JOB210: Job Profitability Reports

Transcription

1 JOB210: Job Profitability Reports CERTIFIED COURSE CURRICULUM SAGE UNIVERSITY

2 IMPORTANT NOTICE This document and the Sage 100 Contractor software may be used only in accordance with the Sage 100 Contractor End User License Agreement applicable to the Sage 100 Contractor software. You may not use, copy, modify, or transfer the Sage 100 Contractor software or this documentation except as expressly provided in the license agreement. Visit Sage's training services Web site at call , or us at to learn about training classes that Sage adds throughout the year. Contact your business partner to learn about local training options. Information in this document is intended solely as general information with respect to common business issues and is not to be construed as professional advice. Consult a tax or accounting professional for all tax and account related questions. THE INFORMATION HEREIN IS PROVIDED AS IS AND ALL WARRANTIES ARE EXPRESSLY DISCLAIMED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY: OF MERCHANTABILITY; OF FITNESS FOR ANY PARTICULAR PURPOSE; OF NON-INFRINGEMENT OF ANY PROPRIETARY RIGHT OF ANY THIRD PARTY IN ANY COUNTRY; OTHERWISE ARISING OUT OF ANY PRODUCT, PROPOSAL, SPECIFICATION OR SAMPLE; AND ANY WARRANTY THAT THE DOCUMENT IS ERROR FREE. No license, express, implied, by estoppel or otherwise, to any intellectual property right is granted by this document. Sage Software may make changes to the information in this document at any time, without notice. Recipient is solely responsible for assessing the suitability of the information and assumes all risk of use Sage Software, Inc. All rights reserved. Sage, the Sage logos, and the Sage product and service names mentioned herein are registered trademarks or trademarks of Sage Software, Inc., or its affiliated entities. All other trademarks are the property of their respective owners. 03/2013

3 Jobs Contents Contents Welcome Course Pre-Requisites Training Data for Lecture and Activities Conventions Used in This Workbook Job Profitability Reports Learning Objectives Over/Under Billings and Bonding Reports Source of detail in the Over/Under Billings Report (6-1-7) Student Exercise How job status and types affect the reporting Printing the Report Period Selection Understand Journal Entries Student Exercise Preparing the Journal Entry Student Exercise Reverse in Next Period The Meaning of * in Reports Bonding Report Selection Criteria for Bonding Report Source of detail in the Bonding Report Student Exercise Adjustments to Reports Enter Internal Change Order Student Exercise Sage Software, Inc. Online Training at 3

4 Jobs Contents 2013 Sage Software, Inc. Online Training at 4

5 Jobs Welcome Welcome This handout has been designed for use in an instructor-led class for Sage 100 Contractor. Detailed instructions help you recall the procedures introduced by your instructor. Depending on how your training class is conducted, some sections may not be addressed. Refer to these sections in the future as you continue to work with the software. Course Pre-Requisites This course assumes that you have installed the Sage 100 Contractor software and opened the Sample Company. You should also have participated in the NCT102 course. Training Data for Lecture and Activities As your instructor demonstrates procedures in the software, he or she will access the training data set that has been used to capture application screens in this workbook. You will also use the training data set to complete the activities. You can download the training data sets on the Sage University Web site ( using the procedure explained on the next page. Transactions in the Training Data Set In certain cases, transactions in the data set that you use may show a different year than the illustrations in this book, or than the instructor shows in class. If your data set transactions show a different year, but all other details such as the account setup, vendor names, and jobs are identical, your data set will correspond to the materials in all respects but the date. When you complete the activities that involve dates, you may see a different year in the instructions or screen shot than in your data. Use the appropriate year based on the data you are using for activities. For example, if 2012 is the current year in your data and the activity prompts you to enter prior year information, enter a date in If the activity prompts you to enter current year information, enter a date in Sage Software, Inc. Online Training at 5

