powerpoint presentation€¦ · indirect rate variance pg2 unbilled a/r dr revenue recognized...

CP-27:Unbilled Accounts Receivable – An Asset or a Risk?

Clarissa M. Van Leuven, Phacil, LLC

Unbilled Accounts Receivable (A/R)An Asset or a Risk?

SESSION AGENDA

• Unbilled A/R Definition

• What does the Unbilled A/R balance represent?

• Entries that create Unbilled A/R balance in Costpoint

• The Costpoint Unbilled A/R Analysis Report

• What could an Unbilled A/R credit balance represent?

• Risk factors – positives/negatives of carrying an Unbilled A/R balance


Unbilled A/R Definition

Unbilled AR is an Asset account on the balance sheet that represents amounts recognized as revenue for which invoices have not been sent.

When analyzing an organization’s balance sheet you look at that Accounts Receivable balance aging to get a sense of cash to be collected and when it will be collected.

Cash is king and should always be the final relief of Unbilled A/R.


• Unbilled A/R is also considered potential cash that will be collected at

some future date.

CURRENT ASSETS

CASH $858,806 Billled A/R 6,351,245$

ACCOUNTS RECEIVABLE 8,031,147 -->

NOTE RECEIVABLE - CURRENT 0 Unbilled A/R 1,679,902$

PREPAID EXPENSES 592,128

$9,482,081


What does the Unbilled A/R balance represent?

• In all industries Unbilled A/R should represent amounts that can be billed

to a customer at some future date.

• It should always represent eventual receipt of cash.


What does the Unbilled A/R balance represent?

• In our Government Contracting industry Unbilled A/R represents:

– Revenue recognized but the invoice has not been sent to customer

or posted to the G/L;

– Indirect rate variance – Revenue is recognized with indirect rates that vary from your

billed indirect rates; (Actual vs Provisional)

– Fee withheld – All costs and fee is recognized as revenue but you must withhold 15% of

your fee when billed to the customer;

– Timing difference between revenue recognized and invoices issued


Entries that create Unbilled A/R balance in Costpoint

Revenue = Billed Amount

Projects Billing Module DR CR

Accounts Receivable $100

Unbilled A/R $100

Invoice issued and posted:

Revenue Journal Posting

DR CR

Unbilled A/R $100

Revenue $100

Revenue is posted

Revenue recognized equals amount invoice $0 Unbilled A/R


Standard Billing Journal Fiscal Year: 2019 Period: 8 Subperiod: 1

Posting Sequence: 36

Page 1 of 1

09/16/19

06:21 PM

Invoice

Project

Project Name

Bill Number

Invoice Date

Due Date

Amount

Account: 10-020-00 Accounts Receivable

Organization: 1.071.01 DOT

INV-0000025149 02133.04.001 Dept of Transportation 0 09/13/19 10/13/19 100.00

Subtotal for Account: 10-020-00 Organization: 1.071.01 100.00

Account: 10-022-00 UNBILLED RECEIVABLES


INV-0000025149 02133.04.001 Dept of Transportation -100.00

Subtotal for Account: 10-022-00 Organization: 1.071.01 -100.00

Billing Module DR CR

Accounts Receivable $100

Unbilled A/R $100

Invoice issued and posted


Revenue Journal Fiscal Year: 2019 Period: 8 Subperiod: 1

Page 1 of 1

10/10/19 04:33 PM

Posting Sequence: 2

Rate Type: Target

Variance Posting: No Variances

Project

Project Name

Amount



02139.03.004 Dept of Transportation 100.00

Subtotal for Account: 10-022-00 Organization: 1.071.01 100.00

Account: 40-100-08 REVENUE


02139.03.004 Dept of Transportation -100.00

Subtotal for Account: 40-100-08 Organization: 1.071.01 -100.00

Projects – Revenue Journal Posting

DR CR

Unbilled A/R $100

Revenue $100

Revenue is posted



Withheld Fee


Accounts Receivable $1,000

Unbilled A/R $1,000

CPFF Contract Billed with fee withheld

Revenue Journal Posting DR CR

Unbilled A/R $1,111

Revenue $1,111.

