Advances in FM

[atif_farooq]

Hi:

We have a scenario from client, they give advance money to various departments. Departments make use of advances given to them against expenses. For example advance has been given to a department for travel. Client wants to budget to be reduced at the time of giving advance not at the time of booking expense. Now i can make advance GL account budgetable but the travel GL account is used in many scenarios where it will be in budgeting so it can not be made statistical only to cater this particular scenario. Please guide me how to cater this requirement from client.

Regards

[iklovski · Accepted solution]

Hi Atif,

Are these 'advances' done by down payments? If not, you can think of earmarked fund, which will consume the budget (commit it) and when the invoice comes, it will reduce the commitment and post actuals.

Regards,

Eli

[atif_farooq]

Hi Eli:

These advances are money given as petty cash to the departments . They use it for incurring expenses of petty nature . We will be opening employee vendor concept (one vendor for each department) here to post advances to departments ,hence first posting an invoice against employee vendor and then paying him through check.This check money will transferred to cash in hand account throughout transaction type in FBCJ. I am creating cash journal for each department . Now its client requirement to reduce department budget as soon as advance is given to it.

Regards

[iklovski]

I guess, I'm still confused about the business nature of transactions involved... Can you give an example with some figures and accounting entries (if any)?

[atif_farooq]

Hi Eli:

Advance is given to the departments across the client for incurring the petty cash expenses.

Fro this i will open department wise cash journals and vendors for every department will be opened. Following entries will be passed

At the time of posting invoice to department vendor

Imprest Clearing Account Dr

Vendor Account Cr

Payment time

Vendor Account Dr

Outgoing Bank Account Cr

Cash Journal Cash in Hand Update in FBCJ

Cash in Hand Dr

Imprest Clearing Account (Contra entry) Cr

Now user will incur expenses using his cash journal and cash in hand

Here i think budget consumption will occur because at the time of invoice imprest clearing account is contra in third entry.  So how will earmarked field scenario work in this scenario?

Regards

[atif_farooq]

Any update on above ?

[Former Member]

At the time you book the advance in FI, you create an earmarked fund in FM (FMX1 or FMY1 or FMZ1) for the same amount at a suitable address of Fund/FC/CI. The earmarked fund consumes budget. When you book the actual expense, you fill the field COBL_KBLNR field with the earmarked fund document number. The expense then will consume the earmarked fund.

[waldo]

As Eli said:

(...) you can think of earmarked fund, which will consume the budget (commit it) and when the invoice comes, it will reduce the commitment and post actuals.

I would use Funds reservations (FMX1), but you could choose what you like.

More info: Earmarked Funds and Funds Transfers

Regards,

Oswald

Ps, I agree with M.Ji too!