How Time and Materials Billing Works
The process begins with an agreement defining billable labor rates, material charges, expense reimbursement rules, and any applicable markups. Employees record their hours against the relevant job, while project teams capture materials used and approved expenses. Accounting staff then review these records, apply the agreed pricing rules, and prepare customer invoices.
For example, assume a contractor records 24 labor hours at $85 per hour and uses materials costing $1,200. If the contract applies a 15% markup to materials, the invoice calculation is:
Labor charges: 24 × $85 = $2,040
Materials with markup: $1,200 × 1.15 = $1,380
Total before taxes and other charges: $2,040 + $1,380 = $3,420
This worked example shows why accurate time records and material costs matter. Missing hours can reduce billable revenue, while incorrect material rates or markups can affect customer invoices and reported project profitability.
Managing Job Costs and Billable Records
Effective Sage 100 billing depends on consistent job identification and reliable supporting records. Businesses should assign labor, materials, subcontractor charges, and approved expenses to the correct project or job. The finance team can then compare actual costs with billings and evaluate whether the agreed rates cover labor costs, overhead allocations, and expected margins.
Customer Time Tracking describes the practice of recording time spent on customer work so billable hours can be reviewed, approved, and connected to invoices. Time And Materials Billing provides the broader billing framework, combining labor and resource usage with contractual rates. Time And Billing Software can support this process by organizing time entries, billing rules, approvals, and invoice preparation within a consistent workflow.
Businesses should confirm which job-costing and billing functions are available in their specific Sage 100 installation. Where time entry or project billing is managed in another application, the process should define how approved records reach the accounting system and how changes are reconciled.
Invoice Preparation, Tax, and Financial Controls
Before issuing an invoice, billing staff should verify approved time entries, material quantities, contractual rates, expense eligibility, and previous billings. Invoice lines should be traceable to job records and supporting documentation. These checks help prevent omitted charges, duplicate billing, and disagreements over the work performed.
Sales tax must be evaluated separately from the underlying labor and material calculations. Taxability can vary by jurisdiction, service type, customer status, and applicable exemptions. Correctly applying sales tax requires validating the relevant rules and documenting the treatment used for each transaction. Businesses operating across jurisdictions should review sales tax requirements and confirm that their invoicing configuration reflects the applicable obligations.
For invoice capture, extraction, validation, matching, general ledger coding, and approval workflows, Invoice Software 2025: AI-Ready AP & Billing Guide offers an educational comparison of invoice-processing technologies and their capabilities. These processes can complement project billing by improving the consistency of supporting financial records.
Connecting Billing to Cash Collection
Creating an accurate invoice is only one stage of the revenue cycle. Once a time-and-materials invoice is issued, accounts receivable teams must monitor its due date, respond to customer questions, and record payments against the correct open items. AR Automation Software can support invoice follow-ups and payment matching, helping businesses reduce manual effort and improve visibility into outstanding receivables.
The collections process focuses on prioritizing overdue accounts, coordinating customer reminders, and tracking promised payment dates. Separately, cash application matches incoming receipts and remittance information to the corresponding invoices so that collected balances can be cleared accurately. These activities help finance teams distinguish completed billing from actual cash received and identify issues affecting working capital.
The Hyperbots Platform supports AI-driven finance and accounting workflows, including document processing and ERP-connected activities. Its integrations with leading ERP systems can help exchange relevant financial information across applications, subject to the supported connector and implementation configuration.
Coordinating Sales, Procurement, and Billing
Time-and-materials projects often require coordination between the sales agreement, project delivery, purchasing, and invoicing. The educational guide Sync Sales to Cash explores how CRM and invoicing systems can connect sales information with billing activities, helping businesses maintain continuity from commercial agreement to customer payment.
When a job requires purchased supplies or subcontracted services, a purchase order can document the approved requirement, supplier, quantity, and agreed price. Comparing the purchase order with receipts and supplier invoices helps verify project costs before those costs are allocated or billed according to the customer contract.
These connected workflows give finance teams a clearer view of the relationship between quoted work, actual resource consumption, customer invoices, and cash receipts. Consistent job references and documented approval rules are especially useful when multiple departments contribute to the same project.
Best Practices for Accurate Billing
- Define labor rates, material markups, reimbursable expenses, and billing terms before work begins.
- Require employees to record time against the correct job and billing period.
- Reconcile material usage and subcontractor costs with supporting purchasing and receiving records.
- Review billable entries and customer contract terms before generating invoices.
- Track billed amounts, unbilled work, overdue invoices, and collected cash separately.
- Reconcile project cost records with the general ledger and investigate material differences promptly.
Summary
Sage 100 Time and Materials Billing helps project-based businesses charge customers for actual labor, materials, and eligible expenses using agreed contractual rates. Accurate time capture, job-cost allocation, invoice validation, and tax review support reliable billing and financial reporting. By connecting project records with accounts receivable and cash collection, businesses can monitor profitability, improve billing completeness, and make better-informed financial decisions.