Invoice Before You Ship? Yes, Absolutely.

Today we're going deep on Progressive Billings. Understanding how Progressive Billings work can significantly enhance your business operations. Let's explore how this functionality is tied to customer orders and the various forms used to manage it effectively.

What Are Progressive Billings?

Progressive Billings are the only way to invoice a Customer Order before it is shipped. It's a way to send an actual invoice to your customer that the system recognizes within the A/R module. Using the progressive billing feature, one or more invoices can be issued prior to the last shipment of each order line. Orders can be prebilled using partial or full amounts, with each line billed at different amounts or rates.

Limitations

• Order Status: The Order Type must be “Regular”, and the CO Lines must be in "Ordered" status.
• Include Tax In Price: This checkbox cannot be selected at the order level.
• Only Includes Line Amounts: Progressive billings are based on dollar amounts, not quantities.

Credit Hold

One of the standout features of progressive billings is your ability to leverage the Credit Hold functionality in SyteLine®.

Setting the customer's Credit Limit and Order Credit Limit to zero will always place an order on credit hold*. Despite this hold, you can still generate a progressive billing. Once the PB amounts have been fully collected, you can release the order from credit hold, allowing it to move through the system.

*If you're a regular reader, you know things aren’t always as straightforward as we’d like—or as they should be? For the order to go on credit hold, the Limit Exceeded Credit Hold Reason—found on the Accounts Receivable Parameters form—requires a valid credit hold reason code for true credit hold to be enabled.

Open Credit / Prepaid Amounts vs. Progressive Billings

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

Open Credit / 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 by Excel or another 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 [Quick] Payments as an open credit. Be 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 proper permission must remove the credit hold at this time, allowing the order to continue 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. This separation is important to understand for reconciliation and reporting, as these two transactions remain separate in the A/R module until you apply the open payment to the invoice.

Progressive Billing

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

When payment is received in this scenario, you apply it directly to the progressive invoice—there’s no need to create a separate open credit. Like to the open credit approach, this is when any credit hold should be removed.

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 footer. If there are current amounts for Freight and/or Misc 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 [Quick] Payments and applied as open 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 the need for 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. 

PRO TIP: Companies don’t have to choose between the two methods. You can use them interchangeably as each situation dictates.

Progressive Billings

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

Progressive Billing Generation

• • The Progressive Billing Generation streamlines the process and allows you to include one or more CO Line(s) in the progressive bill.
  • Filter on the CO number, specify the billing date, and enter 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.
  • Activity generated on this form gets carried to the Progressive Billings form.

Progressive Billings

• • This form provides the details of all progressive billings by CO Line. Each record is a single line and includes a sub-grid displaying all progressive billing activity for that line.
  • It allows for manual creation of progressive billings, which is useful if you need to apply different percentages/amounts to different CO lines based on the line's item.
  • This is also the form you would use to reverse a progressive billing and/or create a progressive credit memo.
    
    

Invoice Flags

When creating a progressive billing, the "invoice flag" is available on both the Progressive Billing Generation and the Progressive Billings forms. Your options are as follows:

• Automatic: Bills the progressive billing based on the billing date. If the billing date is in the past or today, it generates; otherwise, it won’t trigger yet.
• Yes: This is the default setting, which generates an invoice the next time progressive billings are run, regardless of the billing date.
• No: Prevents invoicing until you are ready.

Once the Progressive Billing has been issued—via the Order Invoicing/Credit Memos form—the system will update the flag to either:

• Invoiced: Shows that the billing has been invoiced (or credited).
• Vouchered: The system generated a progressive billing, but the order invoice was printed first. This status ensures customers are not double billed.

Important Notes

• Only one progressive billing account can be defined per site.
  • Sales tax is calculated at the time of progressive billing, but only if you've activated the Apply to Progressive Billing checkbox on the Tax Systems form. If you miss this step, you can't "make up the tax" later. You'll need to reverse (credit) the PB, then activate the setting before regenerating the PB invoice.
• Freight and Misc Charges are only invoiced upon order invoicing.
• The system does not track the receipt of payment against progressive invoices for credit hold purposes, which means your A/R team should have a process in place to release credit holds once payment is confirmed.

Final Invoicing

Once CO Lines have been fully shipped, a regular invoice is needed to close out the order. That doesn't mean you can't perform multiple PBs, shipments, and/or regular invoices (via the Order Invoicing/Credit Memos form) ... just that one final invoice is required to move the CO to complete status.

Revenue Recognition

When a regular invoice is generated, the system recognizes revenue and reverses the corresponding amounts in the Progressive Billing Account. 

Conclusion

Progressive Billings in SyteLine® is a powerful feature that enables efficient cash flow management and controlled prepayment collection. By understanding the forms, workflows, and accounting implications, you can use this functionality to streamline your operations and ensure that customer orders are processed smoothly.

Up Next: August kicks off with receivables' counterpart ... aka Procure to Pay, while staying within our back-to-basics theme.

This entry is posted. See you in the next journal.
Stacey