6 Step Process for Line Item Calculations

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Part of the process of calculating the total amount owed by a customer is calculating each line item on the invoice. Billing systems, such as Net Claims Now, can complete these calculations for you.

1. Line Item Calculations

The first step in the process is to take the base cost of each line item and apply any modifiers. Modifiers are any options chosen by the customer that add an additional cost to a product or service.

2. Line Item Discounts

Next, you take the amount from step one and subtract any discounts. Percentage discounts are subtracted first. Then you subtract any dollar amount discounts.

3. Order-Level Discounts

After you apply the line-item discounts, apply the order-level discounts. These are discounts that apply to the entire order and not just one specific product or service. For example, if you offer customers 10% off an entire job for paying cash, each line item on the invoice would have a 10% discount applied. You can input order-level discounts in Net Claims Now so that they are applied automatically.

4. Service Charges

Next, take the line item total from step three and add any applicable service charges. For example, if you charge a 5% service charge for disposing of hazardous materials in Orlando, FL, you would multiply the subtotal from step three by 5% and then add that amount to the line item.

5. Taxes

For this step, you need to look up the tax rate for each line item and then multiple it by the subtotal from step four and add the resulting amount. This gives you your total line item amount for each item on the invoice.

6. Order Total

The final step is adding all of the line items together to get the order total. The order total should separate the cost of goods, taxes, and service charges.

Manually calculating these amounts for every invoice could be time-consuming and introduce errors. Using Net Claims Now to automate this process allows you to bill more quickly and accurately.

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