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Bill copy format for Product Management

hello everyone welcome to the seven minute workshop this is where we chat with experts to break down complicated and timely topics that affect your business and we do it in just seven minutes after attending a wedding last weekend i can definitively say that i learned it takes me longer than that to tie a bow tie okay we are rounding out our theme of project management and profitability this month month with the topic of project billing it's relationship with project accounting we're going to talk about a typical billing process the complexities around it and how businesses can overcome those complexities to dive into this we're going to be joined one final time by netsuite vertical product manager adam mayo now quick reminder before we bring him on if you have any questions throughout today's discussion you can ask them in the comments and we'll get to them at the end of the conversation and don't forget to tell us where you're tuning in from we know you've signed in from all parts of the world usually i'm in the middle east today i'm actually in washington dc but we'd love to give you a shout out right back so tell us where you're tuning in from and if you have any advice around project billing experiences you want to share don't hesitate to add your thoughts and the comments as well and we'd love to share your insights um okay now please join me in welcoming to mail hey adam thanks for joining us good to see you yeah likewise fritz i'm disappointed there's no bow tie on though i thought you'd still have it i you know um i need some practice in tying my bow tie so uh um you know well maybe next time you're on we'll we'll both wear bow ties we'll tie them during the session this evening that's right the time limit yeah i like it okay cool um all right so last time we talked about project accounting and the and what i want to talk about right now is what is the relationship between project accounting and our topic of today project billing yeah as we were discussing in the previous session billing is a big component of project accounting it's really if i were to put into pillars one of the the main pillars to drive how we translate the contract with our customer into how we're going to invoice them and all the different components that go into it so it's really that piece of it the other parts of project accounting are focused more on the cost tracking and capture and how that affects project profitability but again when we look at that project profitability it's the cost and then the the billing and revenue that's driven so so that's really where i look at it that piece of the pie when we're talking about it in i consider the costs of course are going to be critical as part of project accounting but the the billing component of it we don't do invoicing correctly it's going to delay billing perhaps not get paid uh and hurt our cash flow so very big piece of the project accounting sounds really important um what are the what are the general types of service billing and how does service billing differ from what product-based companies do in terms of billing yeah if you think about product companies that they're selling a widget or let's we're reselling a product let's say we're a wholesale distributor and maybe we're adding some markup to that that item or even a software company typically they're selling some sort of license that has a set dollar value depending on the number of licenses or a subscription that we're selling and in those case cases again it's a fixed amount for software we might be billing it out monthly quarterly annually but again we kind of have that defined so conversely services tends to have much more variety because there's so many different variables that go into delivering a project so we have labor hours and fees and we have our pass-through costs and travel expenses just to name a few uh so to kind of simplify it i like to break it up into two buckets when we talk about services billing you have your fixed fee or time and materials and fixed fee is going to include probably in the simplest terms let's just take a flat amount you know and hopefully it's not just a finger in the air uh this project's going to be 20 000 but uh generally you will say we're going to deliver this project these services for that set value from there we can start to look at how we might build that based off of certain progress we make on the project so things like a percent complete is very common where as i achieve a certain percentage of the project will bill you increments of that 20 000 contract another kind of example of that might be what we refer to as milestone billing and so let's say you know we have four key milestones on our project and once we hit each of those we're going to bill out 25 000 or in this case we would say 25 of that 20 000 right so then each milestone will bill out 5 000 uh and then you know when we get into more of the time and materials that's where we refer to kind of the billing for the the actual effort you know so we're looking at the labor hours that our resources worked on the project and assigning a dollar value to it as well as any sort of pass-through again expenses and it gets it can get certainly uh pretty complicated when you get into labor because how you determine that rate really you know has a lot of variety it could be by the employee has a billing rate might be by kind of a rate card where we're saying the type of resource you are a project manager bills at this rate a technical consultant bills at that rate and we also might build by the type of service that you're doing so it's not really kind of the hat you're wearing it's what you did for that particular customer and then expenses we can have markups and and try to determine which ones we're going to bill out which ones we're not so uh yeah as i kind of you know think about it there's just so much different variety and then to make it all even more fun sometimes there's a mixture where we have one customer and we're billing out fixed fee and time material so there's a lot to think about right and hopefully with experience and time you get better at uh at making sure that that the way you build those those milestones