Not being an accountant on a regular day to day basis, I don’t have to deal with these concepts very often, but when I do, I’m glad I sat through those basic and managerial accounting classes so long ago in college.
In Vision, when you enable revenue generation, you need to set up two accounts that get used by this system:
an asset account:
WIP (work in progress) aka “unbilled services”
and a revenue account:
Uninvoiced Revenue (the revenue side of WIP)
So this week we were testing out some new work breakdown structures in Vision that are more closely aligned with my client’s project structure and which did a better job of storing associated data points needed with the project like expected payment date, payment amount, actual invoice date, A/R status etc. (aka EAC, ETC etc.)
So I set up a rather complex project for my client to run some tests on… logging expenses and invoices against to see how things came out in the general ledger.
They came back to me and said “what is this ‘unbilled services’ account? what is this ‘uninvoiced revenue’ account?” “we haven’t seen this before… you’re screwing with our financials!”
After explaining to them that these were merely clearing accounts for the accrual concept of accrued value on projects I had to ask the question… “why have they not seen them before?”
The thing is, they had been using Vision for 2 years already. Why all of a sudden is it posting to these accounts in test, and why has it not been posting to these accounts all along?
Checking the configurations (configuration/accounting/company settings/ general tab) I notice that in both test and live that revenue recognition is NOT enabled. Then Vision shouldn’t be posting to these accounts at all right?
Here is what I figured out:
If you have Revenue Recognition turned OFF
your project has Revenue Type set to ‘B’ (JTD Billings)
Vision will not post to the WIP and Unbilled Revenue accounts.
However, if you have a revenue type of ‘N’ (no revenue recognition), then Vision WILL post to these accounts for those projects even if you have revenue recognition turned off!
confusing? yes. counter-intuitive? yes.
But that is apparently the way it works.