Progress Invoices

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Certain business use cases, like projects or services that extend over a large period of time, require merchants or suppliers to distribute the corresponding payment requests over multiple invoices. To this end, JustOn Billing & Invoice Management allows for creating progress invoices.

Understanding Progress Invoices

Businesses issue progress invoices at different stages of a larger project. This allows them to bill customers incrementally as the project progresses, usually at previously agreed rates and following a predefined schedule. The amount of a progress invoice often represents the estimated value of some expected work or goods that may yet to be delivered. That is, the first of a series of progress invoices is usually issued before delivery. With the subsequent progress invoices, deliveries may have taken place. Their amounts, however, still correspond to the originally agreed rates. The applicable taxes for progress invoices arise upon payment receipt.

Once the complete project is finished, the business issues the final invoice. This invoice summarizes all deliverables of the entire project as well as all related progress invoices and the received payments.

With progress invoices, the total price of a project or the contract volume may be variable and subject to change. It is the final invoice that sets the definitive price, and all payments made up to that point are offset against it, reducing the final payment amount.

Progress Invoices in JustOn

JustOn Billing & Invoice Management supports progress invoices using the sub invoice type Progress. The related functionality is available when billing arbitrary objects, but not for subscription billing.

The progress invoice is subject to the usual invoice proceedings and business processes, including

finalization,
payment registration,
cancellation,
dunning,
any related balance generation, and
the corresponding bookkeeping data creation.

Info

The support for progress invoices and the related final invoices in JustOn Billing & Invoice Management is primarily designed to comply with German legal provisions.

For details on enabling progress invoices, see Enabling Partial Invoices or Progress Invoices.

Implementation Details

Basically, the creation of a progress invoice is controlled using the ON field ON_Type on the invoice source object. It defines the type of the produced invoice. If this field is set to Progress, JustOn generates a progress invoice.

In addition, progress invoices that relate to one project must hold the same sub invoice assignment key. Using this key, JustOn Billing & Invoice Management associates the progress invoices to the related final invoice. To support this association, the invoice source object must also set the ON field ON_SubInvoiceAssignmentKey.

Implementation constraints

The PDF output of progress invoices and final invoices (as outlined below) is supported with Liquid templates by default.
The rules for setting relevant collective accounts (interim revenue, interim payment, interim taxes, taxes, bank, etc.) must use Tax Code as the determining criterion. Tax Rule is currently not supported.
When users manually assign balances to progress invoices using the Register Payment functionality, they must provide a transaction number or payment reference to allow for unequivocally identifying the payment association in subsequent processes.
When users manually assign balances to progress invoices using the Register Payment functionality, the Split Payments option must not be used with progress invoices.

Workflow

The following sections describe how to work with progress invoices, outlining their behavior and life cycle.

Progress Invoice Creation

Using a properly configured generic invoice run, JustOn Billing & Invoice Management generates a progress invoice if the field ON_Type on the invoice source record is set to Progress.

There is no restriction on how many progress invoices you create to be summarizes with one final invoice – this is usually subject to a contractual agreement between seller and buyer. As long as the involved progress invoices include the same sub invoice assignment key, they will relate to the same final invoice. This key is usually passed from the ON field ON_SubInvoiceAssignmentKey on the invoice source record.

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Creating progress invoices

Progress invoice creation restrictions

You must create all relevant progress invoices before creating the final invoice. It is not possible to add a new progress invoice to an existing final invoice, even if the final invoice is still Draft.
It is not possible to change the sub invoice assignment key of a progress invoice once it is associated to a final invoice, even if the final invoice is still Draft.

Final Invoice Creation

Using a (second) properly configured generic invoice run, JustOn Billing & Invoice Management generates the final invoice if the field ON_Type on the invoice source record is set to Final. Using the sub invoice assignment key (as passed from the ON field ON_SubInvoiceAssignmentKey on the invoice source record), the software will relate all previously created (and finalized) progress invoices with the same key.

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Creating the final invoice for multiple progress invoices

Typically, the final invoice summarizes all deliverables of the entire project. If configured accordingly, the relevant invoice run consequently includes all source records as processed by the related progress invoices, producing the same invoice line items. It may, however, involve other invoice line items as well. This way, the final invoice will charge the exact amount of the project.