or the time and materials out you can uh you don't actually end up losing money um right by doing it yeah um we have a few shout outs here um rick grove says uh uh hey fritz long time in western north carolina i think i i think that's like one of those references to long time listener first time caller so long time watcher first time commenter maybe um from uh alini in athens greece hello um from elisa hi from san diego and from alexander in kiev or kiev i guess is how you say it these days from stephen in charlotte north carolina and no no nolia in uruguay south america wow we got people from all over the world thanks for for tuning in and then hi from from spain from evelyn and from roshan who says hi adam specifically to you um also so great thank you guys all for tuning in please comment maybe we can hit all the continents today um so i'm diving off of that last answer you know what's the typical project building process adam yeah so again a lot of it is translating the contract that you sell with the customer uh and making sure that we can then build out how we're going to to invoice and so we're as you can imagine when we're going to do a project for a customer we're providing a service there's a statement of work and it's saying these are the different deliverables that you have this is the effort that it might take and it might be high level or it might be very granular where we're getting down to the specific tasks and resources that are going to be working on your project but that's going to spit out a dollar value typically and then we're going in as let's say a accountant as a project accountant if we have dedicated resources to do that and we're putting that into our erp our finance system to be able to then automate or drive the the invoicing process uh and so again it's determining what's the rate's going to be uh as time sheets are entered in against a project making sure that we're monetizing those based off those rates tracking any sort of expenses if there's any sort of fixed fees again setting those up so that we can then put those on an invoice and send that out to the customer so i mean this sounds all of it a lot of this sounds very complicated and dependent of course on on all the different kinds of contracts but why do it this way yeah the simple answer in many cases is because they have to uh and part of that's kind of the power dynamic especially for smaller services customers uh working with their and and customer i should say i should say services businesses uh their customers are kind of demanding that that's how the invoices are presented so they they need to have it a specific way part of it's kind of a competitive differentiator if they're willing to be more flexible in how they do the invoicing to the to their customer they may win the business versus someone that's going to you know have maybe same type of pedigree but is a little bit more inflexible and how those invoices are are sent out so so really being able to meet the demands of their customers is a big driving power behind it uh you know part of it also is kind of being able to do analysis on the business you know you might say well why not just make everything a a fixed fee you know it's the most simple component of it but you know fixed fee also brings on more risk oftentimes to the service provider if they get the work done ahead of time then great we're probably going to make profit on it but uh maybe if we're a bit behind and we you know said we were going to do the work for a set dollar value and we've now exceeded it trying to go back and reno renegotiate that contract can be uh you know difficult to do so a lot of different factors kind of go into that process as well before we get to um audience q a one last thing is you know just can you outline all the maybe just quickly some of the main things that could go wrong in in all this or what are some of the challenges yeah i i you know you you kind of keep on uh hammering home the point too of the complexity you know and probably because you're just listening to me ramble on but some of it but you know again you know it's just it's not consistent oftentimes especially for smaller services firms again we have an accountant maybe a controller uh finance folks that have other day-to-day activities to do as well and then they're also part-time the the biller and they're working perhaps also in different systems so one of the things i mentioned as far as driving let's say a fixed fee are the deliverables being met you know the milestone was accomplished and now i can bill well generally that's not being tracked in a finance system so now they have to reach out to the project manager either via email phone or you know log into some sort of project tool where we're maybe capturing that uh and then also if we're billing out time and materials again we may be using a different system for timesheets maybe a point system for expense reports we need to collect all of that and then enter it into the finance tool not only for costing and those purposes but now we need to add the billing value so of course naturally if we have multiple systems there might be uh errors as we read key in data uh we might miss time uh and not be able to bill it out to our customer so really you know the the the gamut of all the potential gotchas are available okay we're going to open this up to questions from the audience if you have them please keep commenting and also keep shouting out we haven't hit antarctica yet so uh we're waiting for that day but we'll do our best to say hello and answer as many questions as we can in the remainder of our time and as we kind of cue those up adam um you know i i have sort of a selfish obligation to ask how does netsuite handle or help with the challenges you just outlined yeah you know billing automation is really where netsuite helps in the way that we're able to automate is having all that set up in the same system and so being able to set up your project and right on the project be able to create billing rules and we have an engine that supports fixed fee time materials where you can add rates to your your hours and also mark up your expenses and also even put in things like caps you know so a big piece of time and materials might be that i have