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Progress Invoices

← About Invoices

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

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.

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.
  • 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.

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

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.

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.

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.

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
(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 Credit 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		 Bank
Credit		 8400
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