EAM for Business Central

Billable Work Orders

Understanding Billable Work Orders

A Billable Work Order is any work order where costs will be charged to a customer, department, or other entity. Billable work orders automatically generate sales documents (invoices or orders) when completed, streamlining the billing process.

Billable vs. Non-Billable

Billable Work Orders:

  • Costs are charged to a customer
  • Generate sales invoices or orders
  • Track revenue and profitability
  • Require customer assignment
  • Examples: Customer service calls, warranty work (charged back), inter-department billing

Non-Billable Work Orders:

  • Internal maintenance costs
  • Not charged to external party
  • Costs absorbed by organization
  • No sales documents generated
  • Examples: Internal preventive maintenance, breakdown repairs on owned assets

Billable vs. Service Order

Billable Only:

  • Work will be invoiced but not necessarily customer-facing
  • Example: Internal maintenance charged to production department
  • Customer No. not required (can use internal cost center)

Service Order (which is also Billable):

  • Customer-facing work
  • Full customer information required
  • Service confirmation documents generated
  • Customer portal visibility (if configured)

Setting Up Billable Work Orders

Configuration Prerequisites

In Maintenance Invoicing Setup:

  • Choose document type: Sales Invoice or Sales Order
  • Configure Sales Account No. for revenue posting
  • Set up number series for invoices/orders

Customer or Cost Center Setup:

  • Customers configured in Customer master
  • OR internal departments set up as "customers" for cross-charging
  • Price lists defined for accurate billing

Creating Billable Work Orders

Method 1: From Quote (Recommended):

  • Work Order Quote automatically creates billable work order
  • Customer and pricing information transfer
  • Billable toggle pre-set to ON

Method 2: Direct Creation:

  1. Create new Work Order
  2. Toggle Billable to ON
  3. Select Customer No. (required when Billable is ON)
  4. Add resources, items, expenses as needed

Method 3: Convert Existing Work Order:

  1. Open non-billable work order
  2. Toggle Billable to ON
  3. Fill in Customer No.
  4. System validates billing information

Billable Work Order Fields

Customer Section (appears when Billable = ON):

Customer No. (Required):

  • The entity being billed
  • Can be external customer or internal department
  • Billing address populates automatically

Maintenance Contract No. (Optional):

  • Link to customer contract if work is covered
  • Affects contracted vs. extra work billing

Billing Options:

  • Time and Material: Bill actual costs (default)
  • Fixed Price: Bill agreed amount regardless of actual costs

Address Options:

  • Sell-to Address: Use customer's main address
  • Alternative Shipping Address: Use alternate address
  • Custom Address: One-time custom address

Managing Contracted vs. Extra Work

Contracted Work Designation

On billable work orders with a linked Maintenance Contract:

Resources Tab:

  • Each resource line has Contracted checkbox
  • Check this box for work included in contract
  • Unchecked lines are "extra" work billed additionally

Items Tab:

  • Each item line has Contracted checkbox
  • Check for parts included in contract coverage
  • Unchecked lines billed as extra

Expenses Tab:

  • Expenses typically not contracted unless specifically stated
  • Mark as contracted only if explicitly included in contract

Billing Calculation Example

Scenario: Monthly PM contract includes 4 hours labor and standard filters

Maintenance Contract: CONT-12345
Monthly Allowance: 4 hours labor + standard filters

Work Order Resources:
Resource      Quantity    Rate      Contracted    Billable Amount
TECH-01       3.5 HOUR    $85.00    ☑ YES        $0.00
TECH-01       1.5 HOUR    $85.00    ☐ NO         $127.50

Work Order Items:
Item          Quantity    Price     Contracted    Billable Amount
FILTER-STD    2 PCS       $35.00    ☑ YES        $0.00
SEAL-KIT      1 EA        $185.00   ☐ NO         $185.00

Total Billable: $312.50
Contract Usage: 3.5 hours labor + 2 filters

Invoice to Customer:

  • Monthly contract fee: (billed separately via contract)
  • Extra work on this service call: $312.50
  • Total this invoice: $312.50

Best Practices for Contracted Work

Clear Communication:

  • Before starting work, review contract coverage with customer
  • Explain what is included vs. extra
  • Get approval for extra work before proceeding
  • Document approval in work order comments

