During our month end activities if there are any AP invoices from the prior month that have not been approved, our AP team enters a reversing manual journal to accrue for the expenses in the correct period.
Our budget owners then ask for monthly spend reports for the accounts that they own and would like to pivot/analyze by vendor. This is easy to do for the system generated journals (misc AP invoices, PO receipts) but we have to include the manual journals in order for the report to tie to the GL.
Has anyone else run into this requirement from their users? Is there a better way to handle AP accruals than what we are currently doing?
They do enter one line per invoice. Right now they have been typing the vendor name and invoice number in the description field on the journal line. That is helpful, but it still requires someone to manually go through the monthly spending reports and actually populate the data into the relevant columns for vendor and invoice number.
A UD field to hold the invoice num would be best. With that you could fetch the vewndor info, in dig down into related docs (the packer slip, PO, etc…) And even check the JE line against the current status of the AP Invoice.
Ideally it would be connected, such that only unapproved invoices could be entered (or searched for).
That’s what I was afraid of.There are already fields for vendor number and invoice number on the journal detail table that get populated for system journals. I was hoping to not have to create more, but it sounds like that’s what we would have to do.
I would definitley not use those existing fields. Like you said, they are used by processes (besides JE), that reference AP Invoicing.
And it occurred to me that you’d need to store the AP InvNum and the VendorNum (as AP invoice nums aren’t unique). VendorID would be easier as it’s the one everyone sees, but they can be changed later, thus breaking (or worse misdirecting) the links between the JE and the invoice.
You may wish to consider using LOGGED AP INVOICES.
These go through an approval process AND keep the $$ in a separate GL Account
Once APPROVED the $$ transfer to OPEN AP …
from the epicor help
Use Logged AP Invoice Entry to record and post invoices to suspense accounts until they are approved and you are ready to pay them. You can still provide information to your accounting system about accounts payable (AP) invoices that remain on hold.
First of all, I have to agree with @amaragni, logged invoices would be best.
Next when you say “accrue the expenses in the correct period”, what do you mean by that?
Are you using the apply date on the transactions to get them into the proper period?
Which manual journals are you referring to?
As for AP Accruals, the PO receipts go to the AP Accrual account (Received / Not Invoiced). Do you have other accruals?
Thanks for the Logged AP Invoices idea. I’ll take a look and see how that would fit in. I’m not sure it would help if they are posted to a suspense account. We need to accrue the expense to the actual expense account that the invoice should be coded to. The budget manager is responsible for a set of Natural-Department-Location account combinations, so if the logged invoice is in a generic suspense account, then they would not see it in their filtered report.
As for the follow up questions:
It’s easier to answer this with an example:
Suppose we rented a piece of equipment for the entire month of August.
On 9/1 the vendor sends us an invoice for the August charges.
That invoice starts the approval process but is not approved by our month end deadline (9/5).
On 9/5, the AP team enters a GJ debiting the rental expense account that the pending invoice should be posted to with Apply Date = 8/31 that reverses on 9/1.
We close the August fiscal period.
The invoice is finally approved on 9/10. Since August is closed now, AP puts an apply date of 9/1 on the invoice and posts it.
Now I run a GL transaction export for the renal account in August and pivot on the vendor number field. The GJ will show up with a blank vendor number so someone must go to that record and fill it in manually.
We enter a GJ debiting the relevant expense account and crediting an AP Accrual account.
Yep, we don’t accrue for PO invoices that have been received. We only accrue miscellaneous invoices or PO invoices where the receipt has not been completed. Many of our POs are not for physical goods (rental equipment and other services) so the “receipt” sometimes takes just as long as the approval of the invoice itself because someone at our facilities reviews the invoice charges in detail and then receives the dollar amount if they agree with the charges.
Looking at the example, I don’t see a flaw in the logic. A am not sure a logged invoice will not help you in this manner. I would examine the internal process to see if it can be sped up.
My only concern would be mixing the AP Accrual account. I would have a separate AP Accrual for the RNI and one for the Manual process. This will allow for easier reconciliation of the accounts. The RNI report should balance to the RNI AP
Accrual and you can balance the Manual portion to the manual AP Accrual account.
Any financial statements could roll up the two accounts while the trial balance would have to separate balances.