6 Welcome Sage 100 Contractor If you already have an older version of the training data installed, you can upgrade it using the directions below to download the latest training data set. If you prefer to use another data set for the activities, you may do so, but your results may not resemble the images you see in the workbook. To Download the Training Data Set 1. In an Internet browser, go to 2. In the right-hand area under QuickLinks, click Training Data. 3. Select the ReadMe File file for instructions on load the sample data. 4. Click the Download the Sample Company Training Data link. 5. Click Run to install the training data. If you see a security warning about the publisher, click Run. 6. Browse to your MB7 folder, then click Unzip, and then click OK. Menu Paths In this workbook, menu paths show you the steps required to start a task. This is a sample menu path: 4-Accounts Payable > 3-Vendor Payments > 2-Pay Vendors Many modules and tasks are also available through Sage 100 Contractor Desktop. The Desktop has a tree structure that reflects the same logical progression as the steps of a menu path. Where to Get Additional Information Application Help Files Each application contains an extensive Help system. The Help is your primary resource for reference and how-to information for all tasks. Help includes Contents, Index, and Search features that help you locate information quickly. You can start Help in two easy ways: Select About this Window from the Help menu in any application. Press the F1 key on the window in any application. Technical Support Knowledgebase The Technical Support Knowledgebase contains the latest information about application features. You must have a current service plan to access the knowledgebase. 6 Local Training From Business Partners 2013 Sage Software, Inc.

7 Jobs Welcome InfoCenter Be sure to check the InfoCenter for product news, announcements, support, and training. Access the InfoCenter from Home & Resources tab > Customer Resources. Submit Enhancement Requests Do you have a suggestion for how we can improve our software? We want to hear your ideas! Open the Product Enhancement Request option from Home & Resources tab > Customer Resources. Ideas you enter will be submitted to our Product Management team. Conventions Used in This Workbook This workbook uses the following conventions: The names of screens, windows, fields, buttons, and other features displayed by the software are shown in bold type. Information you enter into the software is in bold type, as in the example below: Type Miscellaneous in the Amount Type field. Names of keys are shown in capitals; for example, ENTER, TAB. A plus sign (+) between two key names indicates that you should press both keys at the same time; for example, SHIFT + TAB. NOTE: This symbol draws your attention to information of particular interest. TIP: This symbol draws your attention to tips about using a helpful feature of the software. WARNING: This symbol draws your attention to information that is important because it can help you avoid a costly or time-consuming error. FOR MORE INFORMATION: This symbol draws your attention to a reference to another document or to another section in this document Sage Software, Inc. Online Training at 7

8 Welcome Sage 100 Contractor 8 Local Training From Business Partners 2013 Sage Software, Inc.

9 Jobs Job Profitability Reports Job Profitability Reports The purpose of this class is to explore the relationship between budgets, proposals, and job cost reports within Sage 100 Contractor. Learning Objectives At the completion of this course, you will be able to: Explain the purposes of two powerful job cost reports. Identify important differences between the Over/Under Billings Report and the Bonding Report. Illustrate the over/under billing calculation. Define the three essential components of accurate reporting. State how job types and status affect the reports. Prepare the journal entry for over or under billing. Explain the meaning of the * in either report. Know when an internal Change Order might affect the reports Sage Software, Inc. Online Training at 9

10 Job Profitability Reports Sage 100 Contractor Over/Under Billings and Bonding Reports Sage 100 Contractor provides two similar reports to calculate accurate job profitability: Over/Under Billings Report calculates whether the job has been billed the amount actually earned. Bonding Report calculates estimated profit and remaining contract, as well as over/under billing. The Bonding Report, as the name states, is most often given to the bonding company at month end. 10 Local Training From Business Partners 2013 Sage Software, Inc.

