| Description: |
Expense reports paid through outsourced payroll provider
Resolution:
Method 1: Creating an Advance activity.
- Create an Advance activity:
- Check the allow entry on expense reports
- On the Cost/Expense Accounts tab, apply an Employee Receivables account to the Billable, Non-billable, Marketing and Overhead expense fields.
- After entering an expense report
- As part of the expense review process, the supervisor, or accountant would then apply a negative amount equal to the expense report, to the Advance activity, totaling a 0.00 amount expense report.
- This would be added as a line item at the end of the expense report, not using the Advance Amount at the top of the expense report.
- Create the payroll vendor invoice
- Locate the payroll vendor invoice within the existing vendor invoices
- Within the Payroll Vendor invoice, debit the Employee Receivable account.
- Pay the expense reports
- Within Manage Vendor Invoices > Existing, find and edit each expense report
- Click the Pay button and choose EFT and the date of the payroll
- If expense reports are revised later, they will need to be ‘repaid’.
- The amount will be zero, but the payment must be made or the system will never book the entries to the cash basis accounting.
Method 2: Creating a bank account
- Create a bank account
- Within the accounts tab of the new bank account, create an Expense Report Clearing account (asset) for the cash account
- Use normal accounts for bank charges, interest income and interest expense account settings
- Enter and submit all expense reports/approve
- In Manage Vendor Payments, pay the Expense Reports using the Expense Report Clearing Account
- This will pay off the expense reports and credit the clearing account
- Create the payroll vendor invoice
- Locate the payroll vendor invoice within the existing vendor invoices
- Within the Payroll Vendor invoice, debit the Employee Receivable account. This will create a debit balance to employee receivables
- Within the Bank Register of the Expense Report clearing account
- Make an EFT Deposit from employee receivables
- This will debit the clearing account (zeroing it) and credit employee receivables (zeroing)
- This last step is very important; otherwise the clearing account bank register will continually decrease, causing incorrect cash on the company dashboard.
- It is important that the employee receivables account and the clearing account be distinct GL accounts because the system will not allow a circular entry to be made into a bank register.
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