Setting up Engagements with Practice Ignition: Creating proposals for annual engagements

This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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How to set up Practice Ignition

Setting up Practice Ignition only takes 1 – 2 hours. You are then ready to send proposals to new clients, collect payments, and deploy invoices and jobs to Xero and XPM. Below are the steps to set up Practice Ignition once you have signed up to a trial.

When you first set up your trial of Practice Ignition you will arrive on the discover page which includes useful tips and tricks to help you set up your account. Take a moment to check out the videos on the discover page, then move onto setting up each area using the below sections as your guide.

Creating proposals for annual engagements

Creating proposals in Practice Ignition is easy. Select ‘+New Proposal’ and follow these steps in the ‘General’ tab:

For time-charge agreements, or fixed-price agreements that are in-period:

• Proposal Name: Annual Engagement
• Client: The relevant client
• Contact: The relevant contact
• Proposal Start Date: The first day of the next financial year
• Proposal End Date: The last day of the next financial year
• Continue Recurring Billing: Stop recurring billing
• Recurring Period: Monthly
• Recurring Invoice Day: 1^st.

To elaborate on the proposal dates, the first day of the next financial year means the financial year you will be doing the work in. So if we are about to start the 2022 financial year, you will be doing the financial statements for the 2021 financial year. For time-charge agreements and in-period fixed-price agreements, we would set the start date to be the start of the 2022 financial year, as we do the work on the 2021 financial year annual accounts.

For fixed-price agreements that are in-advance or contract-period:

• Proposal Name: Annual Engagement
• Client: The relevant client
• Contact: The relevant contact
• Proposal Start Date: The first day of the current financial year
• Proposal End Date: The last day of the next financial year
• Continue Recurring Billing: Stop recurring billing
• Recurring Period: Monthly
• Recurring Invoice Day: 1^st.

To elaborate on the proposal dates, the first day of the current financial year means the financial year that is in progress. So if we are about to start the 2022 financial year, we want this job created at the start of the 2022 financial year so we can capture the billing throughout the year, then we can work on the annual accounts in the 2023 financial year. This means the job will be open for 24 months.

Once you have set up the proposal information, you can then click into the ‘Services’ tab and begin to add your services for this engagement. It is important to create all services under one job. This is because the invoices that are created by Practice Ignition will be posted to one job per engagement, which is the first job on your proposal. If you have multiple jobs, the other jobs will not see any revenue from the invoicing, which will create major issues with your reporting.

Let’s look at an example:

Say we have a job for annual accounts, then a separate job for the GST. If we were to bill $3,000 for the entire engagement, the full $3,000 would post to the annual accounts, and no revenue would post to the GST job. When we complete and close the jobs, let’s say we have $2,000 of billable time on the annual accounts job, and $1,000 of billable time on the GST job. This would result in a $1,000 write-up on the annual accounts job because we have invoiced $3,000 and only had $2,000 of billable time. Our GST job would show a $1,000 write-off because we have $1,000 of billable time and no revenue. This would incorrectly show great margins on annual accounts work, and terrible margins on GST work. This example highlights why it is so important to have the invoicing and the time sheets on the same job.

Once you have set up your services, click into the ‘Job Settings’ tab. This will open up the details on the job that will be created in XPM once the proposal is accepted. The job name will be Annual Engagement’. In Practice Ignition it is not possible to automatically allocate it a year using {year}, so you have two options:

1. Do not include the year in your job name and use the dates of the job to determine what year the engagement relates to.
2. Enter the financial year manually each year when you roll your engagements over. This can be done as part of your review process when completing your annual rollover.

‘Job Description’ is optional, and is generally left blank. Allocate the job manager if you know who this will be, otherwise leave it blank. Leave the staff blank as we will deal with this during our scheduling. The reason we don’t enter this now is there is a chance staff may leave and you end up having old staff sitting across jobs throughout the year. It’s best to just deal with this once you are scheduling the work for the year.

‘Manager’ and ‘Staff’ can be populated if you know this information while creating the engagement, otherwise these can be left blank and updated in XPM later. It is important to ensure you have linked you staff between XPM and Practice Ignition by going to ‘Settings > Team’ and clicking into each staff member to link them.

‘Recurring Job’ should be set to no. This is because we are going to do a rollover each year, so we have the opportunity to review the annual engagements annually rather than auto-creating them.

The ‘Start Date’ is the start of the financial year. This is where Practice Ignition is awesome. We can create this job at any time, but it will select the start of the financial year from this date, rather than just using the date it was created – like XPM does. ‘Due Date’ is the end of the financial year for time-charge and in-period fixed-price agreements, and the end of the following financial year for contract-period and in-advance fixed-price agreements. Once you’ve done that, hit ‘Save Job’ and you’ll be directed back to the proposal.

Use the ‘Terms and Presentation’ tabs to customise the style and feel of the proposals. You can customise this by adding your logo in the ‘Settings’ tab, and updating your terms and conditions in the ‘Library’ tab. Once you are happy with your proposal, hit ‘Create Proposal’. Give it a quick review by hitting the ‘View Client Accept Page’, and if you are happy you can send it to your client for acceptance.

Once the client signs the proposal, all the magic unfolds. A job will be created in XPM using the job templates that have been mapped to the services in the proposal. An invoice will be created in Xero, and this will be sent back to XPM on the invoice frequency to capture the billing amount against the job. If you have payment collection enabled, Practice Ignition will debit any funds due and pop them in your bank account. You can then match this amount against the invoice Practice Ignition created. No more accounts receivable!

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