Ideas for Acumatica

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Recognize deferred expenses based on consumption from purchase order

Dear partners and customers,

We need your feedback on whether this idea makes sense to you, and whether you are aware of a real business need to have this process supported in the system. Your input helps us prioritizing requests in the backlog. Thank you.


Situation:

The company makes a purchase order (PO) for services for few months in advance, and needs to defer the expenses and recognize them as the services are actually consumed.

General Assumptions:

1) Services are non-stock items in the system.

2) Consumption is tracked by means of PO receipts.

 


Scenario 1:

The company places a PO for services to be delivered in portions over the next few months, and the company needs to defer the expenses and recognize them upon actual consumption from the PO. At the end of the process, the company receives the AP bill for all services delivered by PO.

Assumptions:

1) AP bill is created after the PO receipt.

2) Deferred schedules support the Inventory Receipt document type.

The process should look as follows (not in Acumatica yet):

1. The user places the PO for services, e.g. 100 hours in the amount of $1000.

2. The user enters a PO receipt for the consumed quantity, e.g. 30 hours, with a deferred code.

3. On release of PO receipt (inventory receipt), the system generates the GL entry:

Accrued Purchases (L), Cr $300

Deferred Expenses (A), Dr $300

And generates the deferred schedule to recognize the received portion as of PO receipt date.

4. The user runs expense recognition in the Deferred Revenue module and the system makes the GL transaction:

Deferred Expenses (A), Cr $300

Service Expenses (E), Dr $300

5. The user enters the AP bill for the PO receipt (no deferred code is needed). On release of AP bill, the system generates the GL transaction:

Accounts Payable (L), Cr $300

Accrued Purchases (L), Dr $300

6. If the user made a prepayment for the PO at step 1, the user can apply the prepayment to the AP bill.


Scenario 2:

The company places a PO for services and receives an AP bill to pay for them in advance before any of services are delivered. By the PO, the services are delivered in portions over the next few months, and the company needs to defer the expenses and recognize them upon actual consumption from the PO.

Assumptions:

1) AP bill is created before the PO receipt. PO receipt can be linked back to a released AP bill.

2) The consumption is tracked by means of PO receipts. There could be two options - consumption by quantity or by amount of the PO receipt.

3) New deferred expense recognition method "By PO receipt" should be implemented in the system (by quantity/amount respectively).

The process should look as follows (not in Acumatica yet):

1. The user places the PO for services, e.g. 100 hours in the amount of $1000.

2. The user enters the AP bill for the PO with the deferred code.

On release of AP bill, the system generates the following GL entries:

Accounts Payable (L), Cr $1000

Deferred Expenses (A), Dr $1000

3. The user enters a PO receipt for the consumed quantity, e.g. 30 hours, and links it to the AP bill.

4. The user releases the PO receipt, and the system generates a deferred schedule to recognize the received portion of 300 hours as of the PO receipt date.

5. The user runs expense recognition in the Deferred Revenue module and the system makes the GL transaction:

Deferred Expenses (A), Cr $300

Service Expenses (E), Dr $300

In the next month, the user processes the next portion as PO receipt, etc.


Scenario 3:

The user processes a PO receipt for services paid for 3, 6, or 12 months in advance (subscription billing).

On release of PO receipt, the system creates a GL entry to the Deferred Expenses account, for which the deferred schedules are created to later recognize the received services evenly for the respective N months.

Regular AP bill is processed to clear the accrued expenses account.


  • Ekaterina (Kate) Stepalina (Product Manager Project)
  • Jul 18 2017
  • Future consideration
  • Attach files
  • Twana Mott commented
    11 Sep 07:53

    Thank you for looking into this Vladimir, we still have quite a few use-cases where this is gating us (png to ico). Being able to output an item catalog in an excel format will be invaluable to my company.

  • Gabriel Michaud commented
    October 16, 2017 10:16

    Hi Linda,

    At this point of time we are only contemplating this functionality and its unknown if and when this feature would be added to the product. If your customer or prospect needs this type of functionality in a committed time line, then its best they either consider customization, or you can contact your partner account manager to discuss options.


    Acumatica

  • Linda Bower commented
    October 12, 2017 08:31

    Hi

    Does this mean that this functionality may be added without our client having to pay for it? If enough people respond …..

    Kind Regards

  • Ekaterina (Kate) Stepalina (Product Manager Project) commented
    October 11, 2017 13:16

    Michael, Sergey,

     

    Thank you for feedback.

  • Michael Glen commented
    August 15, 2017 14:17

    Both examples make sense and would be useful.  Seems like it could be a nice simple way to track contract purchases over time.  Could work nicely for EPC or O&M contracts if multiple progress payments were possible.

  • Sergey Marenich commented
    July 20, 2017 08:04

    That idea is required for customer in South Africa. They even creation a customization for it

    Case 057745 - Do deferred expenses on PO Receipt level

  • and 5 more