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Item requirements for project contracts with multiple funding sources

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Applies To: Project Operations for stocked/production based scenarios

Some contractual agreements for project-based deliverables might require multiple funding sources. This article explains how to select and configure the desired funding sources when multiple sources are required for a project or project contract.

Terminology

  • Funding source – The entity that funds the project contract work. This entity can be an internal organization or an external invoice account (customer or grant).
  • Project customer – The entity that the project work is delivered to.
  • Invoice account – The external entity that pays for the project work.

Example

Contoso has won an equipment renewal contract with two of its customers: Adatum US and Adatum Corporate. The contract includes hardware and installation services that will be delivered to Adatum US (the project customer). The hardware will be financed by Adatum Corporate (invoice account 1), and the installation work will be financed by Adatum US (invoice account 2).

Set up invoice account defaulting rules for item requirements

Prerequisites

  • Microsoft Dynamics 365 Finance version 10.0.27 or later is required to use item requirements that have multiple invoice accounts.
  • Your system administrator must enable the Allow Item requirements with multiple funding sources for Project Operations stocked/production-based scenarios feature in the Feature management workspace.

Set up the invoice account defaulting rules

To set up the default rules for the invoice account, follow these steps.

  1. Go to Project management and accounting > Setup > Project management and accounting parameters.

  2. On the General tab, in the Sales orders and Item requirements section, set the Allow for projects with multiple funding sources option to Yes.

  3. In the Default customer field, specify where the project delivery customer on the item requirement comes from by default:

    • From funding source – The default project delivery customer comes from the funding source. If multiple funding sources are associated with the project contract, the first funding source in the list will be used.
    • From project – The default project delivery customer comes from the customer that is selected in the Project record account field.

  4. Optional: Set or change the default invoice account on project records:

    1. Go to Project management and accounting > Projects > All projects, and open the project record details.
    2. On the General tab, set or update the Default invoice account field. The account that you specify will be used as the default invoice account for new item requirements that are created for the project. If you leave the field blank, the invoice account of the first project contract funding source will be used by default. However, users will be able to change the account when they save the record.

Select the invoice account to use when you create an item requirement

To select the invoice account to use when you create an item requirement, follow these steps.

  1. Go to Project management and accounting > Projects > All projects, and select the project record.

  2. On the Plan tab, select Item requirements.

  3. Create a new item requirement record.

    • By default, the Invoice account field in the record is set to the invoice account that is set for the project. You can change the value of the Invoice account field and then save the record. After the record is saved, you can no longer update the Invoice account value. If you must update the Invoice account value for the item requirement, delete the existing item requirement, and then create a new one that has the desired value.
    • By default, the Customer field for the item requirement is set based on the Default customer value that is set on the Project management and accounting parameters page.

    When the item requirement record is saved, the system associates it with the Item requirement sales order header record. If no open sales order header has the selected invoice account, the system will create one and associate the item requirement line with it.

Note

Item requirements are always fully invoiced to the invoice account that is set in the record. The system doesn't currently support funding allocation rules that have item requirements, and it won't split the posting based on the setup of funding allocation rules.

Create an item requirement from an item forecast record

To create an item requirement from an item forecast record, follow these steps.

  1. Go to Project management and accounting > Projects > All projects and select the project record.

  2. On the Plan tab, select Item forecasts.

  3. Create a new item forecast record.

  4. Optional: On the Project tab, in the Funding source field, select the desired invoice account.

  5. Select Create item requirement, and confirm the message that you receive.

    Note

    The system copies the Funding source value from the item forecast record to the newly created item requirement record.

Default invoice account when the system automatically creates an item requirement from a purchase order line

If the Create item requirement option is set to Yes on the Project management and accounting parameters page, the system automatically creates an item requirement when a new project purchase order line is saved. By default, the Invoice account and Item requirement fields are set to the value of the Default invoice account field in the project record. The system doesn't currently support updating or changing the invoice account for records of this type.