing throughout the project lifecycle. Job costing, project budgeting, and project billing are all included in project accounting.
Organizations can pick from various different billing types for a project task in NetSuite to best fit their needs. We'll be briefly going through each of them to give you an overview.
Fixed bid milestone
With this billing type, you can set up invoicing events based on the completion of your project Milestones. This is a useful technique to manage invoicing if you have to bill clients based on project milestone accomplishments.
The benefit of this invoicing method is that billing occurs only after actual project work has been completed. When the project is set up, the milestones are configured in the work breakdown structure.
Fixed bid interval
You can bill fixed sums at predetermined fixed dates using this strategy. The most basic of the billing options, Fixed Bid Interval billing is the closest equivalent to typical billing schedules outside of Project Accounting.
You set billing rates at predetermined periods with this billing type. In the billing schedule, you set the intervals at which you want to bill project tasks.
Time and materials billing
Billing hours spent on a project can be done using this method. Hours logged and approved against a project are used to charge for time and materials. Time intervals are set up for when an organization wants to bill at fixed dates, similarly to Fixed Bid Interval.
However, because there is no set pricing for the project, the customer is billed for the hours logged and approved against the project, even if they exceed the projected hours.
You can establish charges that you can bill to your customers using Charge-Based Billing. You can apply rules to produce costs that are included on project invoices when using the Project Management feature.
This method also allows you to create charge rules that allow you to choose different pricing methods for different project activities. This gives businesses a lot of leeway in terms of how they bill and account for revenue.
Which Method Suits you?
The answer to this question would depend on your company's current situation and structure. Different billing methods offer different benefits and can either make or break a company's accounting depending on the usage and moment used.
That being said, charged-based billing shows a lot of potential to be an all-around method that can be utilized by most companies.
Charge based billing NetSuite in More Detail
Charge-Based Billing from NetSuite is a simple invoicing solution that allows you to add customer-specific billing rules to your accounts receivable procedures.
If you're not using the Project Management functionality, you can create charge based projects from records or directly against a customer. Charge rules can be configured to compute billable rates for a range of services, expenses, or milestone achievements when utilizing Charge Based Billing with the Project Management feature.
How does it work?
The first step to enforcing a charge-based billing method is to set up charge rules.
Charge Rules calculate billable charges for project activity in Charge Based Billing. You can define several Charge rules that generate billable charges automatically.
Some examples of charge rule basis are milestone completions, purchases made, progress, and fixed fees.
Rates are determined by the charge rules. Charges can be established from time and expense entries, which are then aggregated for a single project, by configuring time-based and expense-based charge rules.
These guidelines assist in the creation of a single invoice for all tasks and activities related to their project for a specific time period.
How to implement charged-based billing
If you want to create a Charge-Based project, follow these steps:
Go to "Lists" > "Relationships" > then "Projects" to create a new Project record.
Under Billing Information, go to the Financial subtab and select Charge-Based in the Billing Type field.
You must then select a Billing Schedule
Enter other relevant information
How do you bill charged-based projects?
Charges marked as 'Ready' are ready to be invoiced. On the Project record, in the Financial subtab under the Charges sublist, you can see charges or expense reports related to a specific project. Using NetSuite's native Billing Operations capability, you can invoice customer charges.
Billing Operations allow you to invoice your customers in a variety of ways and at different times. You can create invoices for all customers, select customers, or groups of customers.
The Charge Stage shifts from "Ready" to "Processed" when charges are invoiced. Organizations can see the total amount invoiced so far, charges that are ready to be billed, and expected labor revenue on the Project record, among other things.
Why Should you Choose Charge-based Billing?
The way charge based billing projects are updated has changed in NetSuite. As is with other modules, new updates are being made to charge billing.
Automatic charge runs now take into account the company's or subsidiary's designated time zone. Previously, charge runs for charges and projections solely considered the region where each company's headquarters were located.
When charge based billing projects are updated, a new project preference can be used to limit the amount of time projections are refreshed. When forecasts are enabled, they will only be updated when manually made or during the nightly charge run. Enabling this preference can assist mitigate any performance concerns that may arise as a result of forecast changes.
To recognize revenue as actual charges are made, a new type of project revenue recognition rule is now available. You can recognize revenue from actual project charges as they are made rather than when they are billed using charge-based project revenue rules. A charge-based project income rule might have many charge rules of various sorts.
Although there are many methods available for billing with NetSuite, charge-based billing proves to be the best. It offers the flexibility and diverse functions for the least projects expenses that other methods are lacking.
If you are looking to implement a new billing system, definitely consider getting charge-based billing from NetSuite. And remember, it never hurts to get an experienced NetSuite partner to ensure that your project goes smoothly.
Charge-Based Billing also allows you to keep track of the project billing process in detail. The project record's Financial subtab summarizes each project's billing status. You can then check and bill the pending charges.
You must reconcile your revenue and charges when you have completed your project and billed any connected charges. NetSuite estimates your charges and revenue using forecast charges and plans when you create charges rules and project revenue rules. It's likely that real charges will differ from these projections. It is critical to close out each project by designating it completely billed in order to reconcile your charges and income with actual statistics.