How and when write-offs are apportioned in XPM and WorkflowMax

The write ons/offs are apportioned in XPM and WorkflowMax based on the method of invoicing. There are three levels here:

1. Job-level apportionment
2. Job-task level apportionment
3. Job Timesheet level apportionment

Option 3 can be used with option 1 and 2. Because the apportionment of write ons/offs create a WIP ledger entry they cannot be filtered or toggled on/off. The method of apportionment is determined at the time of invoicing.

Job-level apportionment:

This is the default method of apportionment of write ons/offs and most often occurs at the time of completion when all time and invoices are associated with the job. This can be done at any stage however using the 'Remove from invoice list' button. XPM/WorkflowMax does not automatically zero the WIP on a job when it is completed. You need to do this using 'Remove from Invoice list'.

This method of apportionment is the least detailed but most fair because it looks at the total value of billable effort incurred on a job and compares that to the total invoiced value. The difference will either be positive (write-off) or negative (write-up). The difference between these two numbers will be apportioned by the weighted average value of the billable effort each individual put into the job.

Important: Disbursements get the first 'bite' of any write-on/off so any subcontractor, outsourced service fees and other disbursements get subtracted first from the write on/off at their billable value.

WIP wash-ups 'Remove from invoice list' can be used at any stage throughout the life of a job however this is not something you want to do where the delivery of the services on an engagement is 'lumpy'. Bookkeepers who deliver consistent services throughout the year are best placed to do multiple WIP wash-ups throughout the year. Accountants who have 10/12 months completing low-value in-period activities like BAS returns and 2/12 months with high-value end of year activities are not well suited for multiple WIP wash-ups when they are charging fixed fees either deposits, in-advance, on completion or monthly/quarterly/weekly. This is because the people who work on these engagements throughout the year enjoy write-ups throughout the year and the people who work on the end of year activities inevitably receive large write-offs. If this is the same person doing both tasks, we might consider it however in most practices this does not work.

Because there is no manipulation or interaction required from the person washing up the job this wash-up method is the most fair but could be said to be the least accurate because everyone receives their share of the write-up/off regardless of how well they might have performed for their contribution to the job. If we succeed as a team we suffer as a team. When a person struggles or takes longer than expected on a task, or we're not identifying out-of-scope services etc, everyone including the manager on that job bears their share of the weight of that write-off using this method.

Job-Task level apportionment:

This is the next most detailed method of apportionment of write-offs and can only occur via an invoice (not via Remove from Invoice List). This method is available to both in-arrears and fixed price invoicing methods except monthly/quarterly/weekly retainer-type engagements. This is because we never generate a final invoice or these type of engagements but can do for all others.

When creating a progress or final invoice for a job, change the calculation method at the top of the invoice to 'Fixed Fee'. You will find that the total invoiced value will not equal the total calculated value of the invoice so you will need to move the invoiced values around amongst the tasks. You can then take the total invoiced value and split that across the tasks and disbursements in the job. Just like the job-level apportionment, give disbursements the first bite. Otherwise you will apportioning disbursement revenue to people.

The invoiced values you attribute to the task will be the invoiced values used for the job-task level wash-up that occurs on invoice approval. The billable value incurred on the task (calculated value) will be the billable amount used for the apportionment. Only the people who worked on that task receive the job-task level write on/off by the weighted average value of the effort they put into that task.

For example:
If we are completing an invoice and apply $300 worth of that invoice subtotal to job-task 'BAS - July-September' but the billable value of time incurred on that specific job-task was $400 (2 hours by Hone at $150/hr and 30 minutes by Mere at $200/hr). There is a $100 write-off to be recognised on this job-task, of which Hone will receive 75% ($300/$400) = -$75 and Mere will receive 25% ($100/$400) = -$25.

The benefit of this method is that we can deliberately divided invoiced values across our job-tasks and you might say the apportionment is 'fairer' to individuals who otherwise did well at their part of the job-tasks. The risk of this method is that the apportionment and values gets determined arbitrarily by someone in the accounts department or a job manager and may be a worse reflection of actual performance that the job-level apportionment because it is objective and influenced by personal feelings and decision making.

Job-Timesheet level apportionment:

This is the most detailed method of write-on/off apportionment and can be used for all engagements except those invoiced on a monthly/quarterly/weekly basis because we never have a final invoice here. This method can also be used as well as the two methods above and might be how you start your invoicing process.

By preparing a progress or final invoice on the actual time/cost basis first, we can click into each job-task and determine at the job-timesheet level 'Yes/No/Future' and/or edit the invoiced value of that timesheet.
Note: This does not edit the timesheet itself (and nor should you) as these are relied on for productivity calculations.

'Yes' says that this is an invoicable timesheet entry. You can then edit the hour-quantity on this timesheet entry without editing the timesheet itself. If you are invoicing on the actual time-cost basis this will apply a write on/off specific to that person by their billable rate used on that job and the change in hour-quantity. This will display on the detailed invoice for the customer. Even where you might not be displaying this detail or invoicing on a fixed-price basis the write on/off will still be applied to this persons specifically. You have manipulated the apportionment to go either with or against their favour.

For example:
Mere completes a BAS return in 30 minutes where we expected it to take an hour. Mere would receive a +30min x billable rate write-up here or a higher proportion of the write up earned on the job or job-task level because we have manipulated the timesheet invoice value in her favour.

'No' will write-off the complete value of this timesheet.
For example:

Hone is a new team member who is shadowing Mere on how to complete a GST return effectively. Although Hone's time is billable, none of it is invoicable until he can complete these task on his own. We would tick 'No' next to all of Hone's timesheet entries. This would mean Hone wears the bulk of any write-off here because none of his work is invoicable.

'Future' means we are unsure at this stage if we can invoice this time either directly or as part of a fixed fee coming later ie a final invoice. This should not be used for Final Invoices as all uninvoiced values on final invoices are written off.

For WorkflowMax:

All of the above still applies however we have quotes to consider. A job level apportionment can be done at the time of invoice by either:

• Lump sum invoice method
• % of quoted value invoiced method
• Syncing 'upward' a Xero invoice to the job (WFM Premium only)

Job-task level apportionment can occur on both:

• Quoted/Estimated Invoiced method
• Actual Time/cost invoiced method

By changing the pricing method from calculated to 'fixed price' on the invoice.

The job-timesheet (explicit) allocation of write ons/offs can only occur using the Actual time/cost invoice method because this is the only invoice method that contains timesheets.

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