Any payments made for the related progress invoices are included as specific invoice line items of the type Sub Invoice. They will reduce the final invoice's grand total, producing a remaining amount left to pay. Consequently, the remaining amount will be the calculation basis for all subsequent processes, including

installments
invoice discounts
dunning reminders
cancellations
SEPA orders
entry creation (JustOn Cash Management integration)

The following example invoice explains the final invoice calculation:

Pos.	Title	Tax Rate	Tax Amount	Pos Price Net		Description
1	Catering: Food	7%	140,00	2000,00		reduced tax, not applied with progress invoice
2	Catering: Service	19%	285,00	1500,00		regular tax, applied with progress invoice
3	Location	19%	190,00	1000,00		regular tax, applied with progress invoice
				Subtotal Net	4500,00	sum of `Pos Price Net`
				Tax 19%	475,00	sum of `Tax Amount` for regular tax
				Tax 7%	140,00	sum of `Tax Amount` for reduced tax
				Grand Total	5115,00	sum of `Subtotal Net` and tax lines
	Received Payments
		Status	Type	Grand Total	Gross Payment
	Issued sub invoice #1	Paid	Progress	2046,00	-2046,00	received (gross) payment for progress invoice #1 (40% of estimated total)
				Tax 19%	-326,67	tax on progress invoice #1, always highest tax rate (19%)
	Issued sub invoice #2	Paid	Progress	2046,00	-2046,00	received (gross) payment for progress invoice #2 (40% of estimated total)
				Tax 19%	-326,67	tax on progress invoice #2, always highest tax rate (19%)
				Sub invoice payments	-4092,00	sum of received sub invoice payments
	Outstanding
				Subtotal Net	1061,34	difference between final invoice `Subtotal Net` and the net sum of received payments
				Tax 19%	-178,34	difference between final invoice tax and received payment tax for standard tax (19%), negative because previous tax collection has exceeded due amount
				Tax 7%	140,00	difference between final invoice tax and received payment tax for reduced tax (7%), none collected so far
				Payment Amount	1023,00	sum of `Grand Total` and received sub invoice payments

Final invoice calculation specifics

If there is no payment registered for an issued sub invoice, the software will not create a sub invoice line for this particular sub invoice.
If there is a partial payment registered for an issued sub invoice, the sub invoice's positions with the highest tax rate are settled first. The remaining amount of the partial payment will then be applied to the invoice line items with the lower tax rate(s). If there is no remaining payment amount for a tax rate, this tax rate will appear as a sub invoice position with the amount 0.

Some use cases may require to recreate the final invoice, for example:

A certain event in the invoiced project requires to issue a new or cancel an existing progress invoice.
A customer makes a payment for a progress invoice after the final invoice has been created.

If the final invoice is not yet finalized (status Draft), you can simply delete the invoice and recreate it. If the final invoice is already finalized (status Open), you must cancel the invoice, and then create a new final invoice or clone the canceled final invoice. When cloning a final invoice, JustOn Billing & Invoice Management copies the type and the sub invoice assignment key from the original invoice and assigns the related sub invoices to the cloned invoice.

Bookkeeping Data

For progress invoicing, the bookkeeping data is rather complex. Remember that a progress invoice is only an estimation and the actual calculation takes place with the final invoice (see Understanding Progress Invoices). This is why the received money for progress invoices does not represent realized revenue but rather intermediate revenue, which is temporarily booked to an interim revenue account.

The income for issued progress invoices is booked as gross value to an interim revenue account, using the booking detail type Interim Revenue.
Received payments for progress invoices are booked
- as gross value debit to the bank and credit to the debtor, using the booking detail type Payment
- as net value credit to an interim payment account, using the booking detail type Interim Payment
- the corresponding tax credit to an interim tax account, using the booking detail type Interim Tax
When creating the final invoice, the interim bookings are cleared. Revenue, taxes and payments are booked to their corresponding target accounts.

Note

Be aware that the booking details produced for progress invoices are not compatible with the current implementation of JustOn Connector for DATEV.

To cover the booking scenario, additional collective account settings are required for the booking detail types Interim Revenue, Interim Payment, Interim Payment Clearing and Interim Tax.

The following example illustrates the creation of the related booking details. It uses the following booking accounts:

Account name	Account no. (SKR 03)
Interim Revenue	1593
Interim Payment	1718
Bank	1200
Revenue	8400
Taxes	1776
Debtor	12345

Info

JustOn Billing & Invoice Management produces booking details that are designed for double-entry bookkeeping. This is why each business transaction always involves debit bookings and credit bookings to opposite accounts.

(1) First progress invoice: grand total 30,00, tax rate 19%

Expected posting

Posting	Debit to account	Credit to account	Amount
1	Debtor (12345)	Interim Revenue (1593)	30,00

Produced booking detail

#	Amount	Debit/Credit Flag	Booking Account	Contra Booking Account	Type
1	30,00	`H`	1593	12345	Interim Revenue

(2) Payment receipt (first progress invoice)

Expected postings

Posting	Debit to account	Credit to account	Amount
2	Bank (1200)	Debtor (12345)	30,00
3	Interim Revenue (1593)	Interim Payment (1718)	25,21
4	Interim Revenue (1593)	Taxes (1776)	4,79

Produced booking details

#	Amount	Debit/Credit Flag	Booking Account	Contra Booking Account	Type
2	30,00	`S`	1200	12345	Payment
3	25,21	`H`	1718	1593	Interim Payment
4	4,79	`H`	1776	1593	Interim Tax

(3) Second progress invoice: grand total 40,00, tax rate 19%

Expected posting

Posting	Debit to account	Credit to account	Amount
5	Debtor (12345)	Interim Revenue (1593)	40,00

