Page tree
Skip to end of metadata
Go to start of metadata

When certain events occur, Projector creates three types of transactions — GL, AP, and AR transactions — and queues them up for later transmission to the accounting system. Each type of transaction can be transmitted to the accounting system as often as is needed — e.g., organizations may wish to transmit AP transactions every week so that employees get reimbursed more quickly, while only transmitting GL and AR transactions at the end of each month.
Events that create accounting transactions are:

  • Approving or unapproving time cards
  • Approving or unapproving any cost cards (i.e., expense reports, vendor invoices, or soft costs)
  • Approving or unapproving to pay payment vouchers used to create payments for vendor invoices and expense reports
  • Adjusting time or cost cards
  • Issuing or voiding invoices
  • Performing revenue recognition

A typical organization may have tens or hundreds of AP and AR transactions in a month, each one of which must be tracked individually in the accounting system. There may be, however, thousands or tens of thousands of GL transactions in a month; a typical resource might have between 20 and 40 time entries per month, each one affecting the work-in-progress balance. Since the accounting system does not need that level of GL detail, Projector batches the transactions that affect the GL, and then aggregates them to produce a much smaller number of GL accounting transactions. Closing a GL batch causes Projector to summarize all the individual GL transactions created by activity in the system into summary-level transactions, one for each company and accounting period that was affected. Managing GL transaction batches will be discussed later.

Further topics include:

See the chapter on Accounting Integration for additional topics.

Time Cards

This section includes information about Key Accounts, Approving Time Cards, and Adjusting & Unapproving Time Cards. See the chapter on Projector Accounting Transactions for additional topics.

 

Key Accounts

Projector uses several key accounts when tracking the accounting impact of time cards. Listed below are the accounts, what they are used for, and where in Projector accounting system mappings are managed. The account types are as follows:

Account

Account Type

Use

Mapping Location

Time Work in Progress (WIP)

Asset

Projector control account that represents the value of labor that has been expended on behalf of a client, but for which the client has not yet been billed.

Engagement Type

Time Revenue

Revenue

Reflects revenue associated with the initial approval of time and corresponds to the contract revenue on a time card. Time revenue is also the revenue that is affected when a time card is revalued, which recalculates the contract value of the card.

Engagement Type

Time Billing Adjustments

Revenue

Reflects revenue created or destroyed by writing up or writing down a time card.

Engagement Type


While Projector allows organizations to track each of these three types of time revenue in separate accounts in the GL (the two types of revenue described above, plus Revenue Recognition Adjustments, described later), many organizations choose simply to map some or all of these revenue types to the same account in the accounting system.
The Time WIP account is an asset account that Projector considers a control account---i.e., Projector manages the balance of the account, and no other transactions other than Projector should be allowed to affect this account.

Approving Time Cards

A GL transaction is created when a time card submitted to a billable Time and Materials (T&M) or Not to Exceed (NTE) project is approved or unapproved. (Projector treats time cards submitted to Fixed Price (FP) projects differently than T&M or NTE. Fixed price transactions will be described later in this document) At that time, Projector creates revenue (as opposed to generating the revenue when the client is billed for the time) and creates WIP:

Adjusting and Unapproving Time Cards

Once a billable time card has been approved, it can be adjusted using either pre-invoicing adjustments or invoice adjustments to change the financial value of the time card. Revaluing time cards recalculates the contract value of the card using current contract billing rates and thus affects both WIP and time revenue. Writing up and writing down time cards, on the other hand, affects the billing adjusted value of the time card, and thus affects WIP and time billing adjustments. These adjustments are reversed if the time card is later unapproved:


Cost Cards

This section includes information about Key Accounts, Approving Expense Reports, Cash Advances, Adjusting Cost Cards & Unapproving Expense Reports, Approving Expense Reports with VAT & Expenses that are Treated as Revenue, and Company-paid Expenses. See the chapter on Projector Accounting Transactions for additional topics.

 

Key Accounts

The accounts that Projector employs to track expenses within the system include:

Account

Account Type

Use

Mapping Location

Cost Work in Progress (WIP)

Asset

Projector control account that represents the value of expenses that have been incurred on behalf of a client, but for which the client has not yet been billed.

