Billing Projects with Milestone Billing

Objectives

After completing this lesson, you will be able to:

  • Explain milestone billing for projects

Milestone Billing for Projects

James and Lisa Discuss Milestone Billing

Since now part of the project work is finished, James (who works as a project planner at Hybrid Machinery) discusses the realization of revenues in projects with Lisa, who works as a Sales representative at Hybrid Machinery. They talk about the process of milestone billing.

Note
See the following video to follow their conversation:

Billing Projects with Milestone Billing

The benefit of billing projects with milestone billing is that milestones in your project trigger billing processes for your sales order.

A billing block for a certain date line in the billing plan prevents the invoice from being created for that date line.

The requirements for using milestone billing are as follows:

  • A Work Breakdown Structure (WBS) with a billing element
  • A sales order item account assigned to the WBS billing element
  • A milestone with an integration to sales and distribution
  • A billing plan that is assigned to a sales order item and linked to a milestone

The starting point for milestone billing is a sales order item that has a billing plan whose dates are related to milestones of the assigned project. If you enter actual dates in the billing milestones (for example, by confirming the assigned activity), the billing block imposed on the corresponding date in the billing plan is disabled. The figure shows the confirmation of a milestone, and the lock disablement in the respective billing plan item.

The unlocked billing date is billed during the next billing run. Like the sales order item, the invoice document is assigned to a WBS element. This means that the actual revenues are posted in the project. The system sets the date in the billing plan to Fully Processed (billing status C).

As soon as a certain milestone is reached, the billing block is removed. The next time that the billing program is run, it creates an invoice.

Project billing is not necessarily based on milestone billing. Project billing can be based on the following:

  • Resource-related billing of the sales order
  • A combination of milestone billing and resource-related billing
  • Direct billing without a sales order

Depending on your business process, you can configure billing to fit your needs.

How to Execute Milestone Billing

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