We wanted to spread the costs of our Annual Maintenance Contract for IT Support (a non-qty bearing part) into 12 months instead of to just one month. We have issued the PO for this service as 12mos., but payment is 100%, so there will only be 1 invoice from the Supplier and 1 payment from us.
My question is, will it be possible to receive this PO as post dated (i.e. Aug 6, 2020, Sep 6, 2020… Jun 6, 2021) without running into some issues down the line? I’m thinking, since we need to close the financials for 2020, what will happen to the items received in 2021? Is that going to cause problems in the finance?
Hi,
If I am not wrong, this nature of transaction is more related to recording expenses on a monthly basis in the GL book rather than the inventory transaction (monthly receipt).
Ideal case for Deferred Expense accounting (Amortization)
Thank you for the reply. I’ve suggested this to our Accountant, but he said that we cannot use this because we issue Purchase Order and receive the item, so Deferred Expense cannot be used in this instance. Does he have a valid point?
Hi Fred,
It sounds like a good case for deferred expense, as @prash172 mentioned. From what your accountant said, maybe they mean mechanically they’d prefer a PO. To use deferred expense, you’d have an invoice with no PO.
Another option would be to create the PO and enter an Advanced Billing invoice in AP Invoice Entry. That’ll allow you to pay the PO up front and then receive later. You’ll want to receive each month and then at the end of the contract, you process a final AP invoice. The final invoice ends up being $0 as the system will subtract the advanced payment.
I’m not sure what you mean by receiving the PO “as post dated.” Do you mean you want to process the receipt transactions for future months now? Or do you mean you want to be able to receive in the future months? If the latter, there would be no issues. If you want to receive it all now, I don’t see any issue other than those transactions sitting on the Received Not Invoiced report and sitting in your AP clearing account.
It really is an Accounting issue. They want to spread the cost out over 12 mo, but want to pay it all at once.
From a materials point of view, its like a pre-paid PO, Order a qty of 12, with 12 releases (one per month). Pre-pay the PO, then each months “receipt” would chip away at that “pre-payment”.
Hi,
You may check this option, this may be more suitable as you wanted to do monthly receipt, follow the below steps.
Book PO with 1 line and 12 releases
Book AP invoice as new unreceived lines (refer screen shot shown below)
Post AP Invoice
Book receipt every month.
Use the “Invoice / Receipt Match” to match the receipt and the AP invoice.
Menu Path:- Accounts Payable -> General Operations -> Invoice / Receipt Match
Thank you for your inputs and for confirming that there aren’t any issues if we receive items today in advanced dates (that’s what I meant with post dated receiving). Our Accountant thinks it is better to have these types of expenses with PO’s rather than treat them as Miscellaneous invoice, so I guess that’s how we’re going to move forward on this.
Apologies for the very late reply as I had been caught with other Epicor issues that required tracing and troubleshooting some transactions. I’m fairly new to this system, so everything I do seem to take sooo much time!
Anyway, thank you again so much for sharing your expertise with the community. I’ve had this shared with our Accountant so that he may consider using this in the future rather than as you say, receiving expenses monthly wise.