Accurate Marking:

  • Review contract terms carefully
  • Mark only truly contracted work
  • When in doubt, discuss with customer
  • Consistent marking ensures accurate contract reporting

Contract Monitoring:

  • Track contract allowance usage
  • Warn customer when approaching limits
  • Report regularly on contract utilization

Work Order Execution for Billable Work

Time Tracking for Billing

Accurate time tracking is critical for billable work:

Best Practices:

  • Start timer when work begins
  • Pause timer for breaks, interruptions
  • Stop timer when work completes
  • Use correct Work Type Code (affects billing rate)
  • Split time between contracted and extra work

Work Type Examples:

  • REGULAR: Standard business hours work
  • EMERGENCY: After-hours premium rate
  • TRAVEL: Travel time to customer site
  • ONCALL: On-call availability charge

Multi-Technician Scenarios:

Two technicians work together for 3 hours

Resource Lines:
Resource      Work Type    Quantity    Rate      Amount
TECH-01       REGULAR      3.0 HOUR    $85.00   $255.00
TECH-02       REGULAR      3.0 HOUR    $85.00   $255.00

Total Labor: $510.00 (6.0 hours billed)

Parts Usage and Billing

Accurate Consumption Recording:

  • Record parts as consumed (not at start of job)
  • If extra parts needed, add new lines during work
  • Return unused parts to inventory (reduce consumption)
  • Differentiate contracted vs. extra parts

Parts Markup:

  • Item prices in price lists should include markup
  • Typical markup: Cost + 15-25%
  • Markup compensates for inventory carrying costs
  • Adjust pricing by customer or part criticality

Example Parts Billing:

Part Used: Hydraulic pump (replacement not in contract)

Item Line:
Item          Quantity    Cost      Price      Markup    Amount
PUMP-HYD-100  1 EA        $850.00   $1,020.00  20%      $1,020.00

Customer billed: $1,020.00
Margin: $170.00 (20%)

Managing Additional Expenses

Common Billable Expenses:

  • Subcontractor services
  • Equipment rental (crane, lift, etc.)
  • Specialized tools
  • Permits and inspection fees
  • Disposal fees (hazardous materials)
  • Travel expenses (mileage, lodging for remote sites)

Recording Expenses:

  1. Add expense lines during or after work
  2. Enter actual costs incurred
  3. Set billing price (may include markup)
  4. Document expense details in description
  5. Attach receipts (using document attachment)

Example Expense Billing:

Expense: Crane rental for motor removal

Expense Line:
Expense No.    Description         Cost       Price      Amount
EQUIP-CRANE    4-hour crane rental $600.00    $750.00   $750.00

Markup explanation: Includes coordination and insurance
Customer billed: $750.00

Scope Change Management

When work scope exceeds original estimate:

Minor Scope Changes:

  1. Add additional resource hours or items
  2. Mark as non-contracted (extra work)
  3. Call/email customer to inform
  4. Document approval in comments
  5. Continue with work

Major Scope Changes:

  1. Stop work or place on hold
  2. Create new Work Order Quote for additional work
  3. Send quote to customer for approval
  4. Upon approval, continue work or create new work order
  5. Link work orders via comments

Change Order Documentation:

  • Clearly separate original scope from changes
  • Document reason for changes (e.g., "discovered additional damage during disassembly")
  • Obtain customer approval (email confirmation sufficient)
  • Update work order description to reflect changes

Posting and Invoicing Billable Work Orders

Posting Work Completion

When Work is Complete:

  1. Review all lines:

    • Verify quantities consumed match actual usage
    • Confirm Contracted checkboxes are correct
    • Check pricing is accurate
    • Ensure all expenses recorded

  2. Post Consumption:

    • Click Post Consumption on Resources, Items, and/or Expenses tabs
    • Can post all at once or separately
    • Consumption can be posted progressively for long jobs

  3. Complete Checklists:

    • Ensure all required checklists are completed
    • Particularly "After Work" checklists
    • Obtain customer signatures if required

  4. Close Work Order:

    • Click Post/Close
    • Work order becomes Posted Work Order
    • All costs are final and posted to ledger

Automatic Invoice Generation

Based on your Maintenance Invoicing Setup (Sales Invoice or Sales Order):

