Time-and-Materials Revenue — Weekly Billing
Recognizing weekly revenue under a T&M engagement where the firm bills hours at agreed rates.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable (T&M Invoice) | Asset (+) | 7,200.00 | - |
| Professional Fee Revenue (T&M) | Revenue (+) | - | 7,200.00 |
💡 Accountant's Note
Under a T&M contract, each hour worked is a satisfied performance obligation and revenue is recognized as hours are delivered. 40 hours × JOD 180/hr = JOD 7,200. Invoicing is triggered by the approved timesheet.
Practitioner & Systems Framework
💻 ERP Architecture
T&M revenue is the most operationally straightforward to recognize — revenue equals approved hours times rate, billed weekly or monthly. The practice management system must lock timesheets once approved and generate the billing file automatically. Rate escalation clauses (e.g., 5% annual rate increase) must be updated in the rate card at the contract anniversary date. For engagements with multiple fee earners at different rates, the billing calculation is the sum of (hours per fee earner × that fee earner's agreed rate). Ensure the ERP's invoicing module distinguishes between T&M revenue and fixed-fee revenue for segment reporting purposes.
⚠️ Audit Flags
(1) Approved timesheet requirement — revenue should only be recognized on client-approved timesheets, not self-approved internal submissions. Some T&M contracts require a client signature on the weekly timesheet — confirm this approval process is operating. (2) Rate cap testing — T&M contracts often have maximum fee caps. If cumulative billings approach the cap, the remaining capacity determines future billing. Billings above the cap without a formal change order are not recoverable. (3) Rate changes — if fee earners are promoted or rates are renegotiated mid-engagement, ensure the rate change is reflected from the correct effective date, not retrospectively.
📄 Required Documentation
Engagement letter (rate schedule, billing cycle, fee cap if any), client-approved timesheets, weekly invoices, cumulative billing tracker vs. fee cap, and rate card update confirmations.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.