Loren Farber, Senior Consultant
Helping Companies Optimize NetSuite
If you're sending invoices for services, you know the struggle of managing, analyzing, and billing projects. With different negotiated hourly rates, project milestones, and fixed amounts, the process is ripe for errors.
NetSuite's Charge-Based Billing offers a straightforward invoicing solution that gives you the tools to configure customer-specific billing rules to your accounts receivable processes.
Create charges through Project records or directly against a customer if you're not using the Project Management feature. When using Charge Based Billing with the Project Management feature, you can configure charge rules to calculate billable rates for a variety of services, expenses, or milestone achievements.
NetSuite Charge Rules
Charge Rules within Charge Based Billing calculate billable charges for project activity. You can create different Charge rules that automatically generate billable charges.
For examples, you can base your Charge rules on:
- Completion of project milestones
- Time and Expenses entered against projects
- Project progress
- Fixed amounts generated on fixed dates
What Are Charge Rules and Why Are They Important?
Charge rules determine the billing rate, timing of charges, and the stage of a charge when created. You can base your charge rules on:
- Fixed Fee
The charge rules determine charge rates. Configuring time-based and expense-based charge rules allows charges to be created off time and expense entries which are then aggregated for a single project.
These rules help create a single invoice for all tasks and activities associated with their project for a given time.
How to Create a Charge-Based Project
Projects that generate charges as billable amounts use the Billing Type 'Charge-Based'.
To create a Charge-Based project:
Go to Lists > Relationships > Projects. Create a new Project record.
On the Financial subtab, under Billing Information, select Charge-Based in the Billing Type field.
Select a Billing Schedule Note: Billing Schedule is only used to calculate sales forecast amounts
Enter other information
How to Create a Time-Based Charge Rule
Create Time-Based Charge Rules and other Charges Rules directly on the NetSuite Project record.
To create a Time-Based Charge Rule, go to a project record within NetSuite and click on the Financial subtab. The Financial subtab will display all the different charge rules that can be configured.
Click Time-Based Rules and then click New Time-Based Rule
3. Give the rule a unique name. Tip: to determine a consistent naming convention for all your rules.
4. Set the Rule Order. This determines when this rule should run relative to other Time-Based Charge Rules.
5. In the Initial Charge Stage field, select the default status. Options are Ready, Hold, or Non-Billable.
6. Under the Rates subtab, enter the Rate Basis. Choose one of the following options:
- Billing Classes — displays a list of Rate Cards where this billing class is used. If you use the Per-Employee Billing Rates feature, you can calculate charge rates based on billing classes assigned to your project resources. If you also use billing rate cards, select a rate card for this charge rule.
- Resources — This option lets you set rates for each resource. These rates are set on employee records under the Human Resource subtab on the Rates subtab and on vendor records under the Financial subtab on the Rates subtab. Rates set on the project task are not used for charge calculation.
- Service Items — This option takes the rate from the service items selected on the time entries logged for this project.
7. Enter other information if necessary, such as a rate multiplier, rounding, or a cap.
8. Save the rule
If you use Billing Classes in NetSuite, you can also use Billing Rate Cards to define billing rates for groups of Billing Classes.
Use rate cards to set hourly rates on charge-based projects using Time-Based Charge Rules. For example, Billing Rate Cards can assign billable rates of $200 per hour for a Project Manager and $150 per hour for a consultant.
If your billing rates are dynamic, you can configure Different Billing Rate Cards for specific customers.
Billing Charge-Based Projects
Charges that are in a stage of 'Ready' indicate that the charge is ready for invoicing. You can view charges related to a specific project on the Project record in the Financial subtab under the Charges sublist.
You can invoice customer charges using the native NetSuite Billing Operations functionality. Billing Operations is a feature that must be enabled at Setup > Company > Setup Tasks > Enable Features > Transactions > Billing Operations.
Billing Operations gives your organization flexibility in how and when you invoice your customers. You can opt to generate invoices for all customers, groups of customers, or specific customers.
In OneWorld environments, you will need to select a specific subsidiary and the customers. Billing Operations supports the following types of processes:
- Bill Run
- Credit Memo Run
- Bill Run (Off-Cycle Only)
NetSuite offers you multiple options in how time items, expense items, and billable items are displayed on invoices. You can configure these preferences by going to Setup > Accounting > Preferences > Invoicing Preferences.
When charges are invoiced, the Charge Stage moves from Ready to Processed. On the Project record, organizations have visibility into the billed amount to date, charges ready for billing, and the estimated labor revenue among several other metrics.
Enabling Charge Based Billing, in conjunction with the Project Management feature, gives your business flexibility in how you generate billable charges from projects through the configuration of Charge Rules.
You can generate accurate, timely invoices that improve the invoice-to-cash cycle. Here are some other resources to help increase the flexibility of your business: