On each project, this is the sum of the current liabilities from each consultant. Further, this is calculated on a phase-by-phase basis.
Percent of Gross Fees Billed x Consultant Fees + Billed Pass-Thrus = PWP Liability
For each of your consultants, their phase-by-phase accrued liability is calculated. Then we subtract payouts you have made to them. This gives us the current PWP Liability.
This liability does not accrue when you receive a pay request; it accrues as you invoice your client. It is not an AP calculation; it is a pending liability calculation designed to keep you aware of dollars that need to be set aside for coming pay requests.
Example
Phase A Fee = $5000, and you have invoiced your client $2000.
Consultant fee for Phase A = $1000
PWP Liability = ($2000 ÷ $5000) * $1000 = $400
So, when you receive your $2000 from your client, $400 of that amount is earmarked for your consultant and should be paid out. If you also billed and collected on any pass-thrus, those funds should also be paid out.
If you have paid your consultant $200, your current liability is $400 - $200 = $200
However, if you have made a payout to your consultant for $600, then your liability is now negative; $400 - $600 = -$200.00. This means you have paid your consultant a greater percentage of their fee than you have invoiced your client for.
Once you invoice your client for enough of the gross contract fee, this negative liability will go away.