11 Jobs Job Profitability Reports Differences between Over/Under Billings & Bonding Reports Over/Under Billings Report (6-1-7) calculates earned revenue by comparing costs to date to the original budget plus change orders. Bonding Report (6-1-8) calculates earned revenue in the same way but adds four additional calculations: Estimated profit Profit to Date Cost to Complete Remaining Contract 2013 Sage Software, Inc. Online Training at 11

12 Job Profitability Reports Sage 100 Contractor The Over/Under Billings Calculation The main goal of this report is to calculate how much each job, and all current jobs, has billed related to expenses. This simple calculation is based on the matching principle. This is an important concept in all accounting. It states that income must be matched to the related expenses. In construction, however, invoices can often be sent out only based on contract conditions. This commonly causes the income to fall in a different period than when the work was performed. Additionally, many contractors often bill ahead of job progress to maintain a positive cash flow. This practice, while good for the cash flow, produces an inaccurate financial statement. Use the table below to understand the calculation of Over/Under Billing. Item Value Contract Price: $10,000 Budget: $8,000 Costs to Date: $4,000 % Complete 50% (Costs divided by Budget) Earned to Date: $ (% Complete x Contract) Invoiced to Date: $7,000 Over/Under Billed: $ If 50% of the job had been completed (costs/budget) what was earned? If billings were $7,000 has the job been over or under billed? By how much? Test questions Based on the example above: 1. Is the Income Statement accurate (if this were the only job in progress)? Why or why not? 2. What are the obstacles to accuracy for this calculation? 12 Local Training From Business Partners 2013 Sage Software, Inc.

13 Jobs Job Profitability Reports Essential components of accurate reporting: Before relying on either of these job cost reports, job cost information must be complete and accurate. Accurate calculations require: Accurate and complete job information. Accurate and complete original budget. Accurate and complete job costs. Accurate and complete change orders. Source of detail in the Over/Under Billings Report (6-1-7) Costs total of all job costs entered to that job Budget original budget (6-2) plus all approved change orders (status 1) with budget amounts = % - Calculated; costs / budget to illustrate percent complete to date Contract from Accounts Receivable (3-5) job setup screen, plus all approved change orders (status 1) with amount on Prime Change Detail screen in requested column. Earned - calculated; % complete X contract 2013 Sage Software, Inc. Online Training at 13

14 Job Profitability Reports Sage 100 Contractor Billed total of all accounts receivable invoices (except void) sent on behalf of the job with type Contract (versus Memo 3-2) Over/Under Earned amount less billed Student Exercise 1 Launch Sage 100 Contractor if you have not already done so. 1. Open Over/Under Billings Reports, and print the report for job# 215 to the screen (File > Print PreView). 2. What are the following: 3. Cost amount 4. Budget 5. % (Complete) 6. What is the contract amount? 7. How did the program calculate the earned amount? 8. Is this right? Y/N. What is missing? Leaving this window open for further exercises, please return to the conference when you have completed this exercise. Without complete detail in the job file at 3-5, information will not calculate correctly in these two reports. How job status and types affect the reporting Over/Under Billings report calculates whether the billing for any job is ahead or behind of expenses. 14 Local Training From Business Partners 2013 Sage Software, Inc.

15 Jobs Job Profitability Reports In addition, the Bonding report calculates profit earned to date and remaining amount on the contract. Neither report would be useful for completed jobs. Jobs not yet begun, but for which a contract has been signed and a deposit received, might be included in the Bonding report as an indication of potential future revenues but not in the Over/Under Billings. Deposits taken before work commences are booked to liability accounts, not to income. Job status: Sage 100 Contractor requires entry at the Job Status cell when setting up a job at 3-5. Status can be either: 1 Bid 2 Refused 3 Contract 4 Current 5 Complete 6 Closed Only jobs which have not been fully invoiced or where expenses remain to be entered should be included in the Over/Under Billings report. When a job has been completely invoiced and when all expenses have been entered, its status should be changed to 5 Complete. Job types: Sage 100 Contractor allows a list of job types to be custom-created at 3-5. If the company bills on different bases, such as fixed price contract or T&M, each job type could include the billing type as well. Job types can be set up to include contract types as well. This way you can select only jobs that might be over or under billed in the report. T&M jobs would not be included Sage Software, Inc. Online Training at 15

16 Job Profitability Reports Sage 100 Contractor Printing the Report There is only one report choice at Selection criteria determine what will print. Job Type: to see only select jobs, change the selection criteria to In List; then use the pick list function to choose which jobs to include. Job Status: typically only current jobs are included, status 4. To quickly find Job Types: 1. Choose In List as the selection criteria for Job Type. 2. Click in the Job Type box and press F5. the Job types Pick List appears. 3. Double click each job you want to include. The selected jobs turn red. 4. Click the check mark to bring selected job types into the Job Type box. 16 Local Training From Business Partners 2013 Sage Software, Inc.

