Overview
You can separate how revenue and costs are recognized on work order invoices. This allows costs to be recorded as materials are used, while revenue is recognized at the time of invoicing, improving accuracy and removing the need for manual $0 invoices.
Who uses this feature
Administrators, office employees, managers, accountants, and bookkeepers
Applies to all business types
Applies to all trades
Feature configuration
This feature is currently in Private Preview and available for specific accounts. It is subject to change.
Account configuration is required to use this feature. Please contact Technical Support for details.
How it works
Separating cost and revenue recognition ensures job or work order costs are recorded when materials are used and revenue is recorded only when invoiced.
By separating cost and revenue recognition, your WIP and over/under billing reports stay accurate, giving you a clear view of project performance.
Cost recognition
When materials or equipment are added to a work order, ServiceTitan creates a consumption journal entry. This entry debits your cost of goods sold or selected account and credits inventory or undeposited funds. Costs are recognized as items are used in the work order.
Revenue recognition
When the work order is invoiced or closed, ServiceTitan creates an invoice journal entry to record revenue. Revenue is recognized only when the invoice is issued.
Record costs and recognize revenue throughout the work order
Follow these steps to accurately record job or work order costs and recognize revenue.
Step 1: Create the work order
When you create a new work order, ServiceTitan automatically generates an invoice associated with it. This draft invoice serves as the foundation for recording costs and revenue throughout the work order lifecycle.
Step 2: Add materials or equipment
Add materials or equipment to the work order from the office or the field. Each item added triggers a consumption journal entry that records the cost on the On Hold date, which defaults to the date the item is added.
Note: The price of a material or equipment item does not affect the consumption journal entry. Consumption journals record only costs. However, the price impacts revenue, which is recorded later through the invoice journal entry. To exclude a price from the invoice, leave the Charge for material option unchecked.
(Optional) Step 3: Adjust the On Hold date
The On Hold date determines when the cost is recognized. You can edit this date before saving if materials were used earlier. If the selected date falls within a closed accounting period, ServiceTitan will prompt you to choose a valid date.
Step 4: Save work order updates
When you save the work order, ServiceTitan automatically creates the corresponding consumption journal entries for any added materials or equipment. These costs are reflected in your work-in-progress (WIP) reporting.
Step 5: Close out and invoice the work order
When the work order is complete, close it out and issue the invoice. ServiceTitan then creates an invoice journal entry to record revenue. Your WIP and over/under billing reports update automatically to reflect both recognized costs and billed revenue.
Step 6: Review financial reports
Use your WIP and financial dashboards to confirm that costs and revenue are recognized correctly. Costs appear as materials are used, and revenue appears when invoiced, ensuring accurate work order profitability tracking.