Manage project invoice proposals

Applies To: Project Operations Integrated with ERP

Your billing department can process project invoice proposals when the following three conditions are met:

• The project manager confirms the proforma invoice in Microsoft Dataverse.
• You post all time and material unbilled sales transactions that the proforma invoice includes by using the Dynamics 365 Project Operations Integration journal.
• The Import from staging table periodic process completes for both unbilled and billed sales lines.

Use the following steps to complete a project invoice proposal in Dynamics 365 Finance.

1. Review billing information for time and material transactions and post the Project Operations Integration journal.
2. Review billing information for fixed price billing milestones.
3. Review and format a project invoice proposal.
4. Post and print project invoices.

Manage billing information in the Project Operations Integration journal

The project accountant reviews and posts project actuals created in Dataverse in Finance. For more information about working with the Integration journal, see Integration journal in Project Operations.

Add cost actuals and unbilled sales actuals to the Integration journal as separate lines:

• The project actual cost transaction in Dataverse provides the unit cost price and cost amount on the Cost actual default.
• The project actual unbilled sales transaction in Dataverse provides the unit sales price and sales amount on the Unbilled sales transaction defaults.

Billing sales tax

The system calculates sales tax for billing by combining the Billing sales tax group and Billing item sales tax group fields on an unbilled sales record in the Project Operations Integration journal line. By default, the system sets these field values based on the settings on the Financials tab of the Project management and accounting parameters page.

• Sales tax group method determines the billing sales tax group defaulting logic:

  • Project: Always defaults the billing sales tax group from the project. You can review or change the default billing sales tax group on a project by selecting Show default accounting on the All Projects page.
  • Project contract: Always defaults the billing sales tax group from the project contract. You can review or change the default sales tax group on a project contract by selecting Show default accounting on the Project contracts page.
  • Customer: Always defaults the billing sales tax group from the customer.
  • Search: Searches across all the preceding entities and selects the first value available. Search starts with the Project entity, then the Project contract entity, and finally the Customer entity.

• Item sales tax group method determines the billing item sales tax group defaulting logic:

  • For time, expense, and fee transaction types, the billing item sales tax group always defaults from the Project category entity.
  • For material transaction types, the billing item sales tax group defaults based on the Item sales tax group method setting in Project management and accounting parameters. The item number defaults the item sales tax group from the Released product entity. The category defaults the item sales tax group from the Project category entity.

Financial dimensions in the integration journal

The financial dimensions for unbilled sales records in the Project Operations Integration journal default from the Project entity. You can review and adjust financial dimensions by selecting Distribute Amounts. If you need to change the financial dimensions of the unbilled sales record after the Integration journal is posted but before the Proforma invoice is confirmed, go to All Projects > Manage > Posted transactions, select the transaction, and then select Process > Adjust accounting.

Exchange rates

Dataverse uses the unbilled transaction currency as the transaction currency in Finance. Finance converts this currency to the company's accounting currency by using the exchange rates you define.

A project contract might require that you use a constant (fixed) exchange rate for the life of the agreement. In some cases, you need a fixed rate agreement to meet contractual or regulatory requirements. You apply the fixed exchange rate when you convert any sales amounts in the configured currency into the revenue entries for the company's accounting currency.

Overview of the fixed exchange rate feature

Starting with the 10.0.41 release, the Enable the use of Project fixed exchange rate agreements for Project Operations Integrated with ERP deployments feature supports this requirement. After you enable this feature, the Action Pane on the Project contracts page in the finance and operations architecture includes a button that you can use to set up a fixed rate agreement. You can enter a sales currency, an exchange rate, and an optional reference agreement number to enable a fixed rate agreement.

By default, if you don't configure a fixed rate agreement for a given project contract, the system uses the exchange rate that is configured for the legal entity.

You can use the following documents with fixed rate agreements:

• Journals
• Time entries
• Material usage logs
• Milestones and retainers
• Expenses
• Expense reports
• Vendor invoices
• Estimates such as hours, time, and materials

Example scenario

Contoso is based in the United States and uses the US dollar (USD) as its accounting currency. It's delivering a project for Coho Winery, which is based in the United Kingdom. The British pound (GBP) is used as the contract sales currency. GBP-to-USD exchange rates regularly fluctuate between 1.2 and 1.4. Therefore, the companies agreed to a fixed rate of 1.25 for their business dealings for the life of the contract and project.

In Project Operations, you establish a project contract. For this project contract, you configure a fixed rate agreement that uses the GBP currency and an exchange rate of 1.25. Contoso set up a Time and Material project with time and expenses that accrue revenue to generate work in progress (WIP) financial entries.

