This results when there is a combination of positive and negative WIP entries against a client. Depending on the degree of the differences, the fee allocations although mathematically correct, can look highly distorted.
Take the following example:
Start with one timesheet entry against a client for $1000 and then bill them $2000 without processing a write-up. This results in the client having a negative Net WIP balance of $1000.
We then add a new timesheet entry for $999.00. The client’s WIP now totals $–1.00.
We then send another bill to the client for $1000.00 again without doing a writeup or off to bring the transactions to nil. When the invoice is prorated across the timesheet entries, the effect is quite dramatic.
Billed amount is calculated by multiplying the Bill Amount ($1000.00) by the opening net WIP of the entry (-$1000.00) and dividing by the total Opening Net WIP (-$1.00)
Although the overall client balance is correct the individual entries have some unusual allocations against them. This is often highly evident when viewing a WIP aged analysis report if the dates of these entries are different.
What lessons can we take from this example:
An individual timesheet entry should be billed once and only once (i.e. write the WIP balance up or off at the time of billing).
If you wish to leave any WIP on the matter, identify the specific entries to leave unbilled and exclude them from the fee.
If you receive a warning about negative WIP when going into a fee batch, try to tidy these entries up in the next fee via 'Allocation Details screen', leaving them will only tend to make matters worse.