How to setup and invoice fixed fee projects in Zoho Projects
In Zoho Projects, you can run projects based on Time and Materials - where you invoice the actual hours and costs going into the project - or Fixed Fee. In a Fixed Fee project, it does not matter how much effort is spent completing the tasks, or how much material is consumed - the project is invoiced at a fixed, predetermined cost (example - buy a house off a plan, and the contract states it will cost $415.000 to build that house against specifications).
Here is how you set it up:
In the project settings, select Fixed Cost for Project under Billing Method. A field appears to enter the contracted billing value (note - this refers to the fixed cost to your customer, exclusive of taxes).
Once set up, you run the project as normal - you use the time sheets as normal - expenses, and bills - for the project manager, there is no material difference in handling a Fixed Fee project compared to a Time and Material project (other than that any budget overrun is not charged to the customer).
To generate an invoice, simply go into the Finance module of Projects, and Create a new invoice. By default, an invoice is created for the entire contract value. For projects with several staged payments, simply replace that value with the contracted stage payment. See example of a two milestone project with four invoices in the schedule:
Project fxed cost: $100,000
Ramp up invoice: 20% = $20,000
Milestone 1 complete: 40% = $40,000
Milestone 2 complete: 30% = $30,000
Acceptance: 10% = $10,000When creating a new invoice - the only option is to create a single line for the entire invoice, with a date range and project description. At the invoice stage, we can overwrite the description to reflect the payment stage.
Note that the invoice created will have the final amount of the fixed fee - we are going to overwrite that as well as the description.
The next invoice you create will have the remaining amount (Project Fixed Cost - Previous invoices) - in this example, the next invoice will default to $80,000 - which will be overwritten by $40,000 to reflect the 40% at Milestone 1. The last invoice will be exactly the amount that is remaining.
To run through the entire process, you can view this video:
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