SUMMARY: Understanding Billable Amounts in Clients & Profits.

There is a concept in Clients & Profits programs which, once understood, makes interpreting Clients & Profits job reports very simple. Read carefully the following equation: Gross (not net) costs minus billings equals billable. Once you fully understand this "formula", Clients & Profits job reports become very clear and easy to use.

Gross Costs Defined

Accounts payable invoices and direct disbursement checks are assigned a gross amount during data entry when distributed to a job and task. Note that net cost times markup percentage equals gross cost.

The gross amount for a time sheet is defined as number of hours x billing rate. (The net cost for a time entry is number of hours x cost rate.)

Billings Defined

Billings are simply accounts receivable invoices added against a particular job/task.

Note again: Gross Costs minus Billings equals Billable. Think about the following three reports in terms of this formula.

The Job Summary

Note carefully that the costs column on the job summary is showing net, not gross, costs. The gross costs are not shown on the job summary. To apply the above "formula" and arrive at the billable figure on the job summary, it is necessary to look at two other job reports:

Job Costs Reports

This report details every cost on the job ticket. It shows both net and gross costs. Net cost is your cost. Gross costs are amounts to be billed to your customers.

Note that in some versions, the gross costs column on the Job Costs report is labeled billable. This is not to be confused with the billable column on the job summary report. Billable on the job costs report means total gross costs, before any billings. Billable on the job summary means gross costs minus billings to date; the "formula" applies.

Let's add to our formula. Gross costs (billable column on the job costs report) minus billings equals billable (as shown on the job summary).

The Job Billings Report

This report simply shows all accounts receivable invoices applied to the job in question. This equals the billings column on the job summary.

The Unbilled Column

Based on the previous discussion, you can see that the billable column on the job summary represents gross costs entered against the job that have not been billed.

Note that the billable figure could easily be a negative number. This would mean that billings have been applied against the job in excess of gross costs. As costs are added, the billable column will climb toward zero. This is a key point in understanding the reports.

For example:

• Assume $100.00 is billed against task PRIN on job number 001. There have been no costs entered against this task. The job summary will show a negative $100.00 billable amount for this task.
  
  
• Next an a/p invoice is added with a net $25.00 cost and gross $50.00 cost against job 001, task PRIN. The job summary will now show costs of $25.00, billings of $100.00, a billable amount of negative $50.00.
  
  
• If a second a/p invoice is added with a net $25.00 and gross $50.00 cost against this same job and task, the billable amount for task PRIN will climb to zero on the job summary . The job summary will now show costs of $50.00, billings of $100.00, and billable $0.00.

In other words, when all gross costs are fully billed, the billable amount on the job summary will equal zero.

Other Job Reports

Other job reports are also based on this same concept. When interpreting other Clients & Profits reports, in particular ask yourself if you are looking at net or gross costs. Costs (net and gross), billings, and billable are integral parts of all Clients & Profits programs.