Billable Services tab

Many business perform fee based services which aren’t required to be individually invoiced.
As with Billable Time, these would accumulate though out a period and then invoiced collectively.

Take a courier business, they would record each delivery service and then invoice weekly/monthly.
Cleaning business who perform ad hoc services in addition to the base contract, replacing broken light bulbs/tubes.
Trade businesses under maintenance contracts could record each callout fee plus any material usage which may also be an Inventory Item. Swimming pool servicing, professionals charging set fees rather then hourly rates, support agencies charging per call etc etc, the list is on going.

By entering their Billable Services daily reduces the slog of creating month end invoicing as its pre recorded.

I am guessing that the input screen would be similar to the Sales Invoice Account line section and then stored a la Billable Time for later incorporation into the actual Sales Invoice. As with Billable Time the revenue would be recognised on the creation of the Billable Service

In addition, it could also be used where a business charges an annual fee up front, performs the service on a monthly basis but only wants to bring the income to account as and when the services are performed. The annual fee would be held in the Balance Sheet and then be transferred to the Profit & Loss as each Billable Service was entered.


Hmmm… So it considered as business expense before reimburse through charging the client? Like expense claim to be incorporate in an invoice?

No, it would be uninvoiced income, balanced by the billable services asset.

This topic has absolutely nothing to do with business expense, reimbursement nor expense claim.
It relates to recognising revenue that is fee based, just as Billable time recognises revenue that is hourly rate based.

Take a contractor who has two options on how to charge for a service.
a) They could charge an hourly rate which would become - Billable Time
b) They could charge a set fee which would become - Billable Service

Charge by lump sum (fixed) not affected by time or by per time rate based?

So it boils them down of how to charge the particular service either by time, frequency, or lump sum? Manager doesn’t have other than time based?

Both - fixed sum & rate based

A carrier could charge a fixed fee per parcel or charge by the cubic rate per parcel size for the delivery service.

Correct, that’s why this topic is listed under the “ideas” category - for user consideration and support.

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Oh! :joy: I never had the chance to use Billable tab, A bit Slow to understand.

And Yes, I want the fee based to be added along with billable time becomes (Billable Fee/Charge) or (Chargeable Bill)

There are 2 concepts here - one is Accrued Revenue and the other is Deferred Revenue. I think that both have merit.

The Manager program already has 2 types of “Billable” items - Billable Time and Billable Expenses. These can both be classed as Accrued Revenue. They both involve third party costs which are incurred by the business and passed directly onto the Customer without any markup.

The name Billable Services implies that the business has incurred a third party cost and if so there is no reason why this could not be processed using Billable Expenses.

If the business is providing a service which is not directly related to a third party cost and includes some kind of markup then I think that it is more appropriate to give it a name similar to Accrued Revenue or Billable Revenue as the credit side of the entry would need to go to a revenue account in the P & L(unlike billable time and Billable expenses where the credit side of the entry goes to Accounts Payable (Balance Sheet) account bypassing the P & L altogether).

Having said this I still think that the concept is excellent as it could provide an ongoing way to regularly update resources outlaid on a specific job (and so immediately recognise it as revenue) until the completion of the job and invoicing the customer.

This part of the suggestion is quite different as this is describing an item of Deferred Revenue. This would have to be handled differently as the initial entry would need to have the following GL entries:
Debit: Accounts Receivable (Customer)
Credit: Deferred Revenue
Then a monthly recurring invoice would be set up to bill the customer and recognise the revenue monthly.

I also think that this concept has merit.

On the other side of the equation Deferred Expenses could also be set up for Accounts Payable items such as Rates which are often invoiced annually but paid quarterly.

This is the first of your comments that show you have some misconceptions about how these tabs function in Manager. While billable time is accrued revenue, billable expenses are not. They are temporary assets pending invoicing, when they transfer into Accounts receivable without ever appearing in any income or expense account. In other words, billable expenses are handled as expenses of the customer, not for the customer.

Not so. Billable time involves revenue generation by the business. No third party is involved. And billable expenses can be marked up; the markup appears automatically in Billable expenses - markup.

You have missed the point of this idea entirely. Again, no third party is involved. Billable Services would function very much like Billable Time, just without the necessity of recording time and rate. The associated revenue would, however, be generated internally.

Both billable time and billable expenses are assets until invoiced, whereupon they transfer to Accounts receivable.