Engagement Type

Cash Advance

Asset

Reflects a loan given to resources in advance of their incurring expenses that will be repaid when the resource submits an expense report.

Cost Center

Tax Receivable

Asset

Represents accrued taxes disbursed to employees in expense reports before getting reimbursed by the government.

Cost Center

Accounts Payable (AP)

Liability

Represents money owed to resources or vendors to pay them for expenses incurred.

Cost Center

AP Clearing

Contra-liability

Projector control account that accrues expenses paid to resources or vendors, but for which GL transactions have not yet been transmitted to the accounting system. Also allows AP transactions to be single-company, single-currency transactions, pushing multi-company, multi-currency effects to GL transactions.

Cost Center

Soft Cost Clearing

Can be any type of account

Used when clients are billed for soft costs for which the company did not incur a specific expense. For example, product sales or company equipment rental revenue.

Expense Type

Cost Revenue

Revenue

Reflects revenue generated by marking up incurred expenses before charging clients for them, or when reimbursed costs are treated as revenue.

Expense Type

Direct Expense

Expense

Represents expenses incurred when costs are submitted to billable projects and the client is asked to reimburse the company for less than the incurred amount (e.g., writing down a cost). When reimbursed costs are treated as revenue, also represents an expense that offsets the revenue generated.

Expense Type

Operating Expense

Expense

Reflects expenses that are submitted to non-billable projects.

Expense Type

Vendor Reconciliation

Contra-liability

Account that tracks amounts that the organization has paid a vendor that are not yet substantiated with approved cost cards.

Vendor


Like Time WIP, the Cost WIP and AP Clearing accounts are accounts that Projector considers control accounts, so no other transactions other than Projector should be allowed to affect these accounts.
Each expense type is able to route expenses to different GL accounts for billable and non-billable projects. Many organizations route each expense type to a different operating expense account, but map the direct expenses for all of the expense types to a single account called "Non-reimbursed expenses" or something similar. Alternatively, the direct expenses for each expense type can be mapped to the same account as that expense type's operating expense account. These different configurations simply allow organizations to track the effect of expenses to different levels of detail within their general ledgers.

Approving Cost Cards

When expense reports, vendor invoices, or soft cost batches are approved, they create GL transactions that represent the WIP, expense, or revenue that is generated by the cost cards. The credit side of this transaction is a clearing account called AP clearing that represents cost cards that have been approved but not yet approved for payment. When cost cards are collected onto a payment voucher and the payment voucher is approved to pay, Projector queues up an AP transaction that allows the resource to be reimbursed or the vendor to be paid. The debit side of the AP transaction is the same AP clearing account credited by the GL transactions. This AP clearing account allows AP transactions to be a single-company, single-currency transaction. This is important when, for example, a European resource (who expects to be reimbursed in Euro) submits an expense report to a project owned by the US company (whose WIP is maintained in US Dollars) for a client in Canada (who will be billed in Canadian Dollars).


To start with a simpler single-currency example, the following transactions are what takes place when an expense report submitted to a non-billable project is approved:


When expenses are submitted to billable projects and approved, the expenses are normally accrued in Cost WIP instead of being routed to an expense account:

In cases where a payment voucher is approved to pay (thus creating an AP transaction) and then unapproved (thus creating a vendor credit) before the AP transaction has been transmitted to the accounting system, instead of transmitting both transactions, Projector will simply void both the AP transaction and the vendor credit and transmit neither.

 

Vendor Reconciliation

In cases where costs were paid using a company-paid credit card, however, organizations can sometimes run into timing issues. For instance, company-paid costs for a resource may not yet have been entered or approved when the monthly statement arrives and needs to be paid. To accommodate these sorts of timing issues (or, indeed, to accommodate payments for costs that will never be entered into Projector, such as late payment fees), reconciliation items can be used.

Reconciliation items are a "plug" that represents the difference between what needs to be paid to a vendor and what can be justified by the cost cards on that payment voucher. Once the cost cards are entered and approved, they can be pulled onto the payment voucher to replace the reconciliation items until all the reconciliation items are removed and the payment voucher is fully reconciled. While the reconciliation items exist, they are represented as a debit balance in a vendor reconciliation account and a credit in the AP clearing account.


