Deferred Expense allows you to automatically release invoice expenses to P+L evenly over a number of future periods.
It reduces manual overhead of monthly imports and maintenance of automatic journals to process entries into P + L, allowing you to distribute each element of an invoice cost to P + L over a different number of period, so you can track expenses in suspense more easily using Open Items
If a cost is to be distributed you can set the control code to be used, to be an open item, and will create or update open items, as we create postings into it, to make tracking what is accrued and what is posted, easier.
Deferred Expense is set up in:
Accounts > Nominal Ledger > Ledger Parameters > Division Accounting Groups (DAG) > Purchase Ledger (Section) > Deferred Expense
This is where the suspense code is added, this nominal is where the invoice is posted to in the first instance, this is then deferred out of this code over time into the P + L.
This nominal holds the posting in the balance sheet until it is spread out to P + L.
Just inputting the code in the above, enables the function in Purchase Ledger when posting the Invoice details to a Nominal Code, this enables the Deferral field, which lets you pick the amount of periods (0 – 12) counting from the period you are working in,
0 = Current period
1 = Post only in next period
2 = Posting over multiple period
3, 4, 5, etc
You don’t need to post the whole invoice as a deferred expense, you can split it down into each of its lines, so it is split on a line by line basis, this allows for certain parts of the invoice to be deferred, and allows you to defer over different time frames.
Due to this, the invoice can also split across Multiple nominal codes.
If Deferral is set to 0, then posts directly to the P + L code, if a Deferral is set then it will post to the Suspense Nominal (DAG Above), it will then will post the amounts out into the P + L code that is set when posting the invoice.
Postings
The postings work as follow:
0 Period Expense Posting (Avoids Expense Control)
Credit Purchase Ledger Control
Debit Nominal (PL Invoice Screen)
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Posting To Expense Control
Credit Purchase Ledger Control
Debit Expense Control
Posting From Expense Control (Done Monthly)
Credit Expense Control
Debit Nominal (PL Invoice Screen)
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The postings are made in the background, but you can’t see them until the periods that they should go into are opened, all postings are created at the posting of the invoice, but don’t show.
All postings go to the date of the 1st for each period going forward.
If an Open Item code is used for the Deferred Expense nominal, then you can view the open items on the nominal code.
The notes field will which the posting number of the set so you can see how many of the postings set have been made so far, this will start with 0 for the initial balance onto the code then for each of the postings.
If viewing an open item code and set it to view via Financial Year, then you can see all the postings for the open item, even if they are in future periods that are not open yet, allowing you to see all the postings via the open item, even if they have not been made yet, allowing you to peak into the future periods.
- Can still pick up GRNI’s and then split the difference left afterwards.
- Open Item and Fixed Asset codes cannot be deferred, and as such default to 1 period.
- Rounding is taken care of in the last period
- Short codes is carried over to all the postings
- Expense Control is carried over to all the postings (The coding postings)