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Title: How are Invoice Amounts rounded?

Brief description:

This entry describes how amounts on the invoice are rounded based on bill rates and hours in timesheets, as well as how to correct or prevent rounding issues.

What’s covered in this document:

Overview

Unanet offers two methods of rounding transactions. Note that Unanet posts transactions at the most detailed cell level (for example, 0.75 hours recorded against a project on a timesheet for a given day).

One method rounds each individual transaction and then sums them, and is available when the Auto-Correct Invoice Rounding property is Off. 

A second method sums all individual unrounded transactions and then rounds the sum of the unrounded transactions. When the invoice is Completed, the system generates a Write-off to handle the penny differences. This option is available when the Auto-Correct invoice Rounding property is On. Many customers prefer this option since they expect that their invoices reflect math performed horizontally as well as vertically on an invoice, even if this does not represent the sum of the detail transactional postings.

The Auto-Correct Invoice Rounding property is available under Admin > Properties > General > Billing as in the screenshot below.


Example of rounding calculations for same hours/bill rates when the property is On and when it is Off

Let's take the example of an invoice of 18.25 hours at a bill rate of $173.33, where the 18.25 hours are made up of smaller increments of hours as in the screenshot below. 


 


Example 1, where only 1 row displays on the invoice, aggregating multiple values

Two examples below illustrate calculations based on the time charges above and upon whether the Auto-correct property is On or Off. 

Comparison of calculations when property is On to when it is Off

The first example below shows two screenshots:

The first screenshot shows how the system will round if there is only 1 row in the timesheet, based on groupings as selected in Admin Setup Invoice Format




Sample Unanet invoice showing these expected calculations when Auto-Correct Invoice Rounding is ON

With the Auto-correct Invoice Rounding property turned ON, we see that in Unanet the invoice amount is, as expected, $3,163.27.


 

Example 2, where 2 rows display on the invoice, aggregating multiple values into two categories

The second example below shows two screenshots:

Explanation of calculations by the system if there are different groupings on the invoice (in this case two rows grouping multiple timesheet transactions by 2 different labor categories.)

With the Auto-correct Invoice Rounding property turned ON, we see that in Unanet the invoice amount is, as expected, $3,163.28.




Sample Unanet invoice showing the expected calculations when Auto-Correct Invoice Rounding is ON



Your Decision about whether to turn the property on

Based on which rounding calculation makes more sense to you, you will determine to turn the Auto-Correct Invoice Rounding property on or off.

Note that if multiple invoice formats are employed for the same invoice you may have introduced an anomaly; by removing the rounding ‘anomaly’ at one level of detail you may have created one at another. This is true even when Auto-Correct Invoice Rounding is ON.

Most accountants, particularly in medium to larger size organizations, consider that posting transactions is a separate activity from invoicing to be correct. Further, they understand that why it can occur and that a few pennies difference due to rounding is immaterial. The solution is to do a write-off.

Also note that it is possible for rounding to go down as well as up, thus cancelling these fractions of a penny out. (although more will be up as 0.5 rounds up).  For example, $125.05 for 0.25 hours is $31.2625 which rounds to $31.26, ‘losing’ a quarter of a penny for each transaction.

When the Auto-Correct Invoice Rounding property is ON

What Billing Type does this apply to?

Currently, the Auto-Correct Invoice Rounding property will apply to projects of Billing Type "TM", or Time and Materials projects. 

When is the Write-off applied?

The Write-off will be applied upon completion of the invoice.

The invoice amount that displays on a Draft Invoice in edit mode is the same amount that will be posted when the Invoice is Completed.

Note that at the time of invoice completion, an adjustment will also be made to revenue such that billing and revenue match exactly.  These adjustments will be visible in the general ledger. 

How is Write off applied?

When the Invoice is Completed, the Write-off will be applied based on logic in this page:

Help Docs - Auto-Correct Rounding 

What happens with the Primary Invoice Format and Additional invoice formats?

For Invoices in the Draft status, Auto-Correct rounding will apply only to the invoice's primary invoice format Total.  Additional invoice formats displaying in edit mode (in the Draft status) will not have rounding corrections applied to the Total. Rounding corrections will apply to all invoice format Totals upon Completion of the invoice. All invoice formats will reflect the same Total amount upon Completion of the invoice (whereas prior to invoice Completion, different formats may have different Total amounts, varying by a few pennies.)

Help Docs - Auto-Correct Rounding 

Where will I see the rounded amount?

The rounded amount will be available in the Draft invoice display for primary invoice formats. It will display the alternative (uncorrected) rounding amount in any previews, lists, etc. For more information, consult this link: Help Docs - Auto-Correct Rounding 

Can I decide not to have the rounding apply, for just 1 invoice?

Yes, you can turn this off in the Draft Invoice even when the property is On by unchecking the Auto-Correct Rounding box as in this Invoice edit screen:

In my Draft invoice, the rounding isn't working.

If the property is turned on and the rounding is not working, consider that there are a few cases where the rounding will only apply upon Completion of the invoice. Those cases are listed in full on this page under the section "Auto-Correct Rounding"

Help Docs - Auto-Correct Rounding

More Grouping Examples - how Grouping can change rounding for the same transactions

The grouping you specify on your Invoice Format (show Labor Category, don't show Labor Category, show Person, don't show Person) can change the rounding even for the same transactions. See section above. This may occur in a couple of situations:

  1. If you change the Invoice Format when an Invoice is in the Draft status (the most current Invoice Format will apply). For example, if you were not showing Labor Categories and you edit the Invoice Format to start showing the Labor categories - the aggregation will change.
  2. If for a Project you have a Primary Invoice Format that aggregates one way and an Additional Invoice Format that aggregates another way. 