For example, if the organization needs to pay American Express $150, of which $100 can be represented by an expense that has already been approved, the following transactions would be created:

 

Cash Advances

When a resource submits an expense report with a cash advance and that expense report is approved, the AP transaction includes a credit to the Cash Advance account, effectively reducing the amount that the resource will be reimbursed:


Note that Projector does not manage the disbursement of the cash advance in the first place, so the initial debits to the Cash Advance account need to be handled manually when the cash advance is disbursed.

Adjusting Cost Cards

Like time cards, cost cards can be adjusted after having been approved, either using pre-invoicing adjustments or on the invoice itself. After an expense report has been approved, each of the individual cost cards on that expense report can be adjusted individually. They can be written up or written down, transferred to other projects, or adjusted in other ways independently of the other cost cards on the expense report.


If cost cards have been adjusted in some manner and the expense report is unapproved, all of the adjustments made to the cost cards are reversed:

Approving Expense Reports with VAT and Expenses that are Treated as Revenue

In countries where Value-Added Taxes (VAT) need to be accounted for in expense reporting, Projector allows resources to enter the portion of the incurred expense that was VAT and allows adjustment of that VAT at a later time if needed. In addition, Projector allows reimbursable expenses reported to certain expense types to be treated as revenue (indicated by the "Treat Costs as Fees" flag on the Expense Type screen). This configuration is useful for organizations that bill clients for subcontractor fees or for products that were purchased on behalf of and re-sold to the client (e.g., advertising space) that the firm wishes to count as revenue:

Soft Costs

Projector allows users to enter costs into the system that don't need to be paid to resources (in the form of expense reports) or vendors (vendor invoices), but which need to be billed to a client or need to impact project profitability. This is generally used in cases where the company charges clients for costs that were not directly incurred by the organization---e.g., for sale of software product licenses or assessment of management fees.

For example, if the company wishes to charge the client $100 for a software product license, Projector would generate GL transactions as follows:


In this case, the credit to the cost clearing account would generate revenue or offset expenses in the General Ledger. Because Projector assumes the cost is just a pass-through, however, the soft cost in this case doesn't affect project profitability in Projector's reports.

In cases where organizations wish to reflect the product sale as pure revenue, it would enter a soft cost of $0 and then mark up the cost to $100:

 

Invoicing

This section includes information about Key Accounts, Issuing Invoices, Issuing & Voiding Invoices with Adjustments, Foreign Exchange Variances, and Recognizing Revenue & Issuing Final Invoices. See the chapter on Projector Accounting Transactions for additional topics.

Key Accounts

Invoicing can affect many of the same accounts impacted by time and expense management in that adjustments can be made to time and cost cards on the invoice before it is issued. Key accounts affected include:

Account

Account Type

Use

Mapping Location

Time Work in Progress (WIP)

Asset

Projector control account that represents the value of labor that has been expended on behalf of a client, but for which the client has not yet been billed.

Engagement Type

Cost Work in Progress (WIP)

Asset

Projector control account that represents the value of expenses that have been incurred on behalf of a client, but for which the client has not yet been billed.

Engagement Type

Accounts Receivable

Asset

Reflects amounts billed to clients that have not yet been paid.

Cost Center

Deferred Revenue

Liability

Represents pre-payments (billed as milestone payments) paid by a client in advance of performing work or incurring expenses and in the billing of fixed price contracts.

Cost Center

Tax Payable

Liability

Represents taxes collected from the client during invoicing that need to be paid to the government.

Tax Type

Time Revenue

Revenue

Reflects revenue associated with the initial approval of time and corresponds to the contract revenue on a time card. Time revenue is also the revenue that is affected when a time card is revalued, which recalculates the contract value of the card.

Engagement Type

Time Billing Adjustments

Revenue

Reflects revenue created or destroyed by writing up or writing down a time card.

Engagement Type

Cost Revenue

Revenue

Reflects revenue generated by marking up incurred expenses before charging clients for them, or when reimbursed costs are treated as revenue.