Produced booking detail

#	Amount	Debit/Credit Flag	Booking Account	Contra Booking Account	Type
5	40,00	`H`	1593	12345	Interim Revenue

(4) Payment receipt (second progress invoice)

Expected postings

Posting	Debit to account	Credit to account	Amount
6	Bank (1200)	Debtor (12345)	40,00
7	Interim Revenue (1593)	Interim Payment (1718)	33,61
8	Interim Revenue (1593)	Taxes (1776)	6,39

Produced booking details

#	Amount	Debit/Credit Flag	Booking Account	Contra Booking Account	Type
6	40,00	`S`	1200	12345	Payment
7	33,61	`H`	1718	1593	Interim Payment
8	6,39	`H`	1776	1593	Interim Tax

(5) Final invoice: grand total 100,00, tax rate 19%, received payments 70,00

Expected postings for the final invoice

Posting	Debit to account	Credit to account	Amount
9	Debtor (12345)	Revenues (8400)	84,03
10	Debtor (12345)	Taxes (1776)	15,97

Additional postings for the previous progress invoices

Posting	Debit to account	Credit to account	Amount
11	Interim Payment (1718)	Debtor (12345)	25,21
12	Taxes (1776)	Debtor (12345)	4,79
13	Interim Payment (1718)	Debtor (12345)	33,61
14	Taxes (1776)	Debtor (12345)	6,39

Produced booking details

#	Amount	Debit/Credit Flag	Booking Account	Contra Booking Account	Type
9	84,03	`H`	8400	12345	Revenue
10	15,97	`H`	1776	12345	Tax
11	25,21	`S`	1718	12345	Interim Payment Clearing
12	4,79	`S`	1776	12345	Tax
13	33,61	`S`	1718	12345	Interim Payment Clearing
14	6,39	`S`	1776	12345	Tax

(6) Payment receipt (final invoice)

Expected posting

Posting	Debit to account	Credit to account	Amount
15	Bank (1200)	Debtor (12345)	30,00

Produced booking detail

#	Amount	Debit/Credit Flag	Booking Account	Contra Booking Account	Type
15	30,00	`S`	1200	12345	Payment

With respect to the booking accounts, the following postings will be recorded:

12345 Debtor

Posting	Debit	Credit	Notes
1	30,00		First progress invoice, claim against debtor
2		30,00	First payment receipt, debtor clearing
5	40,00		Second progress invoice, claim against debtor
6		40,00	Second payment receipt, debtor clearing
9	84,03		Final invoice, exact (net) claim against debtor
10	15,97		Final invoice, payable tax
11		25,21	Debtor clearing using first (interim) payment
12		4,79	Debtor clearing using first payment tax
13		33,61	Debtor clearing using second (interim) payment
14		6,39	Debtor clearing using second payment tax
15		30,00	Final payment receipt, debtor clearing

1593 Interim Revenue

Posting	Debit	Credit	Notes
1		30,00	First progress invoice, intermediate revenue
3	25,21		First payment receipt, intermediate revenue clearing
4	4,79		First payment receipt, payable tax
5		40,00	Second progress invoice, intermediate revenue
7	33,61		Second payment receipt, intermediate revenue clearing
8	6,39		Second payment receipt, payable tax

1718 Interim Payment

Posting	Debit	Credit	Notes
3		25,21	First payment receipt, intermediate revenue clearing
7		33,61	Second payment receipt, intermediate revenue clearing
11	25,21		Final invoice, debtor clearing
13	33,61		Final invoice, debtor clearing

1200 Bank

Posting	Debit	Notes
2	30,00	First payment receipt, debtor clearing
6	40,00	Second payment receipt, debtor clearing
15	30,00	Final payment receipt, debtor clearing

8400 Revenues

Posting	Debit	Credit	Notes
9		84,03	Final invoice, exact claim against debtor

1776 Taxes

Posting	Debit	Credit	Notes
4		4,79	First payment receipt, payable tax
8		6,39	Second payment receipt, payable tax
10		15,97	Final invoice, payable tax
12	4,79		Debtor clearing using first payment tax
14	6,39		Debtor clearing using second payment tax

Chart of accounts

Posting	12345 Debit	Debtor Credit	1593 Debit	Interim Revenue Credit	1718 Debit	Interim Payment Credit	1200 Debit	Revenues Credit	1776 Debit	Taxes Credit
1	30,00			30,00
2		30,00					30,00
3			25,21			25,21
4			4,79							4,79
5	40,00			40,00
6		40,00					40,00
7			33,61			33,61
8			6,39							6,39
9	84,03							84,03
10	15,97									15,97
11		25,21			25,21
12		4,79							4,79
13		33,61			33,61
14		6,39							6,39
15		30,00					30,00

The accounting balance after these transactions would look like this:

Assets		Liabilities
Bank	100,00	Equity (earnings)	84,03
Debtor	0,00	Payable taxes	15,97
		Interim revenue	0,00
		Interim payment	0,00