Fees in MyCorbu

​A description of how Fees and Invoices might work.

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​I have evolved in my thinking about basic fee types from eight to four, and now to just two basic fee types. Those two are hourly rate fees and lump sum fees. The four that I thought were the truly unique types are in bold in the following list. I now see hourly rate fees and lump sum fees as the two fundamental types that bookkeeping needs to address. The other types are primarily contractural ways of describing how the fee is determined. But I am building a bookkeeping app, not a contract management app.

HOURLY RATE FEES
Estimated hourly rate fee without a maximum ::bold::
Estimated hourly rate fee with a maximum ::bold::
Hourly rate for type of work
Hourly rate for role performed

LUMP SUM FEES
Lump sum fee with lump sum phases ::bold::
Lump sum fee with percentage phases ::bold::
Simple lump sum
Fee as a percentage of construction cost
Unit cost fee

Lump sum fee with percentage phases and the fee as a percentage of construction cost are basically the same thing. The latter ties the fee directly to construction cost for contractual reasons, and so the ‘lump sum’ may change.
The unit cost fee is very similar to the fee as a percentage of construction cost because you tie the fee to a calculated number (say, dollars per square foot). 
From the standpoint of contracts you have at least eight different ways to determine the fee. From the standpoint of bookkeeping there are just two types of fee, hourly rate fees and lump sum fees. This realization came to me while trying to devise ways of storing the key data of what I thought were the four fundamental fee types. 

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​Here are two previous posts where I was feeling my way into this subject.
https://www.architekwiki.com/wiki/architectural-fee-types
https://www.architekwiki.com/wiki/architectural-fee-types-in-mycorbu

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​​As I continue to feel my way into the topic of ‘Fees Bookkeeping’ there seems to be four areas where there needs to be a solution. Two of them concern the fee itself and the other two concern the invoices that request payment of the fee.

1. Things you want to document about fees in your bookkeeping system
2. Things you want your bookkeeping system to report to you about fees
3. Things you want to document about invoices in your bookkeeping system
4. Things you want your bookkeeping system to report about invoices

If I can get these four areas to work, I think I will have a good solution for MyCorbu. These four areas actually describe the form and table views that will be needed. Let’s look at each one in more detail.


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FEES
Your fee information drives the income side of your profitability, but you cannot add your fees as income transactions until they  are earned. So fees tell you about potential, rather than actual, results.


Things you want to document about fees in your bookkeeping system.
When you add a new project to your backlog of work, what are the things about its fee that you want to document?

1. The amount of the fee
2. The type of fee
3. The breakdown of the fee
4. The expenses that are included, usually consultants 
5. The markup on Reimbursable Expenses 
6. The hourly rates that will be used
7. The condition of the fee, estimated or fixed (maximum)

Things you want your bookkeeping system to report to you about fees.
Periodically you will want to review your status concerning fees to determine the amount that you can invoice for work that you have completed. This same report could show you the total remaining fee to bill, which would be a rough equivalent to the size of your work backlog.

The things you will want your bookkeeping system to report to you about fees.

1. The percentage complete of each active Project-Phase
2. The value of the work that has been completed for each active Project-Phase
3. The amount that has been invoiced previously for each active Project-Phase
4. The value of the work that has been completed for each active Project-Phase since the last invoice
5. The amount remaining of the fee for each active Project-Phase 
6. The total of each of the above values /amounts for all the active Project-Phases

INVOICES
Determining your profitability is possible as a result of the invoice process because each invoice that you create also creates an income transaction in bookkeeping to compare to the expenses incurred.

Things you want to document about invoices in your bookkeeping system.
When you create a new invoice, what are the things that you want to document?

1. The ID designation for this invoice
2. The invoice date
3. The Project Name
4. The Client Organization
5. The timeframe to which the invoice refers
6. The amount of the fee due per Project-Phase 
7. The amount of any expenses that are due for this timeframe
8. The total amount due for this invoice

From a client relationship viewpoint there may be other things that you feel should be included in the invoice. From a bookkeeping viewpoint this is what matters. 

Things you want your bookkeeping system to report about invoices.
When you review past invoices for a project, what are the things that you want to be shown?

1. The ID designation for this invoice
2. The invoice date
3. The total amount due
4. Days unpaid
5. The amount of payment received
6. The unpaid amount 
7. Details of the actual invoice (a pdf and/or the bookkeeping data)

I had been planning to have a single Fees/Invoices database, but it has become clear that Invoices contain a different kind of data and will need their own database. 


Now the fun part begins - translating this concept into databases, forms and tables to actually implement the plan.

You can follow along by logging into the MyCorbu Test Drive account periodically and visiting the Bookkeeping >> Fees and Bookkeeping >> Invoices pages to see what it looks like and try it out for yourself.

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