Revenue is posted; CPFF Contract recognize all costs and fee as revenue

Unbilled A/R

DR Revenue Recognized $1,111

CR Amount Billed (1,000)

Unbilled A/R Balance $ 111

$111 represent CASH to be collected at a future date


Standard Billing Journal Fiscal Year: 2019 Period: 8 Subperiod: 1

Posting Sequence: 36

Page 1 of 1

09/16/19

06:21 PM

Invoice

Project

Project Name

Bill Number

Invoice Date

Due Date

Amount

Account: 10-020-00 Accounts Receivable


INV-0000025149 02133.04.001 Dept of Transportation 0 09/13/19 10/13/19 1,000.00

Subtotal for Account: 10-020-00 Organization: 1.071.01 1,000.00



INV-0000025149 02133.04.001 Dept of Transportation -1,000.00




Unbilled A/R $1,000

CPFF Contract Billed with fee withheld

Unbilled A/R



Unbilled A/R Balance $ 111

$111 represent CASH to be collected at a future date



Page 1 of 1

10/10/19 04:33 PM

Posting Sequence: 2

Rate Type: Target

Variance Posting: No Variances

Project

Project Name

Amount



02139.03.004 Dept of Transportation 1,111.00





Subtotal for Account: 40-100-08 Organization: 1.071.01 -1,111.00


Unbilled A/R $1,111

Revenue $1,111.

Revenue is posted; CPFF Contract recognize all costs and fee as revenue



Indirect Rate Variance Pg1



Unbilled A/R $212,300

CPFF Contract Billed at PROVISIONAL indirect rates



Revenue $222,547

Revenue posted CPFF Contract; revenue is recognized at ACTUAL indirect rates.



Indirect Rate Variance Pg2

Unbilled A/R

DR Revenue Recognized $222,547 @actual indirect rates

CR Amount Billed (212,300) @provisional indirect rates

Unbilled A/R Balance $ 10,247

$10,247 represents CASH to be collected at a future date:

May bill rate variance when final indirect rates are established for the year OR

at final audit and close out of contract. Watch funding is available on contract!


Revenue posting in Costpoint


Contract revenue is recognized at ACTUAL indirect rates.

This may be done monthly, once at year-end when final indirect rates are established or

at some other interim point during the year depending on management’s objective.



Page 1 of 1

10/10/19 04:33 PM

Posting Sequence: 2

Rate Type: Actual

Project

Project Name

Amount








Subtotal for Account: 40-100-08 Organization: 1.071.01 -222,547.00

Revenue posted CPFF Contract revenue is recognized at ACTUAL indirect

rates.

This may occur monthly or once at year end when final indirect rates are

established



T&M Labor Hours unbilled pg 1



Unbilled A/R $6,250

Invoice issued and posted for only 125 billable hours worked at $50 per hour. Reason: Funding, documentation…


Unbilled A/R $10,000.

Revenue $10,000.

Revenue is posted Represents 200 billable hours worked at $50 per hour bill rate to customer



T&M Labor Hours unbilled Pg2

Unbilled A/R



Unbilled A/R Balance $3,750

$3,750 represents CASH to be collected at a future date

when you bill the additional 75 hours @ $50/hr

Watch: Don’t lose track of those 75 hours!



FFP ETC Revenue Pg 1




Invoice issued and posted based on customer provided FFP billing schedule



Revenue $250,000

Revenue is posted based 25% completion of $1.0m project.



FFP ETC Revenue Pg1

Unbilled A/R



Unbilled A/R Balance ($50,000) CREDIT BALANCE

$50,000 Advance payment. Will show as negative unbilled. Should reclass to Liability

section of balance sheet


Creating an Unbilled Analysis Report:


Creating an Unbilled Analysis Report:

First Update the Unbilled Analysis Report TablesAfter any revenue or billing journal posting.


