Progress Billing can be used when you don't know what the final billing amount will be but you still want to bill progressively toward that unknown amount. You can bill a fixed amount on a regular basis or only once; or you can bill a different amount for each billing. Progress Billing can also be used when you know the final billing amount and want to bill the client up front, but you don't know the number of hours it will take. The latter situation applies to certain types of flat fee billing, value billing and retainer billing.

In a nutshell, Progress Billing allows you to bill a client amounts that are unrelated to the actual time being spent working for the client. The amounts are maintained in a separate area in Tabs3 yet are also updated to accounts receivable. Once the work is finished (i.e., the final amount has been established and/or all timeslips have been added), a "reconciliation" statement is processed that applies the amounts billed toward the actual finished work.

One of the main differences between progress billing and other billing is that with progress billing, timekeepers do not receive credit for billed productivity until the account is reconciled. When multiple timekeepers work on a single matter, it may be desirable not to give timekeepers credit for billed productivity until the matter is complete so that any write-up or write-down can be distributed on a prorated basis.

Procedure

To set up a Progress Billing client, select the Progress Billing check box on the Billing Preferences tab of the Client matter.

To bill a progressive amount toward current or future work-in-process, add a fee transaction using a Type 6 transaction code (Progress Billing). The Type 6 fee transaction will not allow you to enter anything in the Rate or Hours fields, only an Amount. Enter the amount you want to bill at this time. Run a final statement for the client and update the statement. The only fee that will be billed on the statement is the Type 6 fee transaction. If desired, you can bill multiple Type 6 transactions on the same statement. The Accounts Receivable Report will show a balance due for the Type 6 amount you just billed (provided a payment was not included on the statement). You have the option of charging sales tax on Type 6 transaction codes.

When the Type 6 transaction is updated, the billed productivity figures are not updated. However, many of the reports will show amounts for billed Type 6 transactions and/or paid Type 6 transactions. These reports include the Detail and Summary Work-In-Process Reports, the Aged Work-In-Process Report, the Detail and Summary Accounts Receivable Reports, the Accounts Receivable by Invoice Report, the Collections Report, the Client Productivity Report, the Client Ledger Report, the Receipt Allocation Report, the Allocated Payments Report, the Unallocated Payments Report, the Timekeeper Status Report, the Client Realization Report, and the Client Budget Report. Also, the Transaction File List subtotals the Type 6 transactions as a separate line item. The Sample Report Pack describes where progress billed amounts are shown on the various reports.

As work proceeds on the matter, enter fee and cost transactions as you would for a normal hourly client. When you are ready to bill another progressive amount, enter a Type 6 transaction, run a final statement and update the statement.

As payments are entered, they are allocated to these statements and their associated progress fees. During the reconciliation process, the payments will be reallocated to the previously unbilled transactions based on the matter’s Method to Apply Payments settings.

Tabs3 allows you to select Save in the Status field when entering a Type 6 transaction. This allows the Type 6 transaction to be billed and saved for successive progressive billings. This is especially helpful if you are billing the same amount for each progressive billing. If you are changing the amount, you can edit the Type 6 transaction if it was entered with the Save option, or you can enter a new Type 6 fee transaction.

If you want to bill only the Type 6 transaction and not show other fee transactions, use a statement template with a Fee Format of Standard. Since the Progress Billing check box is selected, the Type 6 transaction(s) will be the only transaction(s) "released" for billing.

If you want to also include other fee transactions on the statement, you can use a Fee Format of Info Only. This format lets you bill the Type 6 fee transactions and print regular fee transactions without billing them. This allows you to bill the progressive amount but still show the client the descriptions and hours of services rendered. The regular fee transactions remain in work-in-process until a reconciliation statement is run for the client and is updated.

Reconciliation Statement When Progress Billing

After all work has been completed on a matter, you are ready to "reconcile" the client's account. In order to reconcile the client's account:

  1. Clear the Progress Billing check box on the Billing Preferences tab of the Client matter.
  2. If you are using a statement template with a Fee Format of Info Only, you will want to change the statement template to one with a Fee Format of Standard.
  3. Review work-in-process by printing a Detail Work-In-Process Report or a draft statement.
  4. After reviewing the work-in-process, you may want to write-up or write-down fees before billing.
  5. After making any necessary adjustments, run a final statement. The final statement will reflect any unpaid progress billings in the previous balance and will also reflect all progress billings in the line item "Adjustment For Prior Billings" as a credit amount. The regular fee transactions will be printed according to the statement template you have selected and will be totaled and printed on the For Current Services Rendered line. (Note: If desired, you have the ability to change the terminology of the "Adjustment for Prior Billings" line on Line 24 of the Terminology tab in Statement Customization.)
  6. After printing the reconciliation statement, run the Update Statements program. After updating the statement, the accounts receivable and productivity information will be updated.

The following is an example of a reconciliation statement:

                          Fees

Telephone conference with client.  Letter to
client's trustee.  Telephone conference with
client's trustee.  Office conference with client.

For Current Services Rendered                        465.00
Adjustment for Prior Billings                       -400.00

Balance Due                                          $65.00
                                                     ======

Note: You will not be able to change the Progress Billing check box if the Update Statements program has not been run since a final statement was processed for the client. After running the Update Statements program, you will be allowed to change the check box.

Note: When printing a reconciliation statement, if the Statement Type for a client's statement template is set to Invoice Format and Tabs3 is configured to exclude credits on invoice format statements (on the Options tab of Statement Customization), then the "Adjustment For Prior Billings" line will not be printed on the statement. Either change the client's Statement Type to Statement Format or change Statement Customization to allow credits to print on invoice format statements.

PracticeMaster Integration Note: Type 6 transactions do not integrate with PracticeMaster. The only transaction code types used by PracticeMaster are 0-Normal and 5-Miscellaneous.

GLS Integration Note: When a payment is applied to Progress Fees, journal entries will be created for the payments based on the accounts defined in GLS Integration Setup for posting payments allocated to Progress Fees (or the Unapplied Payments account, if no Progress Fees accounts are defined). When "reconciling" the client's account, the payment will be allocated. Adjusting journal entries will be created to transfer the amount of the allocated payment from the Progress Fees (or Unallocated Payments) accounts to the designated payment allocation accounts configured in GLS Integration Setup.

See also:   Methods of Billing
  Using Progress Billing to Handle Retainers