Use billing schedules with projects by using fee transactions

Subscription billing enables organizations to manage recurring billing through billing schedules. Projects help you plan, create, manage, control, and complete customer-focused work for your organization. On some time-and-material projects, a customer might need to be billed on a recurring basis for all or part of the project.

This feature lets you create billing schedules for projects by using fee transactions, extending the existing functionality that supports sales order generation for projects. The system can generate work-in-progress (WIP) and accrual-based financial entries using fee transactions, particularly in scenarios where project customer invoices are issued at a later stage—after the billing processes run to produce the necessary source documents.

Prerequisites

Before you can implement this feature, you must meet the following prerequisites:

Minimum version required

To use the feature for Project Operations for manufacturing deployments, you need the following versions:

Dynamics 365 Finance version 10.0.46 or later

Enable features

Activate the following features by using the Feature management workspace:

• Subscription billing
• Recurring contract billing
• Billing schedules and deferrals with projects
• Enable project fee journals to support subscription billing for Project Operations for manufacturing

Enable project stage rules

To enable project stage rules, follow these steps:

1. Go to Project management and accounting > Setup > Project management and accounting parameters.
2. On the Project stage tab, select a stage, and then select a value in the Project stage rules field. Project stage rules for creating a billing schedule on a time-and-material project are added.
3. To create a billing schedule linked to a project in the selected project stage, set the Create billing schedule option to Yes.

Set up default parameters for fee transactions

To automatically generate billing schedules for project fee transactions, configure the relevant parameters in the Project Management and Accounting Parameters settings following these steps.

1. Go to Subscription billing > Setup > Project Management and Accounting Parameters.

2. In the General tab, set Invoice transaction type as Project fee journal.

3. In Posting options, configure the following settings based on your billing and invoicing requirements:

   • Create project fee journal: Automatically generates fee transactions. You manually create project invoices later.
   • Show posting invoice or Create invoice proposal page: Generates both fee transactions and project invoice proposals. You can defer posting invoices and complete them later.
   • Post invoice automatically: Generates fee transactions and posts the invoice proposals immediately, completing both actions in a single step.

Create a billing schedule from a project

To create a billing schedule directly from a time-and-material project, follow these steps:

1. Go to Project management and accounting > Projects > All projects.
2. On the All projects page, select a project.
3. On the Action pane, on the Manage tab, select New, then select Subscription billing > Billing schedule. The Create billing schedule page opens and includes the standard options for creating a billing schedule.
4. Select the Billing schedule group. By default, the customer account, customer name, project, and funding source are entered from the project. If there's more than one funding source (customer or grant) on the project contract, select the funding source for the billing schedule. This funding source is set as the invoice account.
5. Optional: Set the End user account and End user name fields.
6. Set the Billing start date and Number of periods fields. The Billing end date value is automatically calculated, but you can also enter a value.
7. Select OK to create the billing schedule.

The All billing schedules page displays the newly created billing schedule. By default, the Project ID, Project name, Project contract ID, and Funding source values on the billing schedule header are entered from the project. By default, the payment terms, payment schedule, and currency come from the funding source. You can change the project fields until you add billing schedule lines. Invoice transaction type comes from Project management and accounting parameters by default. When you use a project on a billing schedule, the Invoice transaction type field is set to Project fee journal or Sales order.

Billing schedule lines

If you set the Invoice Transaction Type to Project Fee Journal, the grid includes fields such as Fee category and other related fee-specific attributes. If you select Sales order, the grid displays item-related order line details instead.

You can modify the Invoice Transaction Type until you create billing schedule lines, providing flexibility during the setup phase. When you invoice a billing schedule line that has a project by using the Generate invoice process, the system creates a Project fee journal that includes all the billing schedule lines.

The Billing schedule lines grid displays details based on the value you select in the Invoice Transaction Type field on the billing schedule header.

If you add a project to a billing schedule header, the system enters it by default on the billing schedule line on the Project tab. By default, the system enters the Project ID, Category, Line property, and Sales tax values from the project. When a billing schedule line has a project, you can only add service items and non-stock items to it. You can add billing schedule lines without the project ID.

To create billing schedule lines of type Fee, follow these steps:

1. Go to Subscription billing > Recurring contract billing > Billing schedules > All billing schedules.
2. Select the existing billing schedule related to the project or create a new billing schedule by selecting + New.
3. On the Billing schedule header, select Project fee journal in the Invoice transaction type.
4. On the Billing schedule lines, select + New to create a new billing line.
5. Select the Fee type category in the category field, enter the unit price and other details.
6. On the project tab for the lines, select the tax and item tax group.
7. On the financial dimensions tab, review the financial dimensions.

View a billing schedule from a project or a project contract

To view a billing schedule, follow these steps:

1. On the All projects page, select a project.
2. Select Manage, select Related information, then select Subscription billing > Billing schedules. The All billing schedules page shows billing schedules that you created for the selected project.
3. On the Project contracts page, select Maintain.
4. In Related information, select Subscription billing > Billing schedules. The All billing schedules page shows any billing schedules that you created for the project contract.

Learn more about billing schedules with projects in Billing schedule with projects.

Learn more about generating invoices from billing schedules in Generate invoices from billing schedules.