unbilled receivables: not so mysterious after...

Unbilled Receivables:Not so Mysterious After All

Susan Smith, GCS Premier Practice DirectorWJ Technologies L.L.C.Kiran Pinto, Manager Watkins Meegan LLC

GC-160

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2 10/15/2013 CONFIDENTIAL ©2013 Deltek, Inc. All Rights Reserved

Objectives: At the end of this session you will be able to: Define Unbilled Receivables Recognize the differences between revenue recognition and billings Research the common causes of Unbilled Receivables Resolve unintentional balances Grasp the importance of regular reconciliation of Unbilled


Unbilled Receivables: Where do you see Unbilled Receivables? By Contract/Task on the Unbilled AR Report By Contract/Task on the F/S Code Summary Report

What Creates Unbilled Receivables? The unbilled balance is the difference between the Revenue recorded and

Billings posted on the contract/task


Why is Unbilled a Positive Value? When Revenue > Billing, the Unbilled Balance is a Positive Number A True Unbilled Receivable, an Asset on the Balance Sheet

Billed Receivables

Unbilled Receivables Revenue

Suffix 11 Suffix 12 Suffix 30

Bill is Posted 100 (100)

Revenue is Posted 120 (120)

Balance 20


Why is Unbilled a Negative Value? When Revenue < Billing, the Unbilled Balance is a Negative Number Also known as Billings in Excess or Unearned Revenue, a Liability

Billed Receivables



Bill is Posted 100 (100)

Revenue is Posted 70 (70)

Balance (30)


Unbilled Receivables in GCS How Does GCS Premier Handle Unbilled Receivables? Revenue and Billing are two separate and distinct processes The only thing they have in common in GCS is that the offset to both is

Unbilled Receivables suffix 12 Billing is controlled by the Billing Master File and Summary Budgets & Ceilings Revenue is controlled by the Contract Master File and Summary Budgets and

Ceilings


Research Unbilled ReceivablesResearch Unbilled ReceivablesThe question is: What Causes Unbilled Receivables?The question is: What Causes Unbilled Receivables?


Revenue Options Revenue equals Billing Fixed Price: 5 Other Methods Cost Plus Fixed Fee: 9 Other Methods Time & Materials: 5 Other Methods


Billing Options Billing is driven by Contract requirements Timing Cutoff periods (last Friday of the month vs. end of the month)

Billing of Indirect Rates Multi-year Cost Plus Contract Provisional Rates for Billing Indirect Rate Ceilings Actual for Revenue


Intentional or Unintentional Unbilled? Intentional Causes of Unbilled Receivables Retentions Award Fees Indirect Rate Variances Deferred Revenue At Risk Contracts Fixed Price


Intentional or Unintentional Unbilled? Unintentional Causes of Unbilled Posting Issues Have both Revenue and the Billing Journal been posted?

Timing Issues Difference in timing between AP cutoff/Billing and Revenue recognition

Contract Value and/or Funded Values Issues Revenue ceiling is the Contract Value Billing ceiling is usually limited to the Funded Value


Intentional or Unintentional Unbilled? When Contract Value and Funded Value are not in sync more revenue may be

recognized than you are able to bill

(T&M contract, 820 hours incurred, bill rate of $100/hour)

Billed Receivables



Contract Value 100,000$ Revenue 82,000 (82,000)

Funded Value 75,000$ Billing 75,000 (75,000)

T&M Amount Billable 82,000$ Balance 7,000

Recorded in GCS Premier:Contract Master Scenario


Reconciliation of Unbilled ReceivablesReconciliation of Unbilled ReceivablesThe questions are: Are the Billings Recorded Properly? Is Revenue Recognized Correctly?

The questions are: Are the Billings Recorded Properly? Is Revenue Recognized Correctly?


Reconciliation Billings Compare the Aged AR to Suffix 11 – do they match?

Compare Cash Receipts to Contract Billings CTD Cash Receipts + Outstanding AR should = Total Billings


Reconciliation Revenue Compare Contract Revenue Summary to F/S Code Summary Report for

Suffix 30 – do they match? Remember to review those prior years carefully!


Resolution of VariancesResolution of Variances

The question is: How do I Correct the invalid balances?The question is: How do I Correct the invalid balances?


Resolution Issues in the Current Year Once identified, relatively easy to resolve Correct funding issue by entering the latest contract mods & re-compute Enter a credit billing for a non-billable transaction that was erroneously billed Process a correcting AP voucher for charges made to the incorrect suffix Ensure all ‘Billing Edit File’ Adjustments are properly corrected in the

contract cost On T&M contracts verify that the consultant/subcontract hours worked are

included in the revenue recognition process when billing is based on hours

Issues in the Prior Year Very difficult


Resolution – Last Resort Write off the incorrect variance through Contract Revenue:

1. Set up a contract called “Prior Years’ Adjustments”2. Enter a revenue adjustment in the contract master file for the variance3. Compute cost and revenue, and post it4. Do an adjusting JE to correct the Unbilled Receivables balance (suffix 12)

on the affected contracts

OR

Write off the Income Statement1. Set up an F/S code called “Adjustments to Prior Years’ Revenue”2. Set up a type “Other” account called “Adjustments to Prior Years’ Revenue”3. Enter an adjusting JE to correct the Unbilled Receivables balance (suffix 12)


Key Session Takeaways Unbilled Receivables is the difference between Revenue and Billing There are intentional and unintentional balances in Unbilled Receivables Intentional balances need to be monitored Unintentional balances need to be corrected

The only transactions that should be posted to Suffix 11, 12, and 30 are the Sales Journal and the Billing Journal Exception is an AJE that debits and credits Suffix 12 ONLY use Last Resort options as a last resort

There are a number of GCS Premier standard reports that can assist in the reconciliation process

Research and Reconcile Routinely!! Every month you should know what is in your Unbilled Receivables


Questions?Questions?


Contact UsFor more information feel free to call or email us:

Susan Smith, CPA, MBA, Practice Director [email protected] 703-885-8156

Kiran Pinto, CPA,MBA, Manager [email protected] 703-847-4458

13665 Dulles Technology DriveHerndon, VA 20171www.WJTechnologies.com

unbilled receivables: not so mysterious after...

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