17 Jobs Job Profitability Reports Why is Jimenez Burrito, Job # 216, included? Select the check box Skip 0$ Jobs to skip jobs that have zero Billed amounts Sage Software, Inc. Online Training at 17

18 Job Profitability Reports Sage 100 Contractor Period Selection At the end of every month, or whenever financial statements are printed, print the Over/Under Billings report for that period. By choosing the correct period, a journal entry can be made to accurately reflect the current income to the end of that period. Enter the correct period for the report from the Selection Criteria. Understand Journal Entries To accurately reflect income in the period in which the expenses were committed, enter a journal entry from the Over/Under Billings report. Accounts Affected: If Over billed: Have invoiced for more money than was earned. This transaction will go to the liability account range and decrease income for the period. If Under billed: Have invoiced for less money than was earned. This transaction will go to the asset account range and increase income for the period. 18 Local Training From Business Partners 2013 Sage Software, Inc.

19 Jobs Job Profitability Reports Accounts to Set Up: A Current Asset account: Under-billings or Costs in Excess of Billings A Current Liability account Over-billings or Billings in Excess of Costs An Income account Over/Under billings Sage 100 Contractor indicates the type of normal balance each account 2013 Sage Software, Inc. Online Training at 19

20 Job Profitability Reports Sage 100 Contractor Student Exercise 2 Please return to the desktop. 1. Return to the Report Printing window for the Over/Under Billings Report for and enter the following information: Job type = In List = 1,3,5 Job Status 4 Period 6 2. What is the amount in the Over/Under column? Is it a plus or a minus? Please return to the conference when you have completed this exercise. Preparing the Journal Entry At Journal Transactions (1-3) enter the detail from the Over/Under Billings Report: Enter a new line for each job if necessary, or enter a single sum representing the total of all jobs. If the report shows a negative (-$) amount, the company is over billed. If the report shows a positive amount, the company is under billed. Sage 100 Contractor calculates the total offset for the asset or liability account; it should equal the total from the Over/Under billings report for the period. 20 Local Training From Business Partners 2013 Sage Software, Inc.

21 Jobs Job Profitability Reports Some CPAs advise separate journal entries for Over/Under adjusting entry versus a net entry. If you prefer, you can enter as separate journal entries. Reverse in next period Sage 100 Contractor calculates the total; this should equal the report total Sage Software, Inc. Online Training at 21

22 Job Profitability Reports Sage 100 Contractor Student Exercise 3 Please return to the desktop. 1. Open 1-3 Journal Transactions and make the following entry to match the screen image above: Trans#: O/U 6J Date: Accept default Description: June Over/Under Billings 2. In the grid: Description Account Subaccount Debit Amt Credit Amt Job California Office 100, Job Nevada Office 212, Job California Office 101, June Over Billings , Select the check box Reverse in next period. 4. Click Save. Please return to the conference when you have completed this exercise. 22 Local Training From Business Partners 2013 Sage Software, Inc.

23 Jobs Job Profitability Reports Reverse in Next Period Because the Over/Under Billings calculation changes with the entry of new data (such as additional accounts payable invoices, a new payroll or new invoicing to the client), this journal entry is only accurate at that one moment in time. Therefore, by selecting the Reverse in next period check box, Sage 100 Contractor will create a new transaction from the original entry reversing the original information and posting it to the next accounting period. Many companies print this report monthly but enter a journal entry quarterly. The Meaning of * in Reports Sage 100 Contractor enters an asterisk (*) whenever the total costs on a job exceed the budget or where there is no budget. Review any job that contains an asterisk for accuracy of both budget and job costs Bonding Report The Bonding Report is similar to the Over/Under Billing Report. It contains information about estimated and earned profit as well. This is the report periodically sent to the bonding company Sage Software, Inc. Online Training at 23

