Track purchase commitments using user-defined books

Create a user-defined commitment book for your Purchasing transactions and gain insight into your budget with spending control. User-defined books are ideal for cases where you need to track and report on specialized accounting entries.

With user-defined books for you can:

  • Book committed expenses in advance without charging your accounts.
  • Track future expenses and improve your budgeting capabilities.
  • Report on committed expenses against your actual and expected budget.
Extra fees might apply; contact your Sage Intacct representative for more information.

Track purchasing commitments using user-defined books

Say you have a conference coming up, and want to gain visibility into your budgeting plans. You haven't 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 sample financial report, these columns display different reporting books, either alone or in combination:

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

Prerequisites

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

  1. Subscription to Purchasing with advanced workflows. If your company is not already using an advanced workflow, learn more in Configure Purchasing.
  2. Setup and creation of 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.

This is one workflow that shows how to get what you need out of user-defined books. It shows reversing a commitment, but user-defined books can also be used to solve other business needs.
  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. PO purchase invoice: After the expense occurs, book the expense in an accrual book and release the commitment in a journal entry in your user-defined 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 PO". 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 will 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 might debit Account X and credit Account Y.
  4. Enter the rest of your information, and select Save.
    5. 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 for booking the actual expense in an accrual book. This is the PO purchase invoice that will be created after the expense occurs. The PO purchase invoice books the expense in an accrual book and creates additional GL postings to the user-defined book to release the original commitment.

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, "PO purchase invoice". 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 Invoice. This classifies your transaction as an invoice in the workflow.
    3. For Transaction posting, select Accounts Payable to ensure that the expense is booked to the subledger in an accrual book.
    4. Select Enable additional posting to ensure that GL entries are posted to your user-defined book to release the original commitment.
    5. 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.
    6. Enter the rest of your information.

  4. On the Posting configuration tab:
    • In the Transaction posting GL account mapping table, post your actual expense to the appropriate GL accounts.
    • In the Additional GL account mapping table, enter appropriate account mappings for your reporting needs. You might select to reverse or reclass the effect of the GL posting in the Committed Purchase Order transaction.
  5. 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.

Generate a report

Later, you can generate reports that include entries from your user-defined book, either alone or with other books.

  • Financial reports: On a column-by-column basis, you can choose the reporting books that you want to include. The example at the beginning of this topic shows a report that includes columns for the following books: Accrual book, a user-defined PO Commitments book, and a combined (Accrual + PO Commitments) book. The final column combines amounts from all the books.
  • Other General Ledger reports: When you create a report, such as a General Ledger report, you specify which books to include. For example, you might include a user-defined book and your compliance book. As with financial reports, you decide whether to combine amounts from your other reporting books with your main, actual book.

Learn more about reporting on other books (compliance, tax, and user-defined).