If Set to Sales Invoice:

  • System automatically creates Sales Invoice when work order is posted
  • Invoice is in draft status (not posted)
  • You can review/edit before posting
  • One invoice per work order (typically)

If Set to Sales Order:

  • System creates Sales Order when work order is posted
  • Order can be shipped and invoiced separately
  • Useful for workflow requiring shipping confirmation
  • Multiple work orders can be combined on one sales order

Sales Document Creation Process

What Transfers to Sales Document:

  • Customer information (bill-to, ship-to)
  • Description from work order
  • Resource lines → Sales lines (Type: Resource)
    • Only non-contracted resource lines
    • Unit Price from resource line
    • Work Type Code in description (optional)
  • Item lines → Sales lines (Type: Item)
    • Only non-contracted item lines
    • Unit Price from item line
    • Quantity consumed (actual, not estimated)
  • Expense lines → Sales lines (Type: G/L Account or Item)
    • Expense charges
    • Unit Price from expense line

Not Transferred:

  • Resource, item, or expense lines marked as Contracted
    • These are tracked in work order ledger only
    • Do not appear on customer invoice

Example Sales Invoice:

Work Order: WO00582 - Monthly PM Service
Customer: C-0001 (ACME Manufacturing)

Sales Invoice Lines:
Type       Description                          Quantity    Price      Amount
Resource   Extra labor - emergency repair       1.5 HOUR    $85.00    $127.50
Item       Seal replacement kit                 1 EA        $185.00   $185.00
G/L Acct   Crane rental expense                1 EA        $750.00   $750.00

Invoice Total: $1,062.50

(Note: 3.5 hours contracted labor and 2 standard filters not invoiced as they're covered by maintenance contract)

Reviewing and Editing Sales Documents

Before posting the invoice to the customer:

Review Checklist:

  • [ ] Customer and billing address correct
  • [ ] All billable work included
  • [ ] No contracted work accidentally included
  • [ ] Descriptions are professional and clear
  • [ ] Prices are accurate
  • [ ] Payment terms correct
  • [ ] Any special instructions or references included

Editing Sales Invoice:

  • You can modify line descriptions for clarity
  • Adjust prices if needed (customer discount, special pricing)
  • Add additional lines for miscellaneous charges
  • Add comments or special instructions
  • Cannot modify quantities (come from actual consumption)

Batch Review:

  • Navigate to Sales Invoices list
  • Filter for invoices from work orders (reference field)
  • Review all at once for efficiency

Posting Sales Invoices

When Ready to Invoice Customer:

  1. Open the Sales Invoice
  2. Verify all information
  3. Click Post
  4. System creates:
    • Posted Sales Invoice (customer receivable)
    • G/L entries (revenue, tax, receivables)
    • Customer ledger entry
    • Invoice document for printing/emailing

After Posting:

  • Posted Sales Invoice is permanent record
  • Cannot be edited (only corrections or credit memos)
  • Customer account balance updated
  • Revenue recognized in financial statements

Sending Invoices to Customers

Method 1: Email Invoice:

  1. On Posted Sales Invoice, click Send
  2. Email window opens with PDF attached
  3. Customize message if needed
  4. Click Send

Method 2: Print Invoice:

  1. Click Print/Send → Print
  2. Choose report format
  3. Print or save as PDF
  4. Mail to customer

Method 3: Electronic Invoicing:

  • If configured, invoices can be sent electronically
  • EDI, e-invoicing standards
  • Customer receives invoice in their system automatically

Tracking Profitability of Billable Work

Cost vs. Revenue Analysis

Work Order Ledger Entries:

  • Record all costs: labor, parts, expenses
  • Track actual costs regardless of what's billed
  • Compare to revenue from sales invoice

Profitability Calculation:

Example Work Order Profitability:

Costs:
- Labor (all hours, contracted + extra):  $595.00
- Parts (all items, contracted + extra):  $305.00
- Expenses:                                $600.00
Total Cost:                                $1,500.00

Revenue:
- Customer Invoice (extra work only):      $1,062.50
- Contract Monthly Fee (allocated):        $400.00
Total Revenue:                             $1,462.50

Profit/Loss:                               ($37.50)
Margin:                                    -2.6%

Analysis: This job was unprofitable. The contract fee doesn't cover the actual cost of contracted work.