24 Job Profitability Reports Sage 100 Contractor Selection Criteria for Bonding Report The Report Printing option for the Bonding Report at contains the same selection criteria as the Over/Under Billings Report. Use Job Type, Job Status and Period Selection to produce the appropriate report. One difference is that in the Bonding Report, selecting the Skip 0$ Jobs check box skips jobs with 0$ Remaining Contract amount instead of jobs with 0$ Billed to Date. 24 Local Training From Business Partners 2013 Sage Software, Inc.

25 Jobs Job Profitability Reports Source of detail in the Bonding Report Current Contract from Accounts Receivable (3-5) job setup screen, plus all approved change orders (status 1) with amount on Prime Change Detail screen in requested column. Current Budget original budget (6-1) plus all approved change orders (status 1) with budget amounts. Estimated Profit calculated: current contract less current budget. Costs to Date total of all job costs entered to that job. % Budget calculated; costs / budget to illustrate percent complete to date. Profit to Date estimated profit multiplied by the % Budget. Earned to Date calculated; % complete X contract. Billed to Date total of all accounts receivable contract (versus Memo) invoices (except void) sent on behalf of the job. Under Billing Earned amount less billed (over billing if negative, under billing if positive). Cost to Complete current budget less cost to date. Remain Contract current contract minus billed to date Sage Software, Inc. Online Training at 25

26 Job Profitability Reports Sage 100 Contractor Student Exercise 4 Please return to the desktop 1. Open 3-5 Jobs (Accounts Receivable), and open Job # In the Terms section of the window, enter 446, in the Contract box and click Save. 3. Open Bonding Report, select Job #215, Period What is the estimated profit now? Please return to the conference when you have completed this exercise 26 Local Training From Business Partners 2013 Sage Software, Inc.

27 Jobs Job Profitability Reports Adjustments to Reports Both reports print vital information based on the accuracy of current data, including: Original budget Change orders Job costs AR invoices Bidding errors, buy-outs and unforeseen conditions occur regularly in construction. When the reality of the job has changed, both these reports are less accurate. An internal change order to reflect new realities on the job would produce greater accuracy, both for management purposes and for external financial reporting. Enter Internal Change Order At 6-4-1, enter an Approved Change Order modifying the Budget only. No charges will be passed onto the client as this is only for Producing more accurate reports. Budget & Sub Change Details Tab Internal CO: Status = 1 Type = Internal Only Budget amounts Change status to 2=Open after report printing. After report printing, the status will be changed to 2 = Open so that the change order does not affect other job cost reports Sage Software, Inc. Online Training at 27

28 Job Profitability Reports Sage 100 Contractor Use this same change order every time you wish to calculate accurate Over/Under Billings or Bonding Reports. Student Exercise 5 Please return to the desktop. 1. Open Change Orders. 2. Enter a Change Order to job #215, for $2,000 for pumping out ditches. Use Cost Code 2300, Cost Type Be sure that the Status is 1-Approved and the type is 90-Internal. 4. Save and go to the Bonding Report, select job # What is the estimated profit now? 6. Click Save. Please return to the conference when you have completed this exercise. Summary The Over/Under Billings and Bonding Reports contain vital information about job profitability. These reports calculate whether income is consistent with expenses by job. The Bonding Report also calculates estimated and earned profits. Both reports rely on complete and accurate job information and job costs in Sage 100 Contractor. Review of course objectives. Did we accomplish our goals for this class as outlined at the beginning of class? We have covered two Sage 100 Contractor job cost reports the Over/Under Billings and Bonding Reports. At this point you should feel comfortable with: The purposes of and differences between each report and when to use them Preparing each report, including over/under billings calculations, journal entries for over/under billings, and how the accuracy of existing data affects the reports. 28 Local Training From Business Partners 2013 Sage Software, Inc.