When does this occur?
If there are multiple financial administrations within one organization where services are shared. For example, when 2 companies (company 1 and company 2) are used within one organization, each with its own financial administration, and chairs are purchased at once for the entire organization (so both for both companies). An invoice for the seats will be received and booked in one of the two administrations, while part of the costs must be passed on to the other administration.
Charge through invoice
The above situation can also be resolved without a booking in a different administration. When the invoice is fully booked in administration A, an invoice from company 1 can then be sent to company 2 with the amount that they have to pay. Company 2 books the invoice in its own administration and pays the invoice to company 1 (which therefore books this as income in their administration). This is a great solution if this does not happen too often. However, when this occurs frequently, it is a lot of administrative work and back and forth of transferring money between the 2 companies.
Charging through RC
When it occurs frequently, this is often resolved via a so-called current account (RC) ratio between the 2 companies / administrations. The easiest way to explain how this works is to use the example.
The invoice for the chairs is € 1000, and both companies need exactly half of the chairs (€ 500).
In administration 1 the following accounts exist:
1002 - RC account administration 2
4000 - Chairs
In administration 2 the following accounts exist:
1001 - RC account administration 1
4000 - Chairs
In source administration 1, the invoice is posted as follows:
- € 1000 on the creditor
+ € 500 on the general ledger account 4000
+ € 500 on the ledger account 1002
In the target company 2 is posted:
- € 500 on the ledger account 1001
+ € 500 on the general ledger account 4000
The result is that in both administrations € 500 has been booked in the ledger account 4000 seats for the costs. In addition, in administration 1 a balance of € 500 has been placed on the RC ledger account 1002. This means that administration 1 has € 500 to claim on administration 2. In administration 2, there is a balance of - € 500 on the RC ledger account 1001. This means that administration 2 has € 500 debt in administration 1. These 2 RC accounts must always be in balance. Of course, the following invoice can be posted in a different ratio the other way round with administration 2 as the source administration and administration 1 as the target administration. At the end of a period, the balance sheet can be drawn up and an amount will ultimately have to be settled. In this way, it can of course be processed more efficiently than charging each time via an invoice.
Suppose that a third administration is added, then administration 1 and 2 logically receive an account 1003 and administration 3 also receives the RC accounts 1002 and 1001. In this way, there is a continuous combination of 2 RC accounts for the balance between 2 administrations.
Update the configuration of your Spend Cloud environment
If you are not yet able to select a different administration when coding an invoice, this needs to be adjusted in the configuration of your Spend Cloud environment. Be aware that not every webservice connection supports booking in a different administration via a current account, if you wish to learn more about this, contact the support department for assistance (applicable to application administrators only). Once this is enabled, you can select a different administration in the invoice line when coding an invoice. Ensure that a current account is set up for the administrations. Follow the steps below to configure this. This can be done under Application Management / General / Administrations.
Set up a current account with the administration
You fill in the current account of the relevant administration compared to the other administrations. So in administration 1 the current account is filled which is known in administrations 2 and 3, in example 1001 above. It is important that this account also appears in the general ledger chart of administration 2 and 3.
Example:
Administration 1: 1001, the general ledger chart of administration 1 must then include 1002 and 1003
Administration 2: 1002, the general ledger chart of administration 2 must then include 1001 and 1003
Administration 3: 1003, then in the ledger chart of administration 3 1001 and 1002 should be included