Configure billing codes for free text invoices

  • 7 minutes

Public sector organizations can use billing classifications and billing codes to help manage free text invoices. This unit explains how to configure billing and test codes for free text invoices.

Billing codes define a specific line item charge, including definable rate calculations and fields; billing classifications organize free text invoice receivables. This allows the system to process documents according to billing classifications.

The Accounts receivable module in Finance also supports settlements in a pooled cash setup. You can set up posting definitions for invoice settlements to automatically generate Due-to and Due-from entries between different funds.

Billing classifications

Billing classifications are used to group similar free text invoices for processing and viewing.

For example, a transit agency might lease space in each transit station to small coffee shops and other vendors. By creating a billing classification for leases, the agency can automatically apply the same terms of payment and use the same sequence of collection letters for all leases. The agency can also view invoices for all the leases together, even if the leases don't share the same financial dimensions.

Billing classifications include the following information:

  • Billing classification code (up to 15 alphanumeric characters)
  • Description (up to 60 characters)
  • Terms of payment
  • Interest information
  • Number sequence for invoice number
  • Number sequence for credit notes
  • Number sequence for collection letters
  • Billing codes that can be assigned to invoices that use this billing classification

You can use billing classifications to control the settlement priority of free text invoices. A billing classification can include many billing codes, but each billing code can be assigned to only one billing classification.

When you select a billing classification on a free text invoice, only the billing codes that are listed on the billing classification are available for the invoice. Before you set up billing classifications, be sure that you have set up the terms of payment, interest codes, posting profiles, collection letter sequences, number sequences, and billing codes that you plan to use on the billing classifications.

Billing codes

Billing codes define a specific line item charge, including definable rate calculations and fields. They provide a set of default values for a free text invoice line for properties such as fee amounts, ledger accounts, and sales tax groups.

Public sector entities need to regularly bill constituents for the services provided. Often, the billing needs are broken down by department and further broken down into a type of charge that is repeatedly billed. Billing codes relieve you from the need to look up the details of a specific charge and how your organization accounts for the revenue, thus providing consistency and accuracy on invoice lines.

The following are some examples of billing codes:

  • Business license charges
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) charges
  • Former employees
  • Fines and inspection charges for the police and fire departments
  • Burglar alarm and fire alarm registration and false-alarm charges
  • Parks and recreation class charges
  • Over-the-counter charges for copies and maps

Billing codes provide a set of default billing values and rates for a defined type of service or charge. The values that you define for each billing code are automatically entered in the free text invoice line when the billing code is selected.

For example, a waste management department might bill certain customers for new containers. They would have a "New container" billing code that contains the billing information for these containers. When the department creates a free text invoice and selects the New container billing code on an invoice line, the default values from the billing code are entered automatically.

Billing codes include the following information:

  • Billing code (up to 10 alphanumeric characters)
  • Description (up to 60 characters; this will print on the invoice)
  • Effective date and expiration date - You can add date effectiveness to billing codes. When you select billing codes on free text invoice lines, the system automatically determines the default values for the line by using the billing code date record that corresponds to the invoice date.
  • Sales tax information
  • Interest information
  • Accounting distribution
  • Rate information - You can define and evaluate a rate expression with a billing code. When you use the billing code on a free text invoice line, the system evaluates the code's rate and provides a default amount for the line. You can write a rate script using the C# or Visual Basic programming language.
  • Project information (if enabled on the Accounts receivable parameters page)
  • Custom fields

Generally, the default values from the billing code can be changed on the free text invoice. However, you can set the billing code to allow or prevent changes to certain fields.

Billing codes can also be associated with posting definitions. When a billing code is used on an invoice line, the posting definition that is associated with the billing code is used for posting the transaction to the ledger.

Custom fields

You can create custom fields for billing codes by opening the Accounts receivable > Setup > Billing code custom fields page. The custom fields are used to collect data related to specific billing charges. For example, the animal control department for a city could use custom fields to record the type of animal and the date of its last rabies vaccination.

Because you assign custom fields to billing codes, you should create your custom fields before you create billing codes. Six types of custom fields exist, and you can set a default value for any one of them. The default values can be changed on the free text invoice.

  • Currency - Currency fields accept only numbers with two decimal places. You can specify the minimum and maximum values for the field.
  • Decimal - Decimal fields accept only decimal numbers with four decimal places. You can set minimum and maximum values for the field.
  • Text - Text fields can hold any kind of text, and any input entered into them will be interpreted as text. You can set a maximum field length for the field.
  • Integer - Integer fields accept only whole numbers. You can set minimum and maximum values for the field.
  • Boolean - Boolean fields allow yes/no selections.
  • Date - Date fields accept only dates. The date is stored as mm/dd/yyyy format.

Although you don't have to enable billing classifications, we recommend that you do.

Many of the public-sector capabilities in the Accounts receivable app are available only when billing classifications are enabled. After you have enabled billing classifications, however, the billing classification is a required field on free text invoices

You can enable billing classifications on the Accounts receivable parameters page. In the General section, on the Sales setup FastTab, select Use billing classifications.

Screenshot of the Accounts receivable parameters page with the Enable billing classifications option highlighted.

The pages where you create billing classifications and billing codes are available before you enable billing classifications. You'll want to set up all billing classifications and billing codes before you enable them.

After you have enabled billing classifications, every free text invoice must have a billing classification. 

If you plan to use billing classifications to determine the settlement priority of free text invoices, enable the Billing attribute on the Settlement priority page after you enable billing classifications.

Select the priority that determines how invoice lines will be settled. The following options are available:

  • None - The invoice lines will be paid in the order in which they appear on the invoice.
  • Billing code - The invoice lines will be paid in the order that is specified in the Billing classifications page
  • Proration - A part of each invoice line will be paid, based on the option that is selected in the Proration type field. This field is available only if the Mark lines on free text invoices and interest notes option is selected in the Accounts receivable parameters page.

When billing codes need to be updated, you don't need to create new billing codes. Instead, you can create multiple versions of the billing code, with effective and expiration dates for each version. On the effective date, the system will start using the updated version automatically.

You cannot assign the same billing code to more than one billing classification, but there's a way to get the results you need anyway. Consider the scenario where your organization uses a separate billing classification for each department. Three of the departments need a billing code for license agreements.