Set up purchase transaction definitions to track commitments for Spend Management

You can use Purchasing transaction definitions that post to user-defined books to track committed expenses entered in the Purchasing application. User-defined books are ideal for cases where you need to track and report on specialized accounting entries.

Extra fees might apply; contact your Sage Intacct representative for more information.

How it works

Say you have a conference coming up, and you want to gain visibility into your budgeting plans. You have not made the purchases yet for the hotel and catering and do not want anything to show up in your accrual books. However, you still want to know how your planned expense will affect your budget.

By creating a user-defined journal that's not attached to an accrual book, you can create a new workflow for committed purchase orders. Best of all, using user-defined books for Purchasing enables you to report on your actual expenses and commitments against your budget.

In the following columns from a financial report, these columns display different reporting books, either alone or in combination:

  • Actual Expenses: the Accrual book
  • Commitments: the purchase order commitments user-defined book
  • Total Expenses: the Accrual and purchase order commitments books
 

Actual Expenses

Current Quarter

Commitments

Current Quarter

Total Expenses

Current Quarter

Budget

Current Quarter

Remaining Budget

Current Quarter
Conference Expenses          
Hotel 2,000 13,000 15,000 18,000 3,000
Catering   500   4,000  4,500 10,000 5,500
Total Conference Expenses 2,500 17,000 19,500 28,000 8,500

Prerequisites

There are two prerequisites to using user-defined books with the Purchasing application:

  1. Subscribe to Purchasing with advanced workflows. If your company is not already using an advanced workflow, learn more in Configure Purchasing.
  2. Set up a user-defined book that's not configured for Management Reporting, with at least one user-defined journal in your General Ledger. This setup allows you to track your commitments. To learn more, see Set up user-defined books.

Setup overview

After you set up your user-defined book and at least one journal, you'll create two transaction definitions. Then, you'll assign the transaction definitions to your new user-defined journal on the Configure Purchasing page.

  1. Set up a user-defined book and at least one journal to track purchase commitment posting from Purchasing.

  2. Create two Purchasing transaction definitions on the Transaction definitions: Purchasing page.

    1. Committed purchase order: Book the expected expense commitment in a journal entry in your new user-defined book.
    2. Commitment release: Release the expense from your user-defined book. This avoids duplication of the expense because the vendor invoice will post the actual expense to an accrual book.
  3. Assign each transaction definition to the new user-defined journal on the Documents configuration tab of the Configure Purchasing page.

Set up your transaction definitions

Use the following detailed steps to configure each of the two transaction definitions in the workflow:

This transaction definition reserves a committed amount for future spending. Think of it as a non-billable "placeholder" to help you gain visibility into your budget.

Set up your transaction definition as follows:

  1. Go to Purchasing > Setup > More and select Add (circle) next to Transaction definitions.

  2. On the General tab:

    1. Enter a Template name, for example, "Committed purchase order". This name will appear in the Transactions menu for Purchasing and in the Transactions submenu for the Projects application for document creation.
    2. For Template type, select Order. This classifies your transaction as an order in the workflow.
    3. To ensure the transaction posts directly to the General Ledger and with no effect on the Accounts Payable subledger, select General Ledger for Transaction posting.
    4. Enter the rest of your information.

  3. On the Posting configuration tab in the Transaction posting GL account mapping table:
    • Post your purchase commitment directly to the appropriate GL accounts.
    • For each account, select Debit or Credit. You'll enter these accounts or other appropriate accounts to release the commitment when you create your second transaction definition. For example, if you credit Account X and debit Account Y, in the next transaction you can debit Account X and credit Account Y.
  4. Enter the rest of your information.
  5. Select Save.
    6. For more information on configuring your transaction definition, see Purchasing transaction definitions.

Select a user-defined journal:

  1. Go to Purchasing > Setup > Configuration.

  2. Select the Documents configuration tab.
  3. In the Purchase journal column, assign the transaction definition to a user-defined journal associated with your new user-defined book.
  4. Select Save.

Create or edit a second transaction definition to release the committed expense. Create a separate transaction definition specifically for this purpose rather than using the vendor invoice to release the committed expense. The amount on the invoice might be different than the amount on the original purchase order.

To add this transaction definition into your workflow:

  1. Go to Purchasing > Setup > More > Transaction definitions.

  2. Do one of the following:

    • To create a new transaction definition for PO purchase invoice, select Add.
    • To edit an existing PO purchase invoice transaction definition, select Edit.

  3. On the General tab:

    1. Enter a Template name, for example, Commitment release. This name will appear in the Transactions menu for Purchasing and in the Transactions submenu for the Projects application for document creation.
    2. For Template type, select Order. This classifies your transaction as an order in the workflow.
    3. For Transaction posting, select General Ledger to ensure that the transaction posts directly to your user-defined book in General Ledger to release the original commitment.
    4. In the Transaction conversion table in the Workflow section, select the Committed Purchase Order transaction definition. This links your PO purchase invoice to the workflow.
    5. Enter the rest of your information.

  4. Go to the Posting configuration tab.

  5. In the Transaction posting GL account mapping table, enter appropriate account mappings for your reporting needs.

    You can reverse or reclass the effect of the General Ledger posting in the Committed Purchase Order transaction.

  6. Select Save.

Select a user-defined journal:

  1. Go to Purchasing > Setup > Configuration.

  2. Select the Documents configuration tab.
  3. In the Additional posting journal column, assign the transaction definition to a user-defined journal associated with your new user-defined book.
  4. Select Save.