As with Fixed Price, we can have a situation where our Client will agree on prepayment for the project, and pay the rest after the prepayment. This example will help you understand how to set up and settle such a project.
This is a hypothetical example!
John's company has acquired a project deal with Company B. The project will last 3 months. The deal states that the client will pay 150,000 € and the rest of the income will be paid after the prepayment will be used, based on agreed income rates.
- Let's create Time & Materials project lasting 3 months.
- Let's go to the Budget, Settled tab. Scroll down to the Overheads.
- Click Add income, and fill out the amount the client paid.
- Now in the Report, we will see the amount prepaid as income and currently profit.
- Let's add 2 people to our project, with different hour rate.
- Now in the Report, we will see not only settled prepaid but also the budget caused by our planning.
- Our employees have logged time for the first month of the project.
- To settle hours with our client, let's head over to our Dashboard. Here we can see logged hours for last month, and how much our client will pay for those hours. We need to remember how much our both employees cost us for that month.
- Once we settle with our client, click the "Settle" button.
- We will go back to the Budget tab, Settled. Let's go to our overhead, subtract the amount our employee has cost our client from the prepaid amount, and click "Save".
- In the Report, we will see that Income stays the same, as the amount of work didn't consume the whole prepaid amount, but we will also see actual costs and profit.
- Our employees have logged time for the next months of the project.
- To settle hours with our client, let's head over to our Dashboard. Here we can see logged hours for last month, and how much our client will pay for those hours. Since now the costs of our employees have exceeded the prepaid amount, we don't need to remember the cost.
- We once again will go back to the Budget tab, Settled. Let's go to our overhead, type zero, and then "Save".
- In the Report, we will see that Income changed, as the amount of work consumed the whole prepaid amount, but we will also see actual costs and profit.
- The rest of the project will continue as normal T&M.