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Business Central for professional services: engagement letter to paid invoice
- 1
Set up the project
Each engagement becomes a project with tasks that match how you quote: phases, deliverables or retainer months. Then the budget lines hold planned hours by resource and any fixed fees.
- 2
Record time and expenses
Staff enter time sheets weekly against project tasks. Next, a manager approves them. Approved hours then post to the project at cost and at the billing rate for that resource or role.
- 3
Bill the client
In Business Central for professional services, you pull billable planning lines onto a sales invoice. Time and materials work bills the hours and costs used. Fixed-fee work, by contrast, bills scheduled amounts or milestones regardless of hours.
- 4
Recognize revenue correctly
At month end, the WIP calculation compares cost and billing to date and posts accruals or deferrals. As a result, the income statement reflects work done rather than invoices raised.
- 5
Collect and review
Cash receipts close the invoices. Meanwhile, project statistics show budget against actual, so partners see which engagements ran over while there is still time to talk to the client.
Choosing a Business Central WIP method for professional services
Utilization and rates in Business Central for services firms
Every resource in Business Central carries a unit cost and one or more prices. Prices can vary by project, customer or work type. So an overtime hour or a senior-rate hour bills correctly without anyone overriding the line. Resource capacity and time sheets together show how many available hours each person spent on billable work.
The limitation, however, is presentation. Standard pages answer the question for one project or one resource at a time. For firm-wide utilization, realization and write-off trends, Power BI on top of posted project ledger entries works better. That combination gives partners a monthly view without an analyst rebuilding a spreadsheet every week.
Business Central or Dynamics 365 Project Operations?
Business Central with Projects
Project accounting, time sheets, billing and WIP inside the same system as the ledger, payables and payroll journal imports. It fits firms where project managers also handle finance tasks.
- ✓One system and one data model
- ✓Essentials license covers projects
- ✓Simpler setup and training
- ✓Resource planning by capacity
Dynamics 365 Project Operations
A full professional services automation product with quoting, a resource scheduling board, skills matching and a more detailed approvals process. It carries more licensing and more setup.
- ✓Quote to project to invoice flow
- ✓Schedule board with skills and roles
- ✓Richer expense management
- ✓Links to a separate finance back end
Business Central gaps to plan for in professional services
- ✓Expense reports with receipt capture from a phone are basic in standard Business Central. So firms often add an expense management app from AppSource.
- ✓Likewise, scheduling people by skill and availability across dozens of consultants stops at capacity figures. Staffing boards need Project Operations or an add-on.
- ✓Retainers that draw down against prepaid balances need careful setup with prepayments or deferrals and a clear rule for unused hours.
- ✓Payroll is not part of Business Central in the US. Instead, time data feeds your payroll provider through an export or an integration.
- ✓Client portals showing hours and budget used are not standard. Clients who expect that view get a scheduled report or a separate portal.
- ✓Proposals, engagement letters and conflict checks live outside Business Central, in a CRM or practice tool. They link to the project once you win the work.
Business Central professional services questions from owners
Can we bill some clients hourly and others on fixed fees?
Yes. You set the billing method per project line, so one project bills time and materials while another bills milestones. A single project can also mix them, for example a fixed design fee plus hourly change requests. You choose the WIP method per project to match.
Do our consultants need full Business Central licenses to enter time?
Microsoft offers a Team Member license that can read data and perform light tasks, and time sheet entry is among the uses Microsoft lists for it. License rules change from time to time, so we confirm the current terms with you before any purchase. Managers who approve and project managers who invoice usually need full users.
How do we see unbilled time at month end?
Project planning lines show what you used but have not invoiced, and the WIP calculation totals it by project. A saved report or Power BI view lists unbilled amounts by client and partner. That list tends to become the most-used page in the first month.
Can Business Central handle revenue recognition for multi-year contracts?
It can with a combination of project WIP methods and deferral templates for subscription-style fees. For complex contracts with multiple performance obligations, your auditors may want a documented policy and a dedicated revenue schedule. We design the setup with your accountant rather than guessing at the policy.
We use a separate CRM. Does that matter?
Not necessarily. Business Central integrates with Dynamics 365 Sales out of the box, and other CRMs connect through APIs or connectors. The key decision is which system owns the customer record, so nobody keeps names and billing addresses twice.
Talk to us about your project.
Tell us what you run today and what has to change. A senior consultant replies with a written next step.