For a large job, you may have delegated work to specialized companies within your family of companies. Those companies will do the work and pay their employees and suppliers, and then pass their costs on to you using Abio’s Intercompany Billing utility.
They may pass on their costs marked up at the client’s time and material rates. Or, they may pass them on at their cost. At that point, you’ll add the markup before billing the client for the work.
In our lesson on Intercompany Billing, we billed payroll costs from Buildomo Construction to West Side Contractors.
So now, in West Side Contractors, we have an accounts payable invoice for the work Buildomo Construction did on our project. They’ve invoiced us at cost and we’ll add a markup to the job before we pass it on to our client. The invoice includes the hours and the amount, so we can choose to markup a dollar per hour amount, or a percentage of the invoice.
Before we can mark-up this job, we have to extract the invoice records. Our user id is setup to allow this:
We can extract any of several reports for this:
We’ll use A/P Invoices by Centre in Job. Navigate to [a] Payables, then [k] Invoice Reports, then [d] Invoices by Centre in Job.
We run it for a single job, 1503, and select unextracted records.
After verifying the correct invoice items are selected, we’ll extract the report.
When the export completes, Abio asks if you want to mark an extract reference on the invoices it exported.
Select an appropriate name for the extract reference. You’ll refer to this when you invoice the job markups.
To Invoice Job Markups, navigate to [a] Payables, then [s] Invoice Job Markup.
The extract reference you just created is available in the drop down list.
The intercompany invoice includes a line item with a unit of ‘HOUR’. This allows Abio to recognize how many hours went into the billing, which allows you to mark up based on the hours. You can specify an hourly markup of $5.50. The preview window on the right shows the amount of the markup.
Click <Apply> to generate the markup invoice.
We post this invoice to the job cost system.
Once the costs are posted, any of the Job Costing reports will show the updated costs.
As with the Internal Equipment Billing, paying the invoice, even though it’s a zero dollar invoice, will move the intercompany amount to the approprate G/L account.