Purchase Invoice Reserves

joosh

Hi

The company I work for has bought some new accounting software and want to introduce Purchase Invoice Reserve accounts, where the value of goods received but not yet invoiced is updated.

I think I need to setup a BS current liability account and a P&L account but not sure where to put it, COS or Overheads?

Can anyone help, can't seem to find any info on this at all.

If anyone already deals with invoice reserves and can give me any advice that would be greata.

Thanks

NeilH

Hi

We operate a goods received-not invoiced (GRNI) system where I currently work and where I have worked in the past. Whenever I have come across such a system, it has been part of the companies ERP or accounting system but the exact configuration and use can vary.

The system where I currently work operates as follows:

1. PO is raised
   
   
2. Goods/services are receipted to the system - a credit for the net value is made in a "GRNI" account in the BS (and is categorised as a type of creditor) and a debit is made in the appropriate account (this will depend on the PO set up). The debit can be P&L or BS - P&L for costs to be directly written to the P&L, BS for stock, fixed assets etc.
   
   
3. Supplier invoice is received and checked against the GRNI report, is then entered against the PO which creates debits in the GRNI account for the net value, debits in-put VAT for the VAT and credits trade creditors for the gross amount.

As I said, this is part of the PO system, but could be done manually providing the GRNI account is reconciled regularly. In addition, it's good practice to regularly check that the GRNI report agrees to the BS account - particularly at period ends. Can I ask what software/ERP you use?

Any questions, feel free to ask.

Neil