Print Unbilled Analysis Report here:


Project Project Name Project TypeAcct

GrpActive ITD Revenue ITD Billings Unbilled Amount Unbilled Per G/L

01003.008.10 GSA - PHILADELPHIA T&M D8T N 763,864.14 440,358.55 323,505.59 323,505.59

01025.00.009 CHEROKEE NATION SUPPORT T&M DCT N 84,197.52 0.00 84,197.52 84,197.52

02057.05.001 US MINT ADMIN SUPPORT - DC T&M DDT Y 1,428,957.50 1,095,674.32 333,283.18 333,283.18

02057.06.001 US MINT ADMIN SUPPORT - PA T&M DDT Y 902,880.47 902,880.47 0.00 0.00

02057.07.001 US MINT ADMIN SUPPORT - NY T&M DDT Y 335,747.99 335,747.99 0.00 0.00

02080.00.002 DOS EMBASSY INSPECTIONS T&M DSC N 142,704.00 142,704.00 0.00 3,750.00

02080.00.006 DOS COURIER SERVICES T&M DSC N 434.06 434.06 0.00 0.00

02112.00.001 ARMY AIR MANUFACTURE FIXED PRICE DST N 1,225,006.12 1,750,000.00 -524,993.88 -524,993.88

02112.00.004 ARMY AIR TRAVEL/ODC CPFF DST N 34,324.66 29,514.58 4,810.08 4,810.08

02112.00.006 ARMY AIR COMMUNICATION CPFF DST N 2,719.52 2,092.12 627.40 627.40

02112.00.008 ARMY AIR MAPS CPFF DST N 5,259.07 4,991.21 267.86 267.86

02139.03.002 US DEPT OF TRANSPORTATION FIXED PRICE DSC Y 35,648.00 20,794.62 14,853.38 14,853.38

02139.03.003 US DEPT OF TRANSPORTATION FIXED PRICE DSC Y 453,874.77 310,867.20 143,007.57 143,007.57

02139.03.004 US DEPT OF TRANSPORTATION FIXED PRICE DSC Y 105,062.77 123,950.40 -18,887.63 -18,887.63

02139.03.030 DOT TRAVEL CPFF DSC Y 5,333.26 1,367.56 3,965.70 3,965.70

02142.00.002 OBXtek DDSB-BY-TSK 2 T&M DCT Y 272,750.93 269,242.08 3,508.85 3,508.85

02142.01.002 OBXtek DDSB-OY1-TSK 2 T&M DCT Y 259,465.15 262,120.85 -2,655.70 -2,655.70

02142.02.002 OBXtek DDSB-OY2-TSK 2 T&M DCT Y 244,610.33 244,610.33 0.00 0.00

Unbilled Analysis Report Example:THIS REPORT IS REVIEWED MONTHLY WITH CONTRACTS/ ACCOUNTING/SR MGRS


What could an Unbilled A/R credit balance represent?

• Under booking of revenue – you billed the correct amount but the revenue you recognized is less than the full amount – may be a pickup on your income statement

• Overbilling to customer – refund to customer may be required;

• You’ve billed the customer in advance, will have to incur additional costs to complete the project in the future.

When a refund is due to the customer or you will be required to incur additional costs to complete the project you should consider re-classing the credit to a liability account as Deferred Revenue or Billings in Excess of Costs


Risk factors – positives/negatives of carrying an Unbilled A/R balance

Unbilled A/R can tell an interesting story to auditors, financial institutions and potential buyers.

• Clean, reconciled and explainable Unbilled A/R shows you manage your finances well;

• Significant debit balances can signify:

– potential cash income in the future;

– perhaps you are slow biller;

– a sign you are over recognizing revenue

• Credit balances can signify

– Significant future liability to complete a project

– Additional revenue to recognize


Risk factors – positives/negatives of carrying an Unbilled A/R balance

• All of these situations can reflect either a risk or a reward to your organization, financials institutions and potential buyers

• Knowing what your Unbilled A/R balance represents on a project by project basis at all times keeps you and management aware of your organization’s financial success or potential risks

• The Unbilled A/R is always a potential source of cash collections


In Review

• Unbilled A/R Definition and what does it represent? ($$)

• We looked at a variety of entries that create an Unbilled A/R balance

• The Costpoint Unbilled A/R Analysis Report and what an Unbilled A/R balance may signify

• Risk factors – positives/negatives of carrying an Unbilled A/R balance


Questions????

powerpoint presentation€¦ · indirect rate variance pg2 unbilled a/r dr revenue recognized...

Documents