Background of this issue
One of the most common mistakes made when using XPM is having time sheets put to separate jobs than the invoices. This is often done when a practice is billing fixed-price agreements and has multiple services to deliver for the engagement. A billing job is set up to capture the billing, then a handful of other jobs are created to represent the work to be completed. The issue this creates is our work in progress (WIP) is on a separate job to our invoices, which creates a headache when doing WIP wash-ups once the engagement has been completed for the year.
How to resolve this issue
There are two steps to resolving this issue. First you need to implement the correct processes for managing fixed-price agreements, where you only have one job per engagement. Read Chapter 2: Industry Billing Models to understand the various types of fixed-price agreements, then read Chapter 7: Setting Up Engagements. These two chapters will give you an in-depth understanding of how to best run fixed-price agreements in your practice.
The second step is to wash-up all the WIP you currently have. This should only be done once you have completed all the time for the jobs, and all 12 invoices have been captured against the billing job. To do the wash-up, click into the client via the ‘Clients’ tab, then create a new invoice. Select all the jobs that have the time and the invoices against them. This invoice will have a large negative balance in the billing job, and a range of positive WIP against all the service jobs. Change the billing mode of the invoice to ‘Fixed Price’ (at the top of the invoice), then run through each line and update the invoice amounts of the service jobs to make the total invoice equal 0.00. When you approve this invoice, the negative WIP will be washed up against the positive WIP.
Timeframe to implement solution
It will take some time to properly implement this solution. You will want to first understand the information in Chapter 2: Industry Billing Models and Chapter 7: Setting Up Engagements, then put a plan in place for the next financial year. When your next financial year rolls over, you want to ensure you have just one job per engagement, and the billing is ready to be sent to that one job. The amount of time this takes will depend on the number of fixed-price agreements you have in your practice. You can budget 10–15 minutes per fixed-price agreement to properly set this up.
Need help setting up, fixing up, or getting up to speed on Xero Practice Manager?
We can help at www.linkacademy.com