Accrual plans represent accounts into which money is accrued and then paid out at a particular time. Defining these accounts as separate records in the program lets you manage the accrual and payment of amounts on a plan-by-plan basis. You can also generate various reports and statistics for separate accrual plans.
Accrual plans
For each accrual plan, set up a card containing information about the accrual plan. There are three types of accrual plan:
Sales Rebates/Promotions
Purchase Rebates/Promotions
Sales Commissions
Define accrual plans for various sales and purchase marketing programs. For example, set up a rebate program where you accrue a certain dollar amount for every sale made over a particular period of time, then pay the accrued amounts back to the customer when the program has ended.
You can also set up accrual plans to calculate and track sales commissions. Commission amounts are accrued based on sales activity and then paid to a specified source such as a salesperson. Because you can have several accrual plans, it is easy to maintain separate commission programs. For example, if you have ten different salespeople, set up a separate sales commission plan for each one.
Accruals
Accruals are amounts accumulated over time. Generate accruals from transactions with customers or vendors, or for specific items or groups of items. There are many different ways to calculate accruals, such as a flat dollar amount per item unit or a percentage of the transaction line's total price. Define all these settings for each accrual plan you set up.
Over time, post accrual amounts to an accrual plan. For example, if you set up a sales rebate plan for Customer A that accrues 5% of Item B's price, every time Item B is posted on a sales order for Customer A, the program accrues 5% of the sales line's price and posts this amount to the accrual plan's ledger.
Payments
Distribute amounts accrued to an accrual plan to one or more defined payment accounts. The payment account can be the same as the accrual's original source. Using the previous example, pay the accrued sales rebate amounts back to Customer A.
You can also post payments to a completely different payment account. When setting up a sales commission, for example, typically accrue amounts from sales orders and then pay these amounts to a salesperson.
Accrual schedules
Set up an accrual plan to accrue and pay predetermined amounts according to a defined schedule. This contrasts with accrual plans that calculate accruals based on actual sales and purchase transactions.
Deduction payments
Rather than wait to receive an accrual payment, a customer may choose to pay less than the full amount of an open invoice, then indicate that you should apply the impending accrual payment to the remaining invoice amount. For example, a customer is due an accrual payment of $100. When the customer sends payment for an open invoice, it is $100 less than the full invoice amount. The customer wants to use the $100 accrual payment to pay the remainder of the invoice. This is called taking a deduction.
Create deductions during the cash receipt process when a customer payment is applied to less than the full amount of an open invoice. You can assign a deduction to an accrual plan. When the cash receipt is posted, the deduction amount is posted as a payment to the assigned accrual plan.
An accrual plan's payment settings determine whether deductions can be posted as payments.