Profitability Reports

Available Reports:

  • Work Order Profitability: Cost vs. revenue per work order
  • Customer Profitability: Total profitability by customer
  • Technician Efficiency: Revenue per technician hour
  • Contract Analysis: Contract fees vs. actual costs

Using Reports for Improvement:

  • Identify underpriced contracts → renegotiate at renewal
  • Find scope creep patterns → better quoting
  • Identify inefficient processes → training or process improvement
  • Spot underperforming technicians → coaching opportunities

Key Profitability Metrics

Gross Margin:

  • (Revenue - Direct Costs) / Revenue
  • Target: 30-50% for service business
  • Lower margins acceptable for contract work (predictability value)

Revenue Per Technician Hour:

  • Total revenue / total technician hours
  • Target: $120-150 per hour (depends on market)
  • Includes both billable and non-billable time

Billable Utilization:

  • Billable hours / total available hours
  • Target: 65-75%
  • Remaining time = travel, training, admin

Average Invoice Size:

  • Total revenue / number of invoices
  • Track trends over time
  • Larger invoices generally more efficient

Advanced Billing Scenarios

Combining Multiple Work Orders on One Invoice

If customer prefers single invoice for multiple service calls:

  1. Set Maintenance Invoicing Setup to Sales Order (not Sales Invoice)
  2. Multiple work orders create lines on same Sales Order
  3. Review and combine/consolidate as needed
  4. Create single invoice from the Sales Order

Benefits:

  • Reduced invoice count for customer
  • Lower processing costs
  • Easier for customer AP department

Progress Billing for Long-Duration Work

For service work spanning weeks or months:

Approach 1: Milestone Billing:

  1. Define milestones in work order comments
  2. Post partial consumption at each milestone
  3. Generate invoice for each milestone
  4. Final invoice upon completion

Approach 2: Periodic Billing:

  1. Post consumption weekly or monthly
  2. Generate invoice for each period
  3. Useful for time-and-materials contracts
  4. Customer sees regular invoices for ongoing work

Warranty Work Billing

For warranty work where manufacturer reimburses:

Scenario: Equipment under manufacturer warranty, you perform repair, bill manufacturer

Approach:

  1. Create billable work order
  2. Select manufacturer as "customer"
  3. Mark asset warranty as active (notification appears)
  4. Perform work and post
  5. Invoice generated to manufacturer
  6. Track warranty claims separately from regular customer work

Warranty Tracking:

  • Asset warranty fields track coverage
  • Notification on work order alerts technician
  • Reports show warranty work by manufacturer
  • Claim aging reports ensure timely reimbursement

Retainer or Prepaid Service Credits

For customers with prepaid service hours:

Setup:

  1. Customer purchases service hours upfront
  2. Track hours in contract or custom field
  3. Create work orders as services are performed
  4. Mark work as "prepaid" or track separately
  5. Generate periodic reports on hours used vs. remaining

Invoicing:

  • Option 1: Invoice prepayment upfront, don't invoice individual work orders
  • Option 2: Create invoices for each service but apply credits
  • Requires customization or manual adjustment

Troubleshooting Billable Work Orders

Common Issues and Solutions

Issue: Sales Invoice Not Generated After Posting Work Order

Solutions:

  • Verify Billable toggle is ON
  • Check Customer No. is filled
  • Confirm Maintenance Invoicing Setup is complete
  • Verify at least one non-contracted line exists
  • Check user permissions for sales invoice creation

Issue: Wrong Amounts on Sales Invoice

Solutions:

  • Review contracted checkboxes on work order lines
  • Verify Unit Price on resource/item lines
  • Check if price list is active and correct
  • Ensure correct currency if multi-currency

Issue: Cannot Mark Line as Contracted

Solutions:

  • Verify Maintenance Contract No. is filled
  • Check contract is active and not expired
  • Confirm line type (resource/item) is covered by contract
  • Review contract terms for coverage details

Issue: Customer Disputes Invoice

Solutions:

  • Show Posted Work Order with actual consumption
  • Provide Work Order Ledger Entries as backup
  • Share photos taken during work
  • Reference customer approval for extra work
  • Offer to review contract terms together

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