No, it is not. A billable service would be current revenue that has not yet been invoiced. Think of both it and the presently available billable time as work in progress.

@tut you are determined to only criticise the points that I have made, in a pedantic manner, rather than examine the concepts I have put forward to support the idea.

They are expenses of the customer that the business has incurred for the customer (so they are both). Use of the Billable Expenses Function is for the purpose of recognising transactions based on the accrual accounting principal where the business recognises this expense as an asset prior to invoicing the customer because the invoicing may not occur until after the end of an accounting period. End of Period adjustments would classify these funds owed to the business as Accrued Revenue (asset in the balance sheet). So by referring to them as Accrued Revenue does not mean they will appear in the P & L in the same way that calling them Billable Expenses does not mean they will appear as an expense in the P & L.

Yes, you are correct, both Billable Time and Billable Expenses can be marked up, so I stand corrected there. Also, there is no direct third party for Billable Time, so you are correct there as well. An employee of the business may indirectly be the third party.

What I said was that if the Billable Service was delivered by a third party then Billable Expenses could be used. Whereas, if not, because “The associated revenue would, however be generated internally” (as you state), then I have suggested an alternate name for the Tab of “Billable Revenue” or “Accrued Revenue” - they are only suggestions.

What you have stated is correct, but as Manager uses the “Double Entry” bookkeeping principle there is also a credit side to every transaction and the credit side of Billable Expenses goes to Accounts Payable (and also BE - markup if applied). I admit I was incorrect about Billable Time - the credit side of this transaction goes to BT revenue.

It is obvious in my post that I was commenting on the Brucanna’s quote that I inserted into the post.
If the business was to enter an annual service fee (and perform the service on a monthly basis), then using this suggested method this would result in the business recognising income before it is earned (i.e. it would be unearned income and should be recognised as a liability in the balance sheet until performed and invoiced). Unearned income or Deferred income - similar terminology. That is why I suggested that it would need to have a separate process. This second process could also be the basis for a third process to recognise Deferred Expenses on the Accounts Payable side.

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Thank you, @generalegend, for acknowledging I was correct about several points, even though you felt incorrectly that I was criticizing you. I was not. I was only pointing you toward correct understanding of how the program works. You still seem to misunderstand billable expenses, though.

This is not correct. Use of billable expenses has nothing to do with when invoicing occurs. No matter when a billable expense is invoiced, it never appears on the P&L of the business as an expense. And the amount reimbursed by a customer, recorded as a receipt against the customer’s Accounts receivable balance (after invoicing, of course) never shows up as income. Once the billable expense passes from the temporary asset account, Billable expenses, to Accounts receivable and money is received from the customer, the expense has no impact on the P&L statement. Although the record of the transaction is preserved, from the viewpoint of the P&L it might never have occurred. The way Manager handles this is unique in my experience. Other accounting systems I know about would eventually recognize the billable expense reimbursement as revenue, to be offset with an expense. Manager keeps the amount completely off the P&L statement. Of course, the net income is the same. But viewing billable expenses as having anything to do with deferred income or expenses is inconsistent with how Manager processes them. That is the point I was trying to make.

The credit side of a Billable expense transaction goes only to the bank or cash account used to pay for it. No billable expense ever passes through Accounts payable. You are correct that markups are credited to Billable expenses - markup.

The observations in the final paragraph of your last post about early recognition of unearned income are correct. However, Manager can already handle such transactions in two ways. The straightforward method is to record such advances in Accounts receivable or Accounts payable, depending on which way the money flowed. See Record customer deposits and advances | Manager and Record supplier deposits and advances | Manager. A slightly more involved approach, but one that gives better visibility on the asset or liability (again, depending on which way the money is flowing) is to use custom control accounts made up of customers or suppliers. See Add custom control accounts | Manager.

The original purpose of this topic was to suggest a capability for non-time-based services parallel to Billable Time. Everything would work the same basic way. Possibly, the two could be combined in a single tab. Expanding the discussion to general consideration of deferred income or expenses meant suggesting capabilities that are already in the program.

This part of the suggestion is “not” quite different and “nor” does it need to be handled differently as your argument above is flawed accounting.

