This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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It is important we capture the necessary information on jobs before they are closed to ensure we are able to accurately report on their performance. Accurate job reporting allows us to easily identify which client fees need to be lifted, and it also provides us with accurate Staff Performance reporting. Without a structured process for closing jobs, we risk losing all accuracy in our reporting. Fortunately, like the job set-up process, the steps are very simple:
- Ensure all tasks are marked as completed
- Ensure all costs are marked as actual costs
- Ensure all invoices are on the job
- Ensure WIP wash-up has been done
- Change job state to completed.
Before we close a job, we must ensure all the time sheets have been captured against the job. The easiest way to do this is to ask your team to mark tasks as ‘Complete’ once they have completed working them. This not only helps with your job close-out process, but also with the management of the job because it allows us to easily see which tasks are yet to be completed on a job.
To mark a task as completed, go to the information page on the job and scroll down to the ‘Task List’. You’ll notice there is a checkbox against each task. If you check the box it highlights the task green, denoting it is completed. This action will lock the time sheets for that task, and allocate the task a completed date. This action is used for various levels of reporting, so it is an important habit to get your team started on.
When our jobs are created, they may contain estimated costs such as Xero subscriptions or outsourcing fees. These are entered as estimated costs on the jobs when they are created because we do not want to spike our WIP by the amount of the cost when the job is created. We therefore wait until the job is completed before we mark the cost as an actual. We want to do this on the day we do our WIP wash-up. This will spike the WIP, then wash it up, on the same day.
Our second check when closing jobs therefore is to ensure we have marked all costs as actual costs. We do this by clicking into the ‘Cost’ tab and checking the costs that do not have checks next to them. Failure to do this will understate the billable amount and cost on the job, and therefore overstate the write-up and profit on the job.
The third step when closing out a job is to ensure all invoices have been loaded against the job. If the job is a time-charge agreement, we want to ensure we have invoiced all the time or the agreed fee for the work. If the job is a fixed-price agreement, you want to ensure all 12 monthly invoices are showing in the ‘Financial’ tab of the job. If there are invoices missing, you will need to look into this. There are instructions on how to fix this in Chapter 10: Invoicing.
Once all invoices are captured against the job, you are ready to do your WIP wash-up.
Once all time sheets have been entered, all costs have been marked as actual costs, and all invoices have been captured against the job, you are ready to do your WIP wash-up. A WIP wash-up is where XPM apportions all interim invoices against all the unbilled time and costs on the job, and writes off any remaining WIP.
Let’s look at an example:
Say we have a job that has $1,000 of billable time and a $500 outsourcing cost, so a total of $1,500 billable WIP. We also have 12 x $100 invoices from our fixed-price agreement billing. When we do our WIP wash-up, the $1,200 of invoices will be apportioned firstly to the cost on the job, and the remaining balance across the time sheets on the job.
In this example, the first $500 of the $1,200 will be apportioned to the outsourcing cost, and the remaining $700 will be apportioned across the $1,000 of time sheet entries. As there is a $300 shortfall, we would recognise $300 as a write-off on the job. This $300 write-off will be apportioned across the staff who worked on the job based on the billable time they entered. If Dan put $200 of time on the job, and Sarah put $800, Dan would get 20% of the write-off which is $60, and Sarah would get 80% of the write-off, which is $240.
WIP wash-ups are important because they allow us to see which jobs we have gone over budget on, and therefore incurred write-offs on. This enables us to raise our client fees for future years, or provide more training for our staff that are struggling to deliver jobs within budget. A WIP wash-up also reduces our WIP balance to $0.00 on the job. If we did not do a WIP wash-up, this job would look like it still has $300 of billable time on it but in reality, the job is completed and there was $300 we were unable to bill because we went over budget.
To do a WIP wash-up, click the ‘Remove from Invoice List’ button in the ‘Financial’ tab within the job. This button will apportion the interim invoices to the unbilled time and cost on the job, and reduce the WIP on the job to $0.00, which recognises a write-up or write-off on the difference.
5. Change job state to completed
Once you have completed your WIP wash-up, you can update the job state to your completed state. This could be called 1.9 Archived or something similar if you have edited your job states. Once the job is completed (or archived), it will no longer show in the job manager in XPM, or in the Open Job report in Link Reporting.
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