On the project, you create tasks to plan for the various project stages. Julia Funderburk completes the first task, requirement gathering. This task has an estimated duration of seven hours. You can open the All projects page in the finance and operations infrastructure, select the project, and then select Hour forecasts on the Plan tab of the Action Pane. The page shows the entry for the seven-hour forecast. Select General ledger preview. The Overview tab shows the estimated costs and a line for 2,187.50 GBP of revenue for the Project - invoiced revenue posting type. Select the General tab to view the breakdown of sales. This breakdown shows seven hours of effort and the sales price of 250. The total sales amount of 1,750 is calculated by using an exchange rate of 125.

Contoso's revenue in its accounting currency is calculated in the following way:

7 hours × 250 GBP price × 1.25 exchange rate = 2,187.50 USD

After the project begins work, Julia logs her time for the first four hours of work on the first project invoice. On August 27, she creates a time entry for four hours against the requirement gathering task. After that entry is approved, it's created as an integration journal during the next processing of import from staging table. The integration journal shows two lines: one for cost and one for sales. The following table shows what these lines look like.

For the cost line, the cost remains in the company currency (USD). Therefore, no exchange rate is applied. For the sales line, the price exchange rate reflects the fixed exchange rate.

Posting of the integration journal results in the following items:

• Posting of the project cost
• Entry to Project – WIP – Sales Value
• Entry to Project Accrued Revenue for the WIP by using the fixed exchange rate

When you generate the invoice proposal, it contains a single line for the four hours at a sales price of 250, for a total sales amount of 1,000 GBP. The customer invoice is in GBP.

When you post the invoice proposal, it creates a customer invoice with the following items:

• Reversal to Project – WIP – Sales Value
• Reversal to Project Accrued Revenue for the WIP by using the fixed exchange rate
• Entry for Invoiced Revenue by using the fixed exchange rate
• Entry for Customer Balance by using the fixed exchange rate

4 hours × 250 GBP price × 1.25 exchange rate = 1,250 GBP

Manage the financial attributes of billing milestones

You invoice project contract lines that use the fixed price billing method through Fixed price milestones. The project accountant can review billing milestones in Finance by going to Project management and accounting > All projects > Manage > On-account transactions.

Billing sales tax of billing milestones

The Sales tax group and Item sales tax group values default from the settings when you create a new billing milestone in Dataverse. The system defaults the values to these fields based on settings on the Financial tab on the Project management and accounting parameters page.

• Sales tax group method determines the defaulting logic of the Billing sales tax group:

  • Project always defaults the billing sales tax group from the project. You can review or change the default sales tax group on a project by selecting Show default accounting on the All Projects page.
  • Project contract always defaults the billing sales tax group from the project contract. You can review or change the default sales tax group on a project contract by selecting Show default accounting on the Project contracts page.
  • Customer always defaults the billing sales tax group from the customer.
  • Search searches across all the entities in this list and selects the first value available. Search starts with the Project entity, then the Project contract entity, and then the Customer entity.

• Fixed price milestone item sales tax group is used as the default value in the Item sales tax group field for the billing milestone. The accountant can review and modify this value on the On-account transactions page. The system uses the value from the on-account transaction when creating a project invoice proposal line.

Financial dimensions of milestones

Set default financial dimensions for the fixed price billing milestone on Project contract lines. Go to Project contracts > Show default accounting. On the Contract lines tab, select price contract line, and then set the financial dimension values that you want to use as the default.

The project accountant can edit the sales tax and financial dimensions information on invoice milestones up until the Project invoice proposal is created.

Import from staging

To import the billed sales lines into the project invoice proposal, run the Import from staging table periodic process. If you didn't previously post any unbilled sales lines, the invoice lines don't populate in the invoice proposal.

Selective import from staging

Starting with version 10.0.47, the Feature management workspace includes a new preview feature called Project Operations selective import from staging. When you use this feature, project accountants can complete the import from staging process from the context of a selected invoice proposal. This functionality streamlines the ability to immediately create the invoice proposal for situations where you want to immediately complete the invoice instead of waiting for the periodic process scheduled run or for unrelated transactions to be processed.

Create project invoice proposals

You can review project invoice proposals in the Project management and accounting module by going to Project invoices > Project invoice proposals.

