Dear Friends,
the best solution to this is to generate a report giving details of PGI done
but not invoiced at month end and then pass a reversible JV at the month end
to recognize revenue. This is the most simplest solution which we have
adopted to correctly reflect the profits in the Financial statements.
Hope this helps.
Regards
Munir.
On Sat, Oct 2, 2010 at 6:48 PM, PSD Rajan via sap-log-sd <
sap-log-sd@groups.ittoolbox.com> wrote:
> Posted by PSD Rajan
> on Oct 2 at 11:17 AM Interesting
> discussion here. Thought I will give my 2 cents worth.
> 1. The effect of billing is that Revenue gets recognized. And so, the
> timing of billing should be as per the law of the land, which generally
> would say that the revenue should be recognized when the title in the
> property passes on to the customer.
> 2. Here, the customer is setting the terms saying - for all deliveries
> during the month, send a collective invoice the next month.
> 3. Deliveries during the month will post to COGS without corresponding
> revenue against it. This will skew the income statement in the sense that
> you have revenues for the prior month booked this month without the
> corresponding COGS as well as COGS for this month without corresponding
> revenue. It may sort of set off against one another, but the elephant is
> still in the room!
> 4. There are 2 implications here, assuming you have no choice in terms of
> the billing date:
> a) Revenue Recognition - If you need to legally recognize the revenue when
> you do the delivery, you have the recognize the revenue the same month.
> Meaning, you will need to accrue the revenue in the month of delivery and
> reverse it when you do the billing.
> b) If Revenue Recognition is not a major issue, then you need to
> synchronize recognition of COGS with Revenue. Carlos has given the hint, but
> not the complete solution. You would need to make account assignment changes
> such that:
> * On PGI a GI/II (similar to GR/IR) - goods issued but not invoiced -
> account is debited, instead of COGS.
> * On Billing, COGS debit and GI/II credit. Copy VPRS as, say ZPRS and
> change it to a real condition. Replace VPRS with ZPRS and enable accrual
> between COGS and GI/II. If you have COPA active, ensure the value from ZPRS
> gets transferred. Also, the COGS account will now need to be set up such
> that it posts to PA.
>
> At this point, you have got everything as you want. However, you are going
> to accumulate debits and credits in the GI/II account which are going to be
> sitting there forever unless you do something about it. You would need to be
> able to clear the corresponding debits and credits somehow.
>
> And all of these would need to be done just for one customer?
>
> What I have stated is from my personal experience and is just conceptua. I
> have implemented this solution for a very large global organization in order
> to synchronize COGS with Revenue. This also ensures perpetual
> synchronization of COGS in FI and PA. Took me almost 6 months to design,
> develop, test and implement.
>
> Rajan.
>
> ---------------Original Message---------------
> From: csalazar
> Sent: Friday, September 24, 2010 11:50 AM
> Subject: Next Month Invoice
>
> > One customer wants us to invoice him monthly but in the next month after
> we deliver the material.
> >
> > In our current system when we generate a delivery it affects the cost of
> sales and warehouse accounts, after that we generate an invoice that goes
> into the cost of sales /tax and client account.
> >
> > What we want its to generate another accounting movement (Remission)
> after the delivery, that affects a "bridge" sales account and the cost of
> sales, before the invoice.
> >
> > I am told this is because if we don't invoice the deliveries on the
> current month, our financial statement will show a loss for that month (We
> are located in Mexico).
> >
> > Is it possible that one delivery generates 2 account movements?
> >
> > Any advice its appreciated.
> >
> > Thank You.
> > Carlos
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