This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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When running jobs in XPM, we have two types of costs. We have time costs, which are created by time sheets against tasks on a job, and we have disbursements. Disbursements are any cost associated with completing the job that is not a time sheet. Disbursements are also known as costs in XPM. These costs could be from subcontractors that do not do time sheets, outsourcing fees, and any general disbursements such as Xero subscription fees. In this section we’ll be covering how to manage each type, and the considerations you need to make.
Just after our job rollover, and prior to scheduling our workflow, we need to determine the annual value of any Xero subscription held on each job. We need to apply an estimated cost to these jobs based on the subscription value at the time of job creation. If we do not apply an estimated cost to each job representing the Xero subscription amount, we will be under-scheduling our internal team by over-allocating the amount of time they have to complete the remaining tasks on a job.
The best time to enter our outsourced fee for our time-charge agreements and our in-advance and in-period fixed-price agreements is at the beginning of the financial year for the year ahead. We can do this for all the Xero subscriptions we hold once a year as all our jobs rollover at the same time.
For our fixed-price agreements that are contract-period, we have a portion of our jobs rolling over each month to match the contract renewal date. Each month we will need to determine which of these new jobs we hold a Xero subscription for, and the annual value of that Xero subscription.
We are unable to bulk import estimated costs into XPM. To add an estimated cost to a job, we therefore need to follow these steps:
- Job > Costs > Add a Cost
- Select ‘Xero Subscription’ from the dropdown list
- Add a quantity of 12 for the number of months in the year
- Add a cost representing the cost of the Xero subscription to your practice by referencing the Xero accounts payable.
- Make the ‘Unit Price’ equal to the monthly market rate of that subscription; reference the Xero pricing page for this
- Select ‘Xero’ from the Supplier dropdown list
- Ensure the ‘Billable’ checkbox is ticked to ensure this value is deducted from the job budget
- Hit ‘Save’
- Untick the green checkbox indicating an actual cost. This will identify it as an estimate.
If the client’s Xero subscription fee changes throughout the year, this can be edited before the WIP wash-up is done on the job. You can either enter a single line item to recognise the increase in subscription fee, or edit the existing estimated cost to align with the actual expected Xero fee for the year.
Once you’ve entered all your Xero subscription fees for all jobs, continue with your scheduling which is covered in Chapter 12: Scheduling and Capacity. To reiterate the point above, there is no way to bulk import these as estimated costs. This needs to be done manually. It is best to prepare a list of all jobs that need an estimated cost loaded, set aside a few hours and work through the list. This only needs to be done in bulk once per year.
Entering estimated Xero subscription costs is a bit easier when using Practice Ignition as you can have multiple job templates associated with each engagement. This means you can choose between the different Xero subscription types when creating the specific customer engagement.
Now that we’ve added the estimated cost of our subscription to our jobs, how do we recognise the actual cost?
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