Expense Type

Direct Expense

Expense

Represents expenses incurred when costs are submitted to billable projects and the client is asked to reimburse the company for less than the incurred amount (e.g., writing down a cost). When reimbursed costs are treated as revenue, also represents an expense that offsets the revenue generated.

Expense Type

FX Variance

Revenue or Expense

Reflects unearned revenue or expense that results when foreign exchange rate changes cause deferred revenue to be worth a different amount when applied to an invoice.

Cost Center

Adjustments to time and cost cards can be made on invoices that can involve altering the financial value of those cards. Most of these adjustments (and the GL transactions that result from them) are applied when the invoice is issued, at which time an AR transaction is also created. Some adjustments, however, such as transfers to other projects, happen as soon as the adjustment is approved and the adjustment is saved to prevent those cards from holding up the workflow of other invoices. In these cases, the GL transactions that result from these adjustments will be created when the invoice is saved.

Issuing Invoices

When an invoice is issued, time and cost cards on that invoice are taking out of WIP and turned into AR. Invoices can also include an amount for tax that is billed to the client and will be paid to the government:

Issuing and Voiding Invoices with Adjustments

As mentioned earlier, when an invoice with time card or cost card adjustments on it is issued, the adjustments are applied to the cards, creating GL transactions along with the AR transaction. If an issued invoice is voided, the time and cost card adjustments are reversed, and a reversing AR transaction (which often shows up as a credit memo) is created. Like approving and unapproving expense reports, issuing an invoice and then voiding it before the initial AR transaction is transmitted will cause both the initial AR transaction and credit memo transaction will be voided against each other.

Foreign Exchange Variances

All of the prior examples were single currency scenarios where the transactions for a particular company were, by design, in the company's GL currency. When multi-currency transactions do happen within Projector, because each company has a single natural currency, multi-currency transactions must cross a company barrier. Projector forces these transactions to be single-currency transactions by leveraging intercompany accounts as described earlier. Because of this, Projector does not need to calculate FX variances when FX rates change over time.

The only transaction where Projector may need to account for an FX variance is an AR transaction where the client is being billed in a different currency than the company keeps its GL in. When an invoice's net value in the engagement currency is zero, but in the GL currency is not because of FX rates that have changed over time, Projector accounts for this gain or loss with an FX variance. This may happen if a credit is issued for previously invoiced amounts or prepayments were applied to the invoice, and those credits or prepayments exactly balance out new amounts being invoiced.

In a single currency example of this prepayment scenario:

If, on the other hand, the client is being billed in Pounds Sterling, many AR systems will manage AR balances in both US Dollars and Pounds Sterling. If the initial milestone payment was for £200 at an FX rate of £2.00/$1.00 (deferred revenue of $100), but the FX rate changed to £2.50/$1.00, the £200 time card is worth $80 in the GL currency. Finally, when the final invoice is issued, Projector needs to net the £200/$100 in deferred revenue against the £200/$80 in WIP so that both the WIP and Deferred Revenue balances are both zero, creating an FX variance of $20 in revenue:

A gain or loss on FX may also be created in a much less frequent situation in which the invoice's value in the engagement currency is not zero, but because FX happened to change in precisely the right way, the GL currency is exactly zero. This is unlikely to happen in reality, but Projector will create an FX variance amount in this case as well.

Delivering a Fixed Price Engagement

Engagements with time contract terms of Fixed Price (FP) are treated differently than T&M or NTE engagements since clients are generally billed based on fixed milestones instead of individual time cards. As milestones get billed, they generate deferred revenue. Fixed price time cards, when approved, do not create WIP and revenue as their T&M or NTE counterparts do. (Actually, Projector credits the revenue account and debits the revenue recognition account by the same amount. Since most organizations map these two accounts to a single revenue account or at least roll up both these accounts into a single parent account, the net effect is the generation of no revenue.) When the process of revenue recognition is executed, revenue is generated and deferred revenue is consumed:

Non-Projector Transactions

The following transactions illustrate how Projector activities would interact with AR and AP transactions used to post cash payments against invoices and disburse expense reimbursement checks.


See the chapter on Projector Accounting Transactions for additional topics.

  • No labels