Oracle NetSuite Automates Project Billing to Accelerate Enterprise Management!

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Project-Based Billing

When a company's product is a project or service with defined outcomes and deliverables that take a long time to complete, billing can become complex. Typically, payments are made in installments as work progresses according to the contract. For these companies, project-based billing is essential. After all, costs do not defer, so businesses need a method to regularly or milestone-based charge customers.

One way to recognize revenue for ongoing projects or services delivered over time is through cost-based billing. Cost-based billing offers a flexible and rule-based approach to tracking project activities while automatically generating expenses and including them in invoices.

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Automation is Key to Efficiency

Cost-based billing is the preferred type of project billing for many businesses. When reliable processes are combined with project accounting tools, companies reap significant benefits: the system automatically executes and manages billing rates, billable time, and billing phases—ongoing, suspended, completed. It controls the creation of expenses to be invoiced based on rules set during the contract initiation period, improving the efficiency of project accounting.

Using a cost-based billing method, companies can gain other major benefits:

• Contract Flexibility and Rule-Based Triggers. When using a cost-based billing process in a Professional Services Automation (PSA) solution, users can leverage flexibility to support multiple billing and revenue rules on the same project and do so in an automated manner rather than using traditional spreadsheets to support complex billing contracts. Additionally, rule-based triggers can execute specific contract types with billing caps and ensure that billing caps are met, and contracts remain compliant and correctly invoiced.

• Visibility and Control. Cost-based billing provides the visibility and control needed to improve project performance.

Firstly, the system can forecast billing based on charge rules for sales orders or planned project activities, then ensure that appropriate invoices are issued to clients. Moreover, it also allows businesses to ensure billing settings are correct through project billing forecasts and determine whether projects meet requirements, such as minimum project margins or billing rate thresholds. If requirements are not met, businesses can consider this when measuring project performance or making changes.

Cost-based billing also supports companies in adjusting expenses before sending invoices. For example, project managers can pause billing or mark them as non-billable. This allows companies to consider not only the timing of billing but also which work is non-chargeable or unbillable, such as administrative expenses.

• Automated Revenue Recognition. Once the project is completed, all bills have been paid, and the contract ends, income and expenses can be reconciled for reporting purposes.

The rule-based processing framework set at the project's inception helps to automatically recognize revenue based on the allocated schedule or milestones. Companies can improve compliance and gain financial insights by monitoring billing and invoicing across different types of project contracts.

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Improve Cost-Based Billing with NetSuite

NetSuite has optimized cost-based billing in its PSA solution to ensure accurate billing throughout the project lifecycle. With NetSuite, project managers and stakeholders can collaborate to define billing basic rules at each customer engagement initiation. By capturing the financial terms of the contract at the start, NetSuite SuiteProjects can automatically generate bills based on project activities, forecast work, and revenue rules, ensuring cash flow and revenue are recorded at the right time and compliance is maintained.

By setting rules in SuiteProjects, cost-based billing can be based on time entries (e.g., time spent on delivering projects), incurred expenses (e.g., costs associated with implementing services, including predefined markups), fixed fees, and purchases (e.g., sales transactions).

NetSuite SuiteProjects overcomes project billing challenges, allowing teams to spend more time on new initiatives and less time troubleshooting and manually clearing project hurdles.