Specify Billing Type and Billing Cycle

Your progress:

What will you learn in this lesson?

After completing this lesson, you’ll be able to:
  • Decide which Billing Type and Billing Cycle to use for a particular Project.
  • Explain how to set the Billing Type and Billing Cycle on a Project.
Things you need to know:

Fixed price contract: A fixed-price contract is a type of contract where the payment amount is agreed between vendor and customer in advance and will not vary on resources used or time expended.

Time and materials contract: A time and materials contract is a type of contract in which the customer agrees to pay the vendor based upon the time spent to perform the work and for materials used in the construction, guided by an early estimate of how much work is required to deliver the project.

Billing Event: A Mission Control Billing Event represents the amount of money a client owes you for the work done on the entire project or on part of the project, also known as an invoice.

Let’s set the scene.

  Layne has met with Grommet Inc and agreed on the billing approach for the website project and when she will be issuing them invoices.

Which Billing Type do I choose?

When selecting your billing type, you will be guided by the terms of the contract that has been negotiated. In Mission Control, there are three options:

  • Fixed Price
  • Fixed Price + Expenses
  • Time & Materials

Fixed Price

Let’s imagine Layne has agreed with her client to invoice them a set amount for the website project regardless of the hours taken to complete the project. In this case, she would select Fixed Price as the Billing Type.

In Mission Control, when a Billing Event is created for a Fixed Price project the amount is calculated based on the number of scheduled hours rather than the number of completed hours.


Note: To assist with management of scheduled and completed hours on fixed price projects, Mission Control includes a validation rule that will prevent users from logging time if it will push the completed billable hours over the scheduled billable hours. The default setting for this validation rule is inactive. If you would like to activate the rule, refer to the Mission Control User Guide for detailed instructions.


Fixed Price + Expenses

What if Layne has agreed to a fixed price contract and is going to charge the client for the travel expenses on the website project? In this case, Layne would select Fixed Price + Expenses.

In Mission Control, when a Billing Event is created for a Fixed Price + Expenses project the amount is calculated based on the number of scheduled hours rather than the number of completed hours, plus the amount of any approved and billable expenses.

Time & Materials

Let’s imagine Layne cannot quote a set price to her client because the scope of works has too many variables to be certain it will come in on schedule and price. In this case, the contract agreed upon is essentially open-ended, so the billing type Layne selects is Time & Materials.

In Mission Control, when a Billing Event is created for a Time & Materials project the amount is calculated based on the number of billable, approved and completed hours up to, but not including the next billing date, plus the amount of any billable expenses approved within the billing period.

Which Billing Cycle do I choose?

Now that we have determined how the amount of an invoice is calculated, we are going to determine when an invoice will be generated. In Mission Control, this is controlled by Billing Cycle, and there are three options:

  • Periodic (only applicable to Time & Materials projects)
    • Weekly, fortnightly, 1st & 16th, 4 weekly, monthly
  • Milestone
  • Manual

Periodic

Let’s imagine Layne has agreed to invoice her client on a monthly basis for the website project. In this example, she would select Periodic as the Billing Cycle, Monthly as the Periodic Billing Frequency, and set the Periodic Billing Next Date.

In Mission Control, a Billing Event is automatically created once per billing period as defined by the Periodic Billing Frequency. Billing Event will include all approved time since the last Billing Event was created.

Milestone

What if Layne agreed to invoice her client at the completion of each phase of the project, for example, an invoice at the end of the Design phase and then another invoice at the end of the Build phase? In this example, she would select Milestone as the Billing Cycle.

In Mission Control, there is an “Invoice on Completion” checkbox on each Milestone. If this is checked, a Billing Event is automatically created when the Milestone is completed.

Fixed Price Milestone Billing

If Fixed Price, the amount of the Billing Event is determined based on one of the following:

  • the ‘Invoice Amount’ on the Milestone, or if this is null or 0
  • the ‘Milestone Budget’ on the Milestone, or if this is null or 0
  • the ‘Hours Scheduled Billable Value’ on the Milestone
Fixed Price + expenses Milestone Billing

When using milestone billing cycles for Fixed Price + Expenses, expenses need to be logged against a specific milestone to be included in the billing event and invoice.

Time & Materials Milestone Billing

If Time & Materials, the amount of the Billing Event is determined by the billable, approved, completed hours of the completed Milestone.

Manual

Let’s imagine Layne would like full control over when an invoice is generated as the client has requested to be invoiced in full prior to completion of the project. In this case, Layne would select Manual as the Billing Type.

In Mission Control, the Manual option will remove the automation of the billing process. With this option, you will need to create your own Billing Events. This option is good where there are no specific billing processes, or processes cannot be handled with the available billing options.

You can manually enter the amount of the Billing Event or use these two very handy fields to calculate the amount:

  • Auto Add Time Logs checkbox – this will automatically include all approved and not yet invoiced time logs
  • Auto Add Expenses checkbox – this will automatically include all approved and not yet invoiced expenses

Let’s select Billing Type and Billing Cycle.

The current project Layne is working on for Grommets, Inc is going to be billed on a Time & Materials basis and invoices are to be issued on a Milestone completion cycle. To set up a Time & Materials project with Milestone billing:

  1. Navigate to Project.
  2. Click Edit.
  3. Click the drop-down for Billing Type and select Time & Materials.
  4. Click the drop-down for Billing Cycle and select Milestone.
  5. Click Save.
  6. Navigate to the first Milestone.
  7. Click Edit.
  8. Check the Invoice on Completion checkbox and enter the Invoice Amount.
  9. Click Save.
  10. Repeat steps 6-9 for each Milestone that needs to trigger an invoice.

Select Billing Type

Select Billing Cycle

Before we move on…

Let’s recap what Layne has achieved so far:

  • Created Roles, Teams and Skills for Kelly and Tyler
  • Created a Project and three Milestones for the website project
  • Specified the Billing Type for the website project
  • Specified the Billing Cycle for the website project

Next on her to-do list is to set the billing and cost rates.

 

Ready to move on? Take the quiz below to test your knowledge.