Examples of aggregating the same data differently, when Auto-correct Invoice Rounding is ON

Let's take the example of time charges as they display in a Project Time Details report, below:


When not displaying Labor Categories on the invoice, the invoice amount comes to $3,163.27 as below:


When instead displaying Labor Categories on the invoice, the amounts still tie horizontally and vertically, but since the grouping is now by labor category the total invoice amount is 2 pennies different.


When the Auto-Correct Invoice Rounding property is OFF

Description

Items are posted at the cell level and then added on the invoice so that posted revenue and billed amounts exactly match. The amount on the invoice is based on each increment of time charged in the timesheet (0.25 hrs, 0.6 hrs, etc.) multiplied by the bill rate and rounded, then summed.  This may be a different result from the reverse, if the hours are summed and then multiplied, then rounded.

Example:  An invoice may show 5359.47 (increments of time * bill rate, then rounded, then summed), when raw math is 5359.44 (64.9 * 82.58 which uses increments of time that are summed, then rounded).

Project Management reports allow you to slice and dice the data "on the fly", showing or not showing people/tasks/labor categories/paycodes.  These amounts will differ depending on what you choose to aggregate. Accounting reports, on the other hand, are in dollars and cents and only ever rounded initially when posted.

The numbers presented on an invoice reflect the detailed billable and earned amounts rounded to the nearest penny, and are calculated at the timesheet cell level when the timesheet was posted.

This approach is taken over recalculating billable values on the invoice itself for two reasons:

  • Billable amounts must exactly match recognized revenue amounts
  • Billed amounts must not be dependent on the invoice format used. Since Unanet allows multiple invoice formats to be presented for the same project & period, i.e. summary and detailed formats, with different levels of aggregation (for example by person, labor category, task, etc.), the amounts on each invoice format could be different for the same invoice number if recalculation was performed on the invoice itself. Because we aggregate from the detail posted values, the numbers will always be the same. A report which aggregates data and calculates values in real time may give different values to the detail-level reports, but the invoices will always be the same, no matter what format or level.

Unanet calculates earned and billable amounts prior to generating invoices. For detailed transactions such as timesheet cell entries where the billable amount is calculated to the nearest penny, it's possible the aggregated values of the timesheet data may display a result which looks incorrect. If this is bothersome, then we recommend you turn the Auto-correct Invoice Rounding property, as described in the section above.

Handling Rounding Differences

Preventing/Avoiding Rounding Differences (typically when Auto-Correct Invoice Rounding is OFF)

One way to avoid rounding differences is to revise the hourly bill rate that includes pennies such that the multiplication of the rate and their smallest time recording increment doesn’t resulted in fractions off a penny being rounded up or down.  For example, if 0.25 hours is the smallest time increment, then using a rate of $110.48 rather than $110.49 would eliminate the issue. If the time recording increment is whole hours then this penny rounding issue would be avoided too, but this may not be relevant to their situation.

Correcting/Addressing Rounding Differences (typically when Auto-Correct Invoice Rounding is OFF)

The option to write up and write down directly on the invoice allows the billing manager to make adjustments if needed to address any rounding issues caused by aggregating detailed transaction-level data. 

Another option is to take the invoice (preview of draft or completed), copy it to Excel via Ctrl-C, Ctrl-V, and then make the change in Excel.  This is the fastest/easiest way to get the data in a presentable form to the customer.  You can then create a separate invoice with an additional item in the amount of the difference that would never go to the customer (so that the reports would tie).

Example of invoiced amounts being equal or larger than aggregated calculated amount


In this simple example, six timesheet entries are created on a project for a single timesheet period, each with 0.5 hours duration. 
The bill rate for each item is $150.33/hour
















Labor CategoryDurationBill RateBill Amount


BobTask 1PM0.5 $  150.33 $       75.17


SueTask 1BA0.5 $  150.33 $       75.17


JohnTask 2BA0.5 $  150.33 $       75.17


BobTask 2PM0.5 $  150.33 $       75.17


SueTask 2BA0.5 $  150.33 $       75.17


BobTask 3BA0.5 $  150.33 $       75.17










When Unanet posts timesheet data, six transactions will be created each with a value of 0.5 * 150.33 or $75.17. 









When this data is presented on a Unanet invoice (or across multiple invoices), the total amount of these transactions will always equal 6 * $75.17, i.e. $451.02.









If recalculation was performed on the invoice you could get the following results, entirely based on invoice format.









Format 1:At the Project Level


Amount


3 hours @$150.33

Total: $     450.99










Format 2:At the Task Level


Amount


Task 11 hour


 $     150.33


Task 21.5 hours


 $     225.50


Task 30.5 hours


 $       75.17






Total: $     451.00










Format 3:At the Timesheet Cell Level

Amount


BobTask 1PM0.5 $  150.33 $       75.17


SueTask 1BA0.5 $  150.33 $       75.17


JohnTask 2BA0.5 $  150.33 $       75.17


BobTask 2PM0.5 $  150.33 $       75.17


SueTask 2BA0.5 $  150.33 $       75.17


BobTask 3BA0.5 $  150.33 $       75.17






Total: $     451.02

If the math doesn't tie, how do I correct the invoice?

Whether you have the Auto-Correct Invoice Rounding property turned ON or OFF, the way to correct an invoice is via a Write-Off.  When the property is turned On, the Write-off is generated automatically upon Completion of the invoice.  When the property is turned Off, you will need to create the Write-off manually.  Help Docs - Write-offs


Additional Information

Help Docs - Auto-Correct Invoice Rounding

Help Docs - Write-offs

KC - Quick Topic - Rounding differences and Reconciliation



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