Automatic monthly prepayments

Kinetic ERP
1

A number of other ERP systems (I know Sage do) have functionality to set up and automatically post monthly prepayments where you enter details such as the value, number of months and GL coding, etc and an automatic process will post the monthly adjustment to release the costs back to the P&L. I imagine the process would be similar as depreciation, almost creating a prepayment register. Does anyone do anything similar in Kinetic? I cannot see this functionality is available? Thanks :slight_smile:

2

Not an accountant, so I’m finding your post a little confusing. Are you talking about an actual transaction happening in the system like an invoice or just some movement between 2 accounts?

3

You’ll want to look at Deferred Expenses in AP Invoice Entry and the help documents. There are a few different things you’ll need to set up: Amortization schedules, GL controls, and the scheduled process to post the transactions, but Epicor can do this.

Edit to be more complete:
In AP Invoice Entry, you can mark an invoice line as “Deferred Expense”. When you do this, you need to select a pre-created Amortization Code which defines the prepaid asset account, monthly expense account, and length/method of the amortization schedule. Once you select this code, the Invoice will populate the amortization schedule where you can override it if needed.

After you post the invoice, there is a program called “Deferred Expense Recognition” where you can load pending monthly expenses, review, and post them. This process can be scheduled to happen automatically. There is also a report called “Deferred Expense Reconciliation” which should act as your subledger for your pre-paid asset account to ensure you are reducing the asset correctly as you charge the expenses to the P&L.

4

Hi, that’s great thank you I will look into that option. I think the issue for us may be that the invoices are all processed by an AP team and they may not know whether the invoice should be prepaid or not at the time of entering the invoice, but I will have a play and see if that will be suitable or if there is a way of marking as deferred expense after the invoice has been posted. Thank you

5

You can also use the Deferred Expense option in GL Journal Entry. If your AP Team won’t know that it’s a prepaid expense when entering the invoice, your accountant or controller could enter a journal after the fact and use the same Deferred Expense setup to generate the prepaid asset and monthly P&L expenses.

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6

Perfect, I will do some testing on this. Thank you!

7

The concept for Deferred Expenses is good, but, in my humble opinion, it is virtually impossible to use in real life. There is no register to manage transactions assigned to amortize and their status. This is especially difficult if the transaction is entered in in GL. Yes, the transaction will be included on the Reconciliation Report and will process monthly. However, there is no schedule or forecast for the GL transactions so you will quickly realize that using a spreadsheet to manage prepaid is easier and more efficient. Should manual JEs exist in that account then the Reconciliation Report becomes unmanageable. (You would have Manual JEs if an AP invoice was booked to an expense account that should have been deferred.)

I recently contacted Support to provide details on the Subledger that the documentation and KBs refer to and how to address reconciliation and reporting. I also wanted to know why the JE Detail Tracker, Amortization tab is empty for an amortized transaction. Here are some highlights:

  • There is no single table or “deferred flag” on GL transactions that identifies them as deferred after posting. The system determines deferred status based on:
    • How the transaction was created (deferred process vs. manual GL)
    • The existence of deferred expense schedules generated by the recognition process

From a system perspective:

  • There is no automatic cleanup or reset process for the Deferred Expense Reconciliation Report.
  • Transactions are considered reconciled only when both sides exist and match:
    • Deferred expense subledger data (created by the deferred process)
    • Corresponding GL postings

Because of this:

  • Manual GL journal entries that hit deferred expense accounts will always remain unreconciled in this report.
  • There are no fields that can be edited to “mark” a manual GL transaction as reconciled, since no deferred subledger record exists for it.

The only practical cleanup options are:

  • Reverse and recreate the transactions using the proper Deferred Expense process, or
  • Exclude or accept these items as permanent unreconciled entries (expected behavior), or
  • Perform data correction with consulting services where appropriate ← I’m a consultant and I have no idea what this means. What, exactly, can be done?

Summary from Support

  • The deferred expense “subledger” is process based, not table based.
  • Recognition details are stored and reported through Deferred Expense processing, not on the GL journal itself.
  • Manual GL entries cannot be flagged, linked, or reconciled as deferred expenses.
  • Unreconciled manual entries are expected and cannot be programmatically “cleaned up” without correcting how they were created.

I hope this is helpful. I also hold out hope that the process will be addressed. It is a valuable feature set for all accounting departments and automation wouldn’t be that hard.

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