Progressive Billing Simplified: An Overview for SyteLine Users

Today we're diving into the topic of Progressive Billings within SyteLine, also known as CloudSuite Industrial (CSI). Understanding how a progressive billing works can significantly enhance your business operations. Let's explore how this functionality is tied to customer orders and the various forms you need to manage it effectively.

What Are Progressive Billings?

Progressive billing is the only way to invoice a customer order before it is shipped. It's a way to send an actual invoice to the customer that the system recognizes within the A/R module. Using SyteLine's progressive billing feature, one or more invoices can be issued prior to the actual shipment of each order line. Each order can be prebilled using partial or full amounts. Each order line can also be prebilled at different amounts and/or rates. Progressive Billing is one way a company can mitigate the risk of non-payment. They can be used for large custom orders, long-term projects, or managing risk and ensuring customer commitment.

Limitations

1. Order Status: The Order Type must be “Regular” and the CO Lines must be in "Ordered" status.
2. Include Tax In Price: This checkbox cannot be selected at the order level.
3. Only Includes Line Amounts: Amounts, not quantities, are evaluated for progressive billings. Amounts from the order header are not included in these invoices.

Why Progressive Billings Are Beneficial

One of the standout features of progressive billing is its ability to work even if the customer and/or customer order is on credit hold. This capability allows you to leverage the credit limit functionality within CSI to ensure that an order does not proceed through the system until you are ready.

How does this work? Progressive billings enable you to bill the customer in advance of shipping the goods. You might opt to collect 100% upfront or a partial amount, depending on your prepayment policies. For example, setting the customer's credit and order credit limit to zero places the order on credit hold. Despite this hold, you can still perform progressive billing to collect the necessary funds. Once the funds are fully collected, you can release the order from credit hold, allowing it to move through the system.

Understanding the Differences:
Open Credit / Prepaid Amount vs. Progressive Billing in SyteLine

Before diving into the actual process within SyteLine, let's quickly review the differences between an open credit/prepaid amount and progressive billing. This distinction is crucial for understanding how to manage your cash flow and customer relationships effectively.

Prepaid Amounts

How do we request prepayments from our customers if we're not using the progressive billing feature? Well, the approach can vary from company to company. Some organizations handle this entirely outside of SyteLine, sending an invoice generated from Excel or other third-party software. Others may utilize the Order Verification Report within SyteLine and send that to the customer as if it were an actual invoice.

Once the prepayment is received, it is recorded through A/R Payments as an open credit, making sure to reference the customer order in the distribution. This step ensures SyteLine transfers the amount to the customer order header as a prepaid amount. If the order is on credit hold awaiting prepayment, a user with the appropriate permissions must remove the credit hold at this time, allowing the order to proceed through the system.

Using this approach, when the customer order is invoiced, the body of the invoice remains unchanged, and the prepaid amount appears in the total section as a credit. This reduces the invoice balance by the prepaid amount from the customer's perspective. However, within SyteLine, these two transactions remain separate in the A/R module until you apply the open payment to the invoice.

Progressive Billing

In contrast, using SyteLine's progressive billing feature allows you to issue one or more invoices before the actual shipment of each order line. Invoices created through progressive billing appear the same in the A/R module as any other invoice generated from within the system. They are included in the A/R Aging Report and the A/R Posted Transactions form, providing your A/R team with a visual reminder within SyteLine that an amount remains due.

When prepayment is received in this scenario, rather than creating an open payment, you apply the amount directly to the progressive invoice. Similar to the open credit approach, this is when credit holds should be removed if you use them to ensure orders aren't released until prepayment requirements are satisfied.

After processing the shipment of the order in SyteLine, order invoicing must still be performed, even if the full value of the order lines was previously invoiced using the progressive billing feature. When the final invoice is generated, the body of the invoice displays the progressive billing amounts for each line. The net due per line is reduced by those amounts, but no prepayment amount is displayed on the invoice document. If there are amounts for freight and/or miscellaneous charges on the CO header at the time of invoicing, they are reflected in the invoice total, as they cannot be invoiced via the progressive billing feature.

This feature ensures that the amount due on the invoice received by the customer aligns with the amount due in the A/R module, providing a clear and accurate financial picture for both parties.