a not to exceed so i'm going to bill you for my labor but once we get to this threshold now i need to go and renegotiate or you know we're gonna have to eat some of that so being able to put in those tools so that it's really the the set it and forget it mentality a little bit of setup on the front end of creating the project but then as we input the data time expense as project progresses occurs that's going to drive the invoice creation for us and also include things like project manager level approvals on those because generally they're the ones that are going to be that first line of defense with the customer if they have any questions or disputes on the invoicing process got it um some more shout outs here rick who tuned in earlier the long time part he was reminding me that we know each other from having worked together a long time ago when i was on the media side and we covered companies like netsuite and talked about all these issues gavin from london england um as opposed to london anywhere else thank you for clarifying that um actually they're probably there's like a lot of london's i think so i i was not really being facetious there vinicius from brazil south america thank you um and from yappo i hope i pronounced that right from dubai um one of my neighbors in the middle east this is a question from lisa who i think gave us a shout out earlier i think this is saying lisa might be a different one how do you make sure that the milestone is achieved before you bill it yeah and so that's where we need to make sure that we have proper project management processes in place and there might be certain protocol one of the things that we often see with services firms is that they'll have a project management office that has certain thresholds as to you know dictating it either from a system perspective generally you know it's a check box or perhaps you can based off of hours worked against what you expected that might trigger it to be marked as completed uh but there's certainly other processes uh whether again it's a checklist of some sort that will determine uh we've we've completed it and then notified billing to to send that out for invoicing great um this is a great question from um well i'm not gonna and there's like an h on the end i think if we've put this in correctly still practicing my arabic a little bit maybe it's not even arabic i don't know um what is the netsuite module name that maybe we're kind of talking around here yeah so we for for uh netsuite we have a couple of psa offerings our open air psa which includes full billing automation on projects as well as suite projects which which is native to netsuite and again has a billing rules engine that's similar that's going to provide that automation great um and thank you for that question the lob and if i mispronounce it please correct me in the comments i'm happy to make another stab at it um although i don't always get the second one right either as we now know um all right next question is what's the benefit we've kind of talked a little bit about this but let's kind of bring a fine point to it what's the benefit of tying project accounting and billing to something like an erp like netsuite yeah yeah again simplifying the amount of systems is going to provide more automation ultimately the the biggest benefit is improved cash flow typically because you know we mentioned all the potential error prone processes the bottlenecks that can delay billing and so if it takes me an extra month to be able to compile everything to get the invoice out the door that's another month removed from when we did the service so the customer might be scratching their head what did you know did this person really work were they on site you know i don't remember this particular thing and now they're going to perhaps want to you know talk with their project manager to make sure everything looks right or potentially even dispute and worst case there actually was an error and we did build something incorrectly uh and so again having everything in one spot is going to reduce the data entry we'll expect invoices out much quicker and hopefully get paid quicker as well this next question is from reg is there a benefit to using a system like netsuite for project building if you don't have say a designated project account yeah i'd say even more so if you don't have a designated project accountant uh generally you'll you'll see that once you start to see services firms grow and they now need multiple people to focus specifically on setting up the billing and revenue recognition on a per project basis but especially for smaller firms where maybe again it's someone wearing multiple hats in the finance department perhaps the project manager is doing some of the billing as well having a tool like netsuite to have it all in one spot have it automated using billing roles and another component that i didn't mention is you know templatizing this so that every project you create in the system can already have a lot of the setup done and then you're just kind of tweaking it based off of what you sold for that particular contract so it certainly i i think it's a big benefit having that in one spot yep and we by the way we just came back from sweet world last week in las vegas and uh one of the things that um we showed in the product keynote was an upcoming um feature called project 360 that i think is pretty exciting as well and um i that that keynote is still available um at sweet world on air on demand so check that out and just a quick thing to learn more about this topic a lot of great interest here and thank you for that we have a a link in the caption that um i think will will help out a lot so um with that that's all we have time for thank you for joining us all these weeks adam it's been a pleasure having you here this month likewise thanks fritz okay and for anyone who wants to connect with adam we've tagged him in the description of this live event and as always a big thanks to all of you for tuning in we begin a new adventure next week we're going to be diving into all things analytics we made some announcements around that as well last week uh we'll have our experts mark holiday and bali that is happening tuesday november 2nd at 12 30 pm pacific time we'll see you then