Workflow: Setting Up and Using Vendor Payables

AMS360's Vendor Payables feature set provides your agency with tools such as the following:

  • The ability to track vendor invoices by number
  • Vendor Invoice Templates, which minimize your invoice data entry time
  • Cross-divisional accounting, which allows for expense splits across multiple agency divisions
  • General Ledger postings based on the incurred Vendor Invoice Date and Pay Amount (applies only to agencies with accrual-basis vendor accounting, as entered in Agency Setup > Vendor Payables)
  • Cash management reporting without general ledger accrual postings (applies only to agencies with cash-basis accounting, as entered in Agency Setup > Vendor Payables)

You must decide your Vendor Accounting Basis prior to posting any Vendor Invoices. Once the first Vendor Invoice is posted, this selection cannot be changed. See the following section: Before You Begin > Step 1: Decide on Accounting Basis.

Vendor Payables options for your agency are in Agency Setup > Vendor Payables. Before you begin using Vendor Payables, you must decide whether your Vendor Accounting Basis is cash or accrual.

You must decide your Vendor Accounting Basis prior to posting any Vendor Invoices. Once the first Vendor Invoice is posted, this selection cannot be changed.

  • If your agency accounting basis in Administration Center > Agency Setup > Accounting Options is set to Accrual, then you can set the Vendor Accounting Basis to Accrual or Cash.
  • If the agency accounting basis in Accounting Options is set to Cash, then the vendor accounting basis must be Cash.

The following table includes considerations to use in making your decision.

Group/Field

What is this?

Accrual

The expense for a Vendor Invoice posts with the Vendor Invoice Date you enter on the New Vendor Invoice data entry form.

Posting appears in the fiscal period that includes the Vendor Invoice Date.

When a Vendor Invoice posts in accrual-based accounting, a liability is created to GL# 21350 Accrued Vendor Payables, with a corresponding posting to the GL account(s) specified for the invoice.

Posting the invoice through Pay Vendors clears the liability and creates the check payment.

 

When you post a Vendor Invoice with a date in a prior period, you may need to reprint certain month-end reports that were run before the invoice was posted.

Cash

Default selection. The expense for a Vendor Invoice posts with the date the check posts to the general ledger.

Expenses for vendor invoices posted on a Cash basis only appear in the general ledger once the check is created through the Pay Vendors process. The Check Date is the date used for the general ledger posting date, whereas the Vendor Invoice Date is informational only.

You can gather the information for your Vendor Payables setup in one of two ways:

  1. Look up all of your expenses/vendor payables for a month. Enter on an Excel® spreadsheet, or manually write down, all of the expense allocations made to your business units (divisions, branches, departments and groups). Next, enter the type of allocation (Percent, #of Sq Feet, # of Employees) that you make for different vendors (e.g., telephone expenses might be allocated by # of employees per business unit, whereas lease payments may be allocated by # of Sq Feet per business unit). Finally, write down the general ledger number(s) to which you allocate these expenses.

    Use the spreadsheet to setup all of your expense allocations in the Business Unit Allocations data entry form."> In the system, set up the vendor default GL #'s in Vendor Setup, create your Vendor Invoice Templates, and finally begin entering the Vendor Invoices.
  2. Decide what month you want to start entering your expenses in Vendor Payables. When you receive a bill from a vendor, setup its Business Unit Allocation, enter the vendor's default GL # in Vendor Setup, create a Vendor Invoice Template, and enter the Vendor Invoice.

    Soon, you will find that Business Unit Allocations previously set up for other vendors work for the current vendor that you are setting up; these allocations could also be used in the Vendor Invoice Template for this vendor. The setup work becomes less and less, until you are only occasionally setting up a Business Unit Allocation and/or Vendor Invoice Template for a new vendor.

Before creating a Vendor Invoice Template, you must first enter a default general ledger account number in the Vendor Setup form. Use these steps:

  1. Open the Vendor data entry form to either edit an existing vendor, or to add a new vendor.
  2. From the GL Number list, choose the general ledger account number you want defaulted to Checks, Receipts, and Journal Entries for this vendor.

    If you need to create a new general ledger account, click GL Chart of Accounts Setup. This opens the Chart of Accounts form where you can add the new account.