Key Takeaways

• Prepaid Amounts: Often managed outside of SyteLine or through the Order Verification Report. These are recorded as open credits in A/R Payments and applied as credits against the final invoice.
• Progressive Billing: Allows for multiple invoices before shipment. These invoices are fully integrated into the A/R module and reduce the net due on the final invoice without needing separate prepayment records.

Understanding these differences helps you choose the right approach for your business needs, ensuring efficient cash flow management and accurate financial reporting. For a deeper dive into progressive billing and to see it in action within SyteLine, read the full article or watch our detailed video walkthrough.

Generating Progressive Billings

To generate progressive billings, there are two primary forms you need to be familiar with:

1. Progressive Billing Generation:
• This form automates the process of including one or more CO lines in the progressive bill.
• You can input the customer order, specify the billing date, and determine the percentage of the order to bill. The system will apply this percentage across the selected lines, whether it’s a 50% down payment, 25% due when manufacturing is complete, or a full 100% prepayment.
2. Progressive Billings:
• This form provides a summary of all progressive billings that have occurred. Each record represents a CO line, with a sub-grid displaying all progressive billings for the CO line.
• It allows for manual creation of additional progressive billings, which is useful if you need to apply different percentages to different CO lines based on the items.
• This is also the form you would use to reverse or progressive billing and/or create a progressive credit memo.

Invoice Flag Options

When creating a progressive billing, you will encounter the "invoice flag" field on either form. This field has several options:

• Automatic: Bills the progressive billing based on the billing date.
• Yes: Bills the next time progressive billings are run, regardless of the billing date.
• No: Prevents invoicing until you are ready.
• Invoiced: Indicates that the billing has been invoiced.
• Vouchered: The system generated a progressive billing, but the regular invoice was printed first. This status ensures customers are not double billed.

Workflow and Accounting

Here’s a typical workflow for using progressive billing in SyteLine:

1. Create Customer Order: Ensure the order a “regular” order and the order lines are in "ordered" status. Remember, order on credit hold can have a progressive billing generated.
2. Generate Progressive Invoice: Use the Progressive Billing Generation form to create an invoice for the desired percentage of the order.
3. Posting: The system posts the invoice through normal processes, crediting the progressive billing account. Once the final invoice is generated, the system recognizes revenue and reverses all amounts previously posted to the progressive billing account.

Important Notes

• Only one progressive billing account can be defined in the system.
• Sales tax is calculated at the time of progressive billing, but freight and miscellaneous charges are only invoiced upon final/regular invoicing.
• The system does not track the payment of progressive invoices for credit hold purposes, so this must be monitored manually.

Multiple Progressive Billings

You can perform multiple progressive billings against a single order. For example:

• Initial Billing: Collect a 50% deposit to start processing the order.
• Subsequent Billing: Once goods are manufactured but not yet shipped, collect another 25%.
• Final Billing: After shipping, collect the remaining balance or a predetermined amount based on your terms.

Final Invoicing

After shipping the goods, a final invoice is required to close out the order. This final invoice will reflect the total order amount minus all previous progressive billings. For instance, if you have a CO line for $10,000 and have progressively billed $8,000, the final invoice will show the $10,000 item price, a credit for the $8,000 progressive billing, and a net due of $2,000.

Revenue Recognition

At the final invoice stage, the system recognizes revenue and reverses the amounts in the progressive billing account. If you pre-billed 100%, the final invoice would show zero due, unless additional charges like freight were added to the order.

Handling Quantity Changes

It's crucial to note that SyteLine’s progressive billing looks at dollar values, not quantities. If the quantity on a CO line decreases, you must ensure that the progressive billing amounts are adjusted accordingly. For example, if you had an order for ten items at $1,000 each and progressively billed $8,000, reducing the quantity below eight would require a credit progressive billing to reconcile the amounts.

Conclusion

Progressive billing in SyteLine is a powerful feature for manufacturing businesses, enabling efficient cash flow management and prepayment collection. By understanding the forms, workflows, and accounting implications, you can leverage this functionality to streamline your operations and ensure that customer orders are processed smoothly.

Whether you're already using SyteLine or considering moving to it, progressive billing offers flexibility and control, helping you manage orders, billing, and revenue recognition effectively. Embrace this feature to enhance your business processes and improve financial management within your manufacturing operations.