When you confirm the Proforma invoice in Dataverse, the system creates the Project invoice proposal header in Finance. For easier reconciliation, the system sets the Project invoice proposal number in Finance to the same number as the Proforma invoice ID in Dataverse. Because users don't necessarily confirm Proforma invoices in the same order they create them, the Project invoice proposal number sequence in Finance must allow for changes to lower and higher numbers. Configure number sequences by using the following steps:

1. In Finance, go to Organization Administration > Number sequences > Number sequences.

2. In the Area filter, select Projects.

3. In the Reference filter, select Invoice proposal.

4. Use the Company field to filter each legal entity with Project Operations Dataverse integration enabled.

5. Open Number Sequence details. On the General tab, set the following values:

   • Allow user changes: To a lower number = Yes
   • Allow user changes: To a higher number = Yes

The system adds Project invoice proposal lines by using the periodic process Import from staging table (Project management and accounting > Periodic > Project Operations integration > Import from staging table). You can run this process manually or by using a periodic schedule. The system doesn't add lines to the invoice proposal document until all the lines are ready to be invoiced. Time and material transactions are ready to be invoiced only when you post them by using the Project Operations Integration journal.

Format and print invoice proposals

The project accountant can customize a project invoice printout by using the Format invoice proposal page and print management capabilities.

Format invoice proposals

Use the Format invoice proposals page to group transactions for display in the customer project invoice.

1. On the Project invoice proposal page, select Print > Format invoice proposal.

2. Select New to create a new grouping for the project invoice printout.

3. In the Detail/Summary field, select options for this grouping:

   • Select Detail to print the transaction details of the customer invoice.
   • Select Summary to print the transaction summary of the customer invoice.

• Select the transaction lines to include in this section on the Available transactions tab and select Include transactions to move them to the Selected transactions tab.
• Select Move up and Move down to change the order of the sections.
• Select Print preview to preview formatted invoice.

Print management

Print management uses different report files to print, specify destinations, and customize footer text for the invoice. Set up print management at the module level, but you can override these settings for a specific customer, contract, or invoice proposal. To access this function on the Project invoice proposal page, select Print > Print management.

Print management setup is displayed as a tree view, where each node level displays the available documents to adjust. You can assign custom printouts at the module, customer, contract, or invoice proposal document level. To modify the original document printout, expand the desired node and select Original item. In the Report format field, select the report format to use for printing. You can use custom report formats by using the Business Document Management framework.

Defining the customer due date

The terms of payment determine the due date for when the customer needs to pay the invoice.

Starting with the 10.0.47 release, you can manually select a due date that overrides the terms of payment. This option is especially useful when the terms change throughout different phases of the project.

To use this feature, personalize the project invoice proposal header to include the Due date field and, optionally, the Terms of payment field from the Invoice proposal table and save the view.

• If you don't configure terms of payment for the funding source when opening the invoicing proposal, the due date defaults to today.
• If terms of payment are available, the due date shows the calculated date.
• In both options, you can manually set the due date to override the defaulted or calculated date.

After you select to post the invoice proposal, the Post invoice proposals dialog opens where you have one last chance to change the invoice date. Here you can set up a saved view that displays a read-only view of the due date. If you change the invoice data in this window, the invoice date recalculates the due date and removes any changes to the due date.

Using the due date doesn't change the invoice SSRS report printout for project invoices. If you include the Terms of payment field on your invoice, consider modifying your report design or creating an "Ad-hoc" or "Custom" terms label to print on your invoice to avoid having a mismatch on having terminology like "Net 15" with a due date that isn't reflecting those terms.

Post invoice proposals

After you review and edit the invoice, and you're satisfied with the invoice proposal lines, check the invoice totals and sales tax. In the Details group, select Totals and then select Post to post the invoice.

To view the invoice before posting, clear the Posting check box. The invoice displays Pro forma to signify it's a sample invoice. To print the invoice, select the Print invoice check box.

In addition to the Invoice proposal page, you can also post invoice proposals by running the periodic job, Post invoice proposals. To find this job, go to Project management and accounting > Periodic > Project invoices > Post invoice proposals.

This page shows all the invoice proposals that are ready for posting. You can schedule posting invoice proposals by selecting Batch. Set the Batch processing parameter to Yes and set the recurrence of batch processing by selecting Recurrence.

Enhanced proforma invoice summary for integrated deployments

In Dynamics 365 Project Operations integrated deployments, the proforma invoice summary in Dataverse surfaces customer-required invoice fields from Dynamics 365 Finance. This feature improves cross‑team visibility and enables project managers to address customer inquiries without relying on accounting teams.

Newly supported invoice details

When you post an invoice in Finance, the following fields synchronize and display in Dataverse:

• Customer invoice number
• Customer invoice date
• Project invoice status (new status: Posted)
• Invoice level tax amount

These enhancements provide end-to-end invoice traceability from proforma creation to posting to payment.

Enable this feature

To enable this feature, follow these steps:

1. In Finance, enable the dual-write map for Project Operations integration invoice proposal export entity (msdyn_customerinvoices) version 1.0.0.0.
2. In Project Operations, enable the feature flag Enhanced proforma invoice.