This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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Uranus has 27 moons, and there are just as many ways to bill an engagement using Xero or XPM. This topic is broken down into three sections:
- General guidelines for setting up engagements
- How to set up engagements with XPM
- How to set up engagements with Practice Ignition.
We will start by looking at some general guidelines that are relevant regardless of which system you use to create your engagement. We will then look a closer look at how to set up engagements specifically in XPM and finally, how you can improve your efficiencies by using Practice Ignition.
It is a good idea to make the start date of an annual engagement two months before your financial year starts. This enables you to complete your scheduling before the financial year starts. If all your annual jobs were created on the first day of the financial year, you wouldn’t be able to begin scheduling until the year has started. By starting jobs two months earlier, the practice manager has two months to schedule all the tasks for the year ahead. The downside of using this approach is that the job start date of all your jobs won’t be the start of the financial year, so you will need to use the job end date to determine what the financial year is.
For example, if your financial year starts on the 1st of April, you will have your annual jobs roll over on the 1st of February. If your financial year starts on the 1st of July, have your annual jobs roll over on the 1st of May. If your financial year starts on the 1st of January, have your annual jobs roll over on the 1st of November. Again, this is so we can schedule all the jobs before the financial year starts.
This method does mean there will be more jobs in XPM for those two months leading up to year end, but this is the best method. We will use job states to identify which jobs are waiting to be scheduled. When the jobs are created, they will be created into a job state called ‘1.0 To Be Scheduled’. Once the job is scheduled, it can move to the next job state which could be ‘1.1 Not In’, when the information is received this can be moved to ‘1.2 In Progress’.
The duration of the job depends on the type of engagement. If the engagement is a time-charge agreement, you will give the job a 14-month duration, starting two months before the financial year begins. This means the job due date will be the last day of the financial year.
If the engagement is a fixed-price agreement, and is billed in-period, you will also set this up with a 14-month duration, starting two months before the financial year begins. This means the job due date will be the last day of the financial year. The start and due dates are therefore identical to those of a time-charge agreement.
If the engagement is a fixed-price agreement, and is either billed in-advance or contract-period, you will give the job a 26-month duration. This is because we will need to have the job open for two years. The job will be created two months before the start of the financial year for scheduling purposes. It will then be open throughout the current financial year to collect the invoices from Xero, and time sheets for any in-period tasks such as GST and payroll. The job will also be open for the next financial year to complete the annual accounts.
These three options were covered in more detail in Chapter 2: Industry Billing Models.
In summary, jobs will either be open for one year or two years, and have two months added on at the start for scheduling purposes:
- If you are billing as a time-charge agreement or if your fixed-price agreement is billed as in‑period, you will have the job open for 1 year + 2 months (14 months).
- If your fixed-price agreement is billed in-advance or as contract-period, you will have the job open for 2 years + 2 months (26 months).
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