Setting Up WIP Policies (Setting up the Financials)

Another important option under Financial System setup relates to the WIP policy. WIP is what defines unbilled revenue for work that has yet to be completed. For accounting purposes, WIP is considered as a current asset. The WIP Policy button creates WIP Policies in the application and associates them with projects.

To set up a WIP policy:

• Setup > Financial > System > WIP Policies
• Click the WIP Policy button. The WIP Policies screen opens
• This screen displays a list of all Projects in the application with WIP Policies (their Rule Type is not set to None).
• Suspended Projects are displayed in red.
• The grid displays the Company Name, the Client Name, the Project Name, the Project Code, the Project Start Date and the Project End Date.
• The Show all active Projects only checkbox is checked by default. The Policy for a given project can be edited by clicking the Project Name.
• Click the New link to open the WIP Policy screen
• Select an appropriate option from the Project drop-down list.
• The Project drop-down list is filtered to display only those non-placeholder projects that do not have a WIP policy associated to them (Rule Type = none).
• The Client field is set to an automatic value and is read-only.
• The Currency field is set to the associated Client's currency and is read-only.
• The Company is set to the selected company for the project belongs to and is read-only.
• Select an appropriate option from the Rule Type drop-down list. For more information on the different Rule Types, see Financials Setup: Revenue Recognition Rule Types.

When a Project has a Revenue Recognition Policy with the Amount to Recognize field set to Fixed amount, a WIP Policy on the Project (Rule Type being changed from None to any other option) cannot be defined. Upon attempting to Save the setting, a message displays that reads the following, and the Rule Type change is not saved, maintaining it as None:

"A WIP Policy cannot be defined when a Revenue Recognition Policy with Fixed Amount exists on the Project."

• Click Save, and then Close.
• The WIP Policy can also be set up for a Project from Project Edit.

This feature prevents including entries that have an associated Revenue Recognition Schedule from being included in the WIP Accrual Batch.

When a policy of type Time and Materials exists on the Project, the WIP Accrual Batch excludes:

• Approved billable Charge entries that have an associated Revenue Recognition Schedule.
• Approved billable Product entries that have an associated Revenue Recognition Schedule.
• Approved billable Time, Expense, Charge or Product entries that are included in a Project level Revenue Recognition Schedule (through the Apply to <Time/Expense/Charge/Product>entries between <Project start/Custom> and <Project end/Custom> option).

When a policy of type Time and Materials exists on the Project, the WIP Accrual Batch is flagged for an update when:

• A Charge entry included in the Batch has a Revenue Recognition Schedule associated to it.
• The Revenue Recognition Schedule of a Charge entry, that was not included in the WIP Batch because it had a Revenue Recognition Schedule associated, is deleted.
• A Product entry included in the Batch has a Revenue Recognition Schedule associated to it.
• The Revenue Recognition Schedule of a Product entry, that was not included in the WIP Batch because it had a Revenue Recognition Schedule associated, is deleted.
• A Time, Expense, Charge or Product entry that is included in a WIP Accrual Batch becomes included in the Project's Revenue Recognition Schedule (through the Apply to <Time/Expense/Charge/Product> entries between <Project start/Custom> and <Project end/Custom> option).
• A Time, Expense, Charge or Product entry that was not included in a WIP Accrual Batch because it was included in the Project's Revenue Recognition Schedule (through the Apply to <Time/Expense/Charge/Product> entries between <Project start/Custom> and <Project end/Custom> option) now gets excluded from the Project's Revenue Recognition Schedule (either through the entry type change or through the date change).

When a policy of type Time and Materials exist on the Project, the WIP Accrual Batch will not be flagged for an update when:

• a Charge entry is updated and that entry has an associated Revenue Recognition Schedule.
• A Product entry is updated and that entry has an associated Revenue Recognition Schedule.
• A Time, Expense, Charge or Product entry is updated and that entry is included in the Project's Revenue Recognition Schedule (through the Apply to<Time/Expense/Charge/Product> entries between <Project start/Custom> and <Project end/Custom> option).

There will be no changes made to the functionality of the WIP Accrual Batch when a WIP Policy of type Percent Complete or Fixed Price with Average Rate is defined.