Added project-based accounting

The latest version (21.9.28) adds project-based accounting.

There is new tab called Projects

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The idea behind projects is to be able to track profitability by project or job.

When you create new project, you will be able to assign project name on line items within transactions (payments, receipts, expense claims, invoices etc.).

This will allow to group project-related transactions by income and direct costs which can determine project gross profit.

  • Sales invoices, credit notes and receipts assigned to a customer will show under Income column. This means you can use Projects even if you do not use invoicing.
  • Everything that is not income will show under Direct costs column.

This is not a complete implementation. There are still some loose ends especially when it comes to billable time, costs on order and inventory (even though you can already write-off inventory items into a project).

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I am a bit confused as I was under the impression that the Sales Orders module which is still being worked on would be managing the project profits.

See post - Status of quotes, Sales Orders and Purchase Orders Idea - #18 by Abeiku
and post Status of quotes, Sales Orders and Purchase Orders Idea - #19 by lubos
and post Status of quotes, Sales Orders and Purchase Orders Idea - #20 by abdulbari
and lastly post Status of quotes, Sales Orders and Purchase Orders Idea - #21 by lubos

I think it makes more sense to use the Sales order as the module for managing the project as presumably everything for the project would be in this Sales Order.

Then you not only have the Progress of the order, what’s invoiced, Order Status and amount, delivery dates etc as shown in @Abeiku example in the first linked post.

I am pleased that you are implementing the Project Based Accounting, but from my limited understanding of what was said in the above linked posts and also the fact that most of the information is already in the sales order, I am not sure why you see it as more logical to have a separate tab for this?

I would think linking the purchase invoices and sales invoices to that sales order would basically do all the work calculating the project profits for that project. Is that not easier?

I was thinking about this and realized Projects and Sales Orders should be separate.

  • Sales Orders are presented in customer currency, profitability of projects are normalized in base currency
  • Sales Orders are per customer. But there are multi-customer / multi-order projects too. For example, organizing a conference will have direct costs such as speaker fees, hotel venue etc and many customers.
  • Sales Orders imply you have to use sales invoices but there are businesses with projects where you are going to be making sales but not necessarily issuing invoices or managing accounts receivable.

So making Projects and Sales Orders combined would result in more limited system, not to mention over-complicating sales orders too.

So…

The purpose of sales orders will be

  • Track whether ordered quantities to customers are being delivered
  • Track whether amounts on orders are being invoiced

The purpose of projects will be

  • Track profitability

Combining it would result in more limited system because now 1 sales order = 1 project which is not what many businesses need.

Yes - you’d be right. For businesses where 1 sales order = 1 project, then there is extra work because they have to create new project for each order (if they want to track profitability) but I don’t think that is such a big deal. And perhaps it’s even good because instead of having 1 complicated tab showing too much, they can have 2 less complicated ones. Not to mention, if you have staff managing orders but not necessarily want them to see profitability per order then you can assign user permissions as such.

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@Lubos thanks for adding this new model, however in the financial reports only divisions are appearing, any plans to apply Project based accounting and reporting…

@danowagroup are you talking about being able to generate P&L per project? This will be added within a few days.

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Is there a way to close/archive a project?

Yes - you can already mark the project as Inactive.

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I hear what you are saying. The points that you have made are quite valid, especially the point about the sales order tab possibly ending up with too much information making it harder to view the overall information.

The thing that I originally liked about the idea of the Sales order was the ability to link purchase and sales invoices to the sales order. However, I have just realised that even I myself will not necessarily want everything on any given purchase invoice to be linked to that sales order as some stuff on that purchase invoice may be for other clients or other projects! So actually my thoughts on linking purchase invoices and sales invoices is not that practical after all. The linkage does need to be at the line level not the invoice level.

So actually upon consideration, you are right - project based module is a better option that trying to merge it with sales order. I look forward to trying it out!

Do you have any ETA on completion of the Sales Order module as I believe we are waiting on some functionality to be added to that.

Yes exactly, further there would be custom fields need to be added to make it more flexible.

Projects also require to be progressive rather static and company require several functions…

What will be the mechanism to offset this arbitrary overhead calculation against the actual overhead costs, so that there is not a double up in reports? Will this be done by journal entry at each period end?

I notice that journals do allow for selecting a project, which is good, as this will enable fundraising organisations to allocate non-specific fundraising over a number of different projects.

I will need to review the topic again.

What does it mean?

Actually, I realized Overhead concept is not good. There should be a field for desired gross profit margin instead and you should see at glance whether your projects are above or below your desired gross profit margin. I’m going to change this aspect.

@lubos check this out this will explain what project based accounting functions:

Would be nice to have project budgets and actual reporting. Also, percentage of completion report.

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We are impressed that the Manager crew are giving thought to business flow while maintaining good accounting practice. In addition it is truely invigorating to see how Manager is aligning to business needs so hopefully we will hear less that it is just an “accounting program”. There will no doubt be some rough edges here and there but I am confident the crew will position the modules to become real streamline! :sunglasses:

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Yes please. That would be better.Overhead is a bit nebulous as it could refer to many different things. Also it is not clear what I would be doing if I put in say 15% for overheads in each project. I don’t quite follow what actually happens as a result. What people want to know is the profit margin, obviously taking into account operational expenses I guess.

Will the Project P&L be a different report to the standard P&L? I think that carry forward amounts for income and costs will be required when, say producing a current year project P&L.

The other question is how to account for projects amounts in starting balances? Will it be a requirement to create pre-start date transactions to record these? instead of
recording a starting balance at account create/edit?

When creating a Receipt transaction to a project it is incorrectly recording it as negative direct costs. I think it should show as income.

PS. Also, a journal credit is recording as negative direct costs instead of income.

Further more I have noticed that:

  1. Cost of equipment and services sold for the project are not shown
  2. In the Income column, VAT of the sales invoice is added and VAT of the direct cost is deducted and in Direct cost column VAT is ignored. Profit is Income (included VAT of sales) - VAT of Direct Cost - Direct cost. Is this right? I think Profit should be Income - Sales VAT - Direct Cost - Cost of goods and services
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I can replicate this. Only entries coming from Sales Invoices are taken into account as Income.

can you please consider below for project tab improvement and reports

  1. can we have an option to transfer divisions to projects
  2. adding Ref no to Project
  3. we should be able to extract profit and loss and Balance sheet project wise
    3.1 in profit and loss statement it is clear to show profit margin and net profit
    3.2 in balance sheet to show out standing balance, provisions, late cost, and other balance sheet items payments receipt project wise this will help in accruals, provision, late cost, WIP and other
  4. possibility to set divisions for project
  5. ability to link Sales and Purchase for easy report
  6. extend report capability to get it project wise where possible
  7. adding project to payslips

above points could be repeated or useless but it will help to strength the feature for WIP, Late cost, Accruals, Provisions and the link between PO and Sales Order and other to calculate required risk