Does Customer shipment do revenue accrual?

Hi
I know that when supplier Purchase Order is received, the system is doing Dr. WIP Material Cr Clearing Account from AP (I call this accrued liability) and AP invoice entry creates transaction Dr. Clearing Account from AP Cr. Payables Account

When Sales Order is shipped (Customer Shipment), the system is doing MFG-CUS transaction type Dr. COG Cr. WIP Material. And Shipment Invoice creates Dr. Receivables Account Cr. Sales Account.

I’m wondering if the system is doing accrual on revenue side, similar to AP, at customer shipment creating transaction Dr. AR Clearing Account Cr. Accrued Revenue Account or Sales Account and at invoice creating Dr. Receivable Cr. AR Clearing Account Notice: Epicor’s default AR Clearing Account does not function as expectation as it pulls COGS not SALES figures per Hierarchy document.

The reason doing this is because invoicing is not necessary happened after customer shipment and we cannot invoice customer before shipment.

There is a company level setting to allow for the accrual

When enabled, costs in WIP (or from Inventory if STK-CUS). go to this account, and the Invoicing does tran from Accrual Acct to the COS

Hi,

When you do a customer shipment, you should see a DR to your ‘AR Clearing’ account (we call it “Shipped Not Invoiced”) and a CR to your WIP accounts. Then when you invoice you should see a CR to you AR Clearing account, offset by a DR to your COGS accounts, and also a DR to your Account Receivables GL offset by a CR to your Revenue GL account.

For this to work, make sure you have the “Use A/R Clearing Accounting” checkbox on in your company configuration under ‘Modules’ > ‘Finance’ > ‘Accounts Receivable’ > ‘General’ tab. Also make sure you have a GL setup in GL Control Maintenance for the “Inventory, COS and WIP” type for the ‘AR Clearing’ context (see image below).

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I’m doing testing but I see no transaction in my environment, any idea which standard posting rule is used for these transactions?
Also in addition does this pull COGS amount and post to AR clearing? this is not exactly what I want, I want to accrue Sales Order amount not cost.

@JTBAQ Shipment debits COGS account/AR Clearing and .credits inventory/WIP Sales amount will be impacted only after the invoice is posted. There is no sales accrual.

this is useful in AP, but i have never in 17 years used or seen a need for AR Clearing. Once it is shipped it is invoiced, why do an accrual.

How can it be a Cost of Sales, before the sale is recognized?

Not all companies ship widgets. For some companies, the transfer of ownership doesn’t occur until the product is delivered or arrives at a freight forwarder for international shipments. From a GAAP standpoint, it’s not a sale until that occurs so you move that to an asset account until you get proof of delivery and then move it from that account to sales.

Other companies will ship the order on one day but the truck doesn’t take it until there’s a full load. It’s not a sale until it leaves the building. So Accounting would look at the Shipped Not Invoiced report and only invoice those orders with signed shipments.

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@Mark_Wonsil agree with you Mark. If the sales involve installation, it takes time as well. Recently I have to create a new AP Term for due from the goods receipt date instead of supplier’s invoice date which I had to refer RcvHead for the entered PO.

We have products that require commissioning and customer sign-off before we can bill.

Agreed. we are struggling on this and are doing manual journal entry on this.
This should be an enhancement in Epicor.

I lumped this into the INCOTERM/FOB Idea since this is the place that informs when the transfer of ownership occurs. You may want to comment on it that you have to do this manual entry.

I’m not familiar with Idea, it looks like another platform and need to setup a new account.

This thread explains all.

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