    Save and Close the Chart of Accounts form to return to the Vendor setup and then choose the new account number from the GL Number list.
  3. When you are finished with Vendor setup, click Save or Save and Close.
  1. Open the Business Unit Allocation setup form.
  2. Click Newto add an allocation.
  3. In the Effective Date field, select the date this allocation is effective. Only those invoices with a Vendor Invoice Date equal to or later than this date will apply to this allocation.
  4. Enter a unique name for this allocation in the Allocation Name field.
  5. Expand the Division Splits section.
  6. Click New and select the Division participating in this split.
  7. Enter, as a percentage, this division's portion of the expense.
  8. Select the Split Type, (e.g., Percent, # of Employee, or # of Sq Feet) which is the basis for determining the division's business unit expense portions in the Business Unit Breakout section.
  9. Click Add to save the information for this division and add it to the grid.
  10. Repeat steps 6 - 9 until you have entered all divisions participating in the allocation.

The total Division Split Percent for the grid must be 100% before you can proceed to the Business Unit Breakout section.

  1. Expand the Business Unit Breakout data entry fields and click the Get Business Units button. Data entered in Business Unit Setup for your selected divisions automatically fills the grid.
  2. Enter and edit data directly inside the Split Value grid cells to distribute the expense among business units within each Division. For example, if the Split Type is # of Employees, then enter the number of employees in each divisions's business units.
  3. When you enter a Split Value for a specific business unit, the Split Value Pct column calculates (based on the value you entered) the percentage of the division's expense that this business unit represents. Each division in the Split Value Pct column totals to 100%.

If you select Percent as a Split Type for a division, then the total Split Value entered in the grid for that division must be 100% before you can save the allocation.

  1. Enter one or more business unit breakouts for each Division in the grid. You can leave a business unit at 0.00 if you do not want to allocate part of the expense to that business unit.
  2. When you are finished, click Add on the Allocation Setup section menu and then click Save or Save and Close.

To apply a business unit allocation to a vendor invoice, you must first apply the allocation to a Vendor Invoice Template. Continue with the procedure in the next section to Create a Vendor Invoice Template.

A Vendor Invoice Template can reduce the amount of time you spend entering transaction-specific invoice information. An invoice template predefines much of the data that you would otherwise have to enter manually for each invoice (e.g., 1099 information, payment division details, allocation amounts, etc.).

To apply a business unit allocation to a vendor invoice, you must first apply the allocation to a Vendor Invoice Template. Later, when you are entering data in the Vendor Invoice form, you can select the Template from the list to apply the allocation.

Additionally, because you can select only one GL account per business unit allocation, you must use the Vendor Invoice Template form to distribute vendor expenses to multiple GL accounts.

EXAMPLE #1

Your agency routinely receives one monthly invoice from a company called Office Supplies and Maintenance, Inc. Both office supplies and maintenance are billed together on one monthly invoice; therefore the invoice expense is actually allocated to two different GL account numbers.

In this case, you create one Vendor Invoice Template named Supplies/Maintenance. You choose the Manual Split option to set up the Business Unit Breakout by GL account number.

When you enter the vendor's invoice into the system using the Vendor Invoice form, you select the Supplies/Maintenance template to automatically apply the correct GL account numbers, business unit allocations, and other vendor information.

You can also use this form to set up a list of multiple invoice templates for specific vendors. If different business units within your agency have separate accounts with the same vendor, you can create a separate template for each account. The Template Name for each template could be the account numbers.

EXAMPLE #2

Your agency routinely receives two monthly invoices from the company called Workstation Solutions, one billing for office supplies and one for maintenance. Each invoice is applied to a separate GL account number.

In this case, you create two separate Vendor Invoice Templates, one for office supplies and one for maintenance.

Because each invoice has its own invoice number, you enter each invoice separately into the system using the Vendor Invoice form; you apply the appropriate template to each invoice.

You pay the invoices together through the Pay Vendors form. When you post the payments, the system creates one check for the vendor, referencing two vendor invoice numbers.