You can’t (1) Debit the Accounts Receivable (with a Credit to Deferred Revenue) and then again (2) Debit the Accounts Payable with a monthly recurring invoice as then the Customer has been invoiced twice - furthermore you haven’t illustrated how your Credit into this Deferred Revenue account gets debited out (transferred) on a monthly basis to the credit of the P&L revenue account.

So to keep it quite simple without a lot of overly analysing terminology for this situation - where a business charges an annual fee up front.

Step 1 - Invoice the Customer (annually)
Debit - Accounts Receivable
Credit - Billable Services control account.

Step 2 - Enter the Billable Service (monthly)
Debit - Billable Services control account
Credit - P&L Revenue account

@Brucanna, I love it! Thank you. :wink:

I’ll try to explain by looking at only the resulting GL transactions that result and in terms of there timing.

Using the courier services company example that @Brucanna presented in the OP. The Courier company may provide, say, 10 deliveries to one of their customers over 2 months and then invoice the customer at the end of the 2nd month. The delivery driver would enter these into the system using a process similar to billable time, but as @Brucanna suggested, called Billable Services.

First Step: 6 entries with resulting GL entries (6 in all for month of August)

Debit - Billable Services control account
Credit - P&L Revenue account

Lets say that each delivery was $50 and this is their only customer. At the end of August B.Serv. control account would show a balance of DR$300 which is a current asset (a substitute for AR). The end of August reports are now recognising the un-invoiced income saving the process off creating an End of Period journal to recognise this accrued revenue as well as providing the streamlined effect of having to create fewer invoices.

In September a further $200 (4 @ 50) has been added to B.Serv. and an invoice is created for $500 moving it to AR account.

Second Step:
Debit - Accounts Receivable
Credit - Billable Services control account.

Now let’s look at the second example (annual up-front fee). Step 2 (in first example above) now becomes step 1 and Step 1 becomes step 2 (as correctly stated by @Brucanna in the most recent post) with a time lapse of 12 months where the Billable Services account will have a diminishing credit balance, representing a current liability in the balance sheet, when in fact, it would be the Billable Services control account which would be in the current asset section of the balance sheet (assumption on my part). So, this is the difference between example 1 and 2. Example 2 would need to have a control account in the current liability section of the Balance sheet whereas example 1 would need a control account in the Current asset section of the balance sheet.

Having items appear in incorrect sections of the Balance sheet can have ramification for the calculation of financial ratios such as the Working Capital ratio.

Example using these Balance sheet amounts:

Bank DR 10,000
AR DR 12,000
Billable Services DR 6,000 (debit amounts $10,000, credit amounts $4,000)

AP CR 8,000

Working Capital Ratio is 28,000 / 8,000 = 3.5

If the credit amount residing in Billable services is transferred to current liabilities then:

Working Capital Ratio is 32,000 / 12,000 = 2.667

I am in full support of this idea, but in terms of the proper presentation of financial reports, it needs to recognise the difference between example 1 and example 2, and either be split into 2 separate ideas or have some mechanism to differentiate so as to place amounts in the correct sections of the balance sheet.

Accounts can be put into any section of the balance sheet at will.

Please look at the screenshot below where GL entries would be as follows:

Debit: Billable Expenses (customer tagged for later invoicing)
Credit: Accounts Payable

The remainder of your last post on this matter is answered in my post in response to the one from @Brucanna

Yeah, you’re right. If you buy on credit on behalf of the customer, the billable expense will pass through Accounts payable on its way a cash or bank account. But it still never hits the P&L.

Thanks for stating the obvious. The important part of my argument is that they need to be placed in the correct section of the balance sheet to ensure proper and consistent financial reporting.

If it was so obvious, then why did you make the comment “the Billable Services control account which would be in the current asset section of the balance sheet (assumption on my part)”.

In fact, if you re-read the entire applicable section of the topic again (reproduced below)

You will note that it clearly states “would be held in the Balance Sheet” - without specifying being an asset or liability. Therefore your self created assumption has created your own argument that wasn’t required.

PS : Topics in the feature are about broad concepts not about prescriptive implementation.

@Brucanna I thought that this forum was for the exchange of ideas. I am supporting your OP and expanding on how the concept might be improved, so as to give it more gravitas for implementation. Both you and @Tut have tried to shut down my input with spurious arguments against the concepts I have put forward from the very beginning. Now that you can see that what I have stated is basically correct (with a few errors along the way that I have admitted) you continue to be negative rather than acknowledge that I have made some valuable input.