Split billing is a billing methodology in which billing is split by the hour or dollar amount.
Situations may arise when you would like to bill multiple clients working for the same project. An automated financial application would provide you with an easy Split Billing option. By using the Split billing rule, the projects can be split by hour or by a dollar amount. There are not limitations placed on the splitting; splits can add up to 100% or exceed 100%.
Splitting by Hour:
In this case, the project is split by the hour and then billed to clients in their own billing rate. For example, let's assume 10 hours of work is done on project A, which belongs to client 1. Project A has been split by hour to client 1 at 50% and Client 2 at 80%. Client 1 has a billing rate defined as $100 per hour. Client 2 has a billing rate of $200 per hour.
Therefore, for this example, the total billable amounts to Client 1 and Client 2 will be:
- 10 hours * $100 * 0.50 = $500 billable amount to Client 1
- 10 hours * $200 * 0.80 = $1,600 billable amount to Client 2
Splitting by Dollar Amount:Project split by dollar amount is billed to each client in the project's billing rate. Using a similar example to the previous section lets assume 10 hours of work is done on project A that belongs to Client 1. Project A has been split by amount to Client 1 at 50% and Client 2 at 80%. Project A has a billing rate defined as $100 per hour. Client 2 has a billing rate of $200 per hour (in this case, since the project's billing amount is being split, Client 2's billing rate is ignored and not in effect). Therefore, for this example, the total billable amounts to Client 1 and Client 2 will be:
Total billable amount for Project A is 10 x 100 = $1000
- $1000 x 0.50 = $500 billable amount to Client 1
- $1000 x 0.80 = $800 billable amount to Client 2
Area of Application
Professional Service Billing
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