Use these steps to create a Vendor Invoice Template:

  1. In Vendor setup, click the Vendor Invoice Template link to open the Vendor Invoice Template data entry form.
  2. Click New on the Vendor Invoice Setup Information section menu.
  3. Enter a unique Template Name.
  4. Select the Payment Division and Bank from which the invoice is paid.
  5. Allocation Type:

If the vendor expense applies to a predefined Business Unit Allocation, then select the Business Unit Allocation option under Allocation Type, and select the applicable allocation unit from the list.

If the vendor expense applies to multiple GL account numbers, or to multiple business units, select the Manual Split option under Allocation Type. The Division Splits and Business Unit Breakout fields open. You can now enter allocation data specific to this template: create division splits, assign portions of the expense across business units, Copy rows and modify the GL account numbers, add New rows, and/or make other necessary edits.

See the Business Unit Allocation topic for more information. Also, see the section in this topic titled Before You Begin > Step 3: Set up your Business Unit Allocations.

  1. When you are finished click Add on the Vendor Invoice Setup Information section menu, and then click Save or Save and Close.

Use the Vendor Invoice form to enter and edit vendor invoice information, including general ledger distribution, invoice payment dates, and allocation amounts. Through this form, you can select your predefined Vendor Invoice Template and apply it to the invoice.

Follow these steps to enter a vendor invoice into the system:

  1. Open the Vendor Invoice data entry form.
  2. Select the relevant vendor from the list (When the form is selected from the vendor center, the selected vendor defaults into the Vendor field and cannot be changed.)
  3. Enter the Vendor Invoice # and any Attachments applicable to this invoice (email, scanned file or other files).
  4. If your vendor accounting basis is accrual, then the Vendor Invoice Date entered is the date that the expense entry will post to the General Ledger - e.g., the incurred expense date. (If your vendor accounting basis is cash, then the GL post date is when the invoice is actually paid - e.g., check date.)
  5. Enter the PO # (purchase order) if applicable.
  6. If desired, select the applicable Template from the list. This is not a required field; you can manually allocated the invoice to GL Numbers, and Business Units.
    • If you have not entered a Vendor Invoice Template, see the section in this topic called Before You Begin > Step 4: Create a Vendor invoice Template.
    • For additional information, see the Vendor Invoice Template topic.
  7. Enter the Total Invoice Amount.
  8. Note that the Pay Amount defaults from the Total Invoice Amount. You can enter a different amount, as long as it is equal to or less than the Total Invoice Amount.
  9. Enter a Vendor Due Date from the vendor's invoice.
  10. The Pay Date could be earlier than the Vendor Invoice Due Date to allow for check mailing time.
  11. If not already filled from the template, select the Division and Bank through which this invoice will be paid. The Divisions are restricted by your division security. The available Banks are restricted by your choice of divisions and your bank security access.
  12. Once you select a Template above, pre-defined data flows to the GL Distribution grid.

    To modify information in the data fields for a specific row, select the row and click Edit. To add a new row, click New and complete the data entry.

    You can also edit data directly inside the InvAmt and PayAmt grid cells. However, before you can post the invoice, the amounts that appear in these cells must match the Pay Amount field in the Vendor Invoice Information section.
 

If you did not create a template for this vendor, or if you do not want to apply a template to this invoice, you can enter GL Distribution data manually without a template. To add a new row, click New on the GL Distribution section menu and complete the data entry.
  1. When you are finished entering information for this invoice, you can choose one of the following posting options:
    • Click Post to post the invoice to the general ledger and close the form
    • Click Post and New to post the current invoice to the general ledger and then display a blank Vendor Invoice form to facilitate entering another invoice.

Use the Pay Vendors data entry form to issue checks in payment of vendor invoices. This form allows you to pay many invoices at once. You can also narrow your pay selections to a specific vendor, bank, pay date, or vendor due date. For more information, see the Pay Vendors topic.

Follow these steps to post a payment to a vendor invoice:

  1. Open the Pay Vendors form.
  2. Under Display Options, select to filter vendor invoices based on the Pay Date or by the Vendor Due Date. Only invoices within the specified date range appear in the grid.
  3. Under Select to Pay, select the vendor whose invoices you want to pay. You can also select the specific Bank through which to pay all applicable invoices.

    When you select a specific Vendor and/or Bank under Select to Pay, the system updates the Select check boxes in the grid to match your criteria. Note the Payment Division and Bank were selected when the Vendor Invoice was created and posted.
    • The check boxes in the Select column indicate whether or not an invoice is to be included in the posting transaction.
    • If the box next to an invoice is marked, then this posting transaction will include the invoice. If the box is not checked, then the posting will not include the invoice.
    • You can click a box to check it or to clear it (or click the Clear All button to remove all check marks and Select to Pay information).
  4. Under GL Posting Date and Check Type, select the general ledger posting date for the check or checks to be created. This is also the date that prints on the checks.
  5. Double-check that the invoices in the grid with check marks in the Select column are the invoices that you want to pay.
    • If not, modify your selections.
    • If so, click Post to post the invoice payments and close the form.
  6. After posting, if you would like to see the invoice's new status, open the applicable vendor in the Vendor Center and view the Invoices tab. The invoice's status information appears in the display.
  7. You can open the Vendor Invoice form for this invoice by clicking the Invoice # link.
 

If the invoice's status is Paid in Full, you can no longer edit data in the form.

If the vendor expenses for all your agency divisions are paid out of a central administrative office, then the Vendor Payables Interdivision Transfer process provides the means for your agency's expense divisions to "pay back" this central payment division.

Furthermore, this process is useful in any case in which one division in your agency has made a vendor payment on behalf of another division.

 

The Vendor Payables Interdivision Transfer process can be run at any time - as part of your agency routine, or whenever the occasion requires.


Cross-divisional postings net to 0 on a consolidated balance sheet, regardless of whether your agency has implemented interdivision transfers to clear cross-divisional expense obligations, and regardless of the amount of funds owed to payment divisions by expense divisions within your agency.

The Vendor Payables Interdivision Transfer process creates journal entries in the AMS360 general ledger; these entries represent the interbank funds transfer. However, to actually move funds, you must contact your financial institution through normal procedures.

Data entry forms included in the Vendor Payables Interdivision Transfer process include the following:

  • Vendor Payables Interdivision Transfer: a summary of your agency's interdivision transfer GL account activity, as of a date that you specify. This is the form through which you select the specific payment/expense division combination for your transfer action. (See the Vendor Payables section of the Agency Setup topic for more information about entering an interdivision transfer GL account.)
  • Select Invoices to Transfer: a breakdown of the invoices that were paid by the specific payment division on behalf of the specific expense division. This is the form through which you can select specific invoice amounts to transfer, or select all invoices to transfer.
  • Vendor Payables Interbank Transfer: a selection form through which you specify the expense division bank from which to transfer funds, and the payment division bank to which the funds are distributed. Use this form to complete the inter-divisional "pay back" transaction by posting it to the general ledger.

To transfer funds between agency divisions using the Vendor Payable Interdivision Transfer process, follow these steps:

  1. Open the Vendor Payables Interdivision Transfer form.
  2. In the Amounts Available to Transfer section, select the latest paid-out posting transaction date (Through Date) for transfer amounts in the grid.
  3. Note that each row in the grid represents a specific combination of Expense Division and Payment Division, with a total amount to transfer.

    To transfer funds (in full or in part) between a specific combination of divisions, click the Transfer link in the appropriate row. The Select Invoices to Transfer form opens.
  4. Each row in the Select Invoices grid represents an invoice amount waiting to be transferred between the divisions. You can select individual invoices to transfer by checking the Select boxes for each specific invoice. Click inside the Select box to enter a check mark; click it again to clear a check mark if you are not ready to transfer that invoice amount.

    You can select all the invoices at once by clicking the Check All button. You can clear all selections at once by clicking the Uncheck All button.
  5. Once you have made your selections, click the link Select Banks and Post. The Vendor Payables Interbank Transfer form opens.
  6. In the Transfer From section, select the expense division Bank from which to transfer funds.

    When you make your selection, the text in the Memo box updates automatically, indicating the system-generated transfer journal entry(s) that will post.
  7. In the Transfer To section, select the payment division Bank to which you will send the funds.

    When you make your selection, the text in the Memo box updates automatically, indicating the system-generated transfer Journal entry(s) that will post.
  8. You can enter a specific Journal Date, or accept the default current system date.
  9. When you are finished making your selections, click Post to post the transfer transactions to the general ledger.