There is a strong connection between the Marketing and Sales module and its neighboring modules. For instance, the marketing staff can check for part availability and pricing in order to develop marketing materials and offer price quotations to a prospective customer. In fact, all of this information can be accessed directly from within the marketing-related form the user is currently working with. Similarly, a sales representative can check for part availability or check on the progress of a work order intended for a specific sales order. In addition, production planning and purchase planning are executed on the basis of sales orders. Goods are prepared for shipment and shipped, which, in turn, automatically updates order balances. Invoices are produced and sent to the customer on the basis of the pricing terms designated in the order or the shipping document.
Priority supports the definition and management of company branches, which you can then assign to use-defined regions, allowing you to analyze sales data according to both branch and region. You can link each branch with a branch warehouse, thus managing the inventory it contains according to the desired inventory levels defined for the branch.
Each worker is assigned to the branch in which he or she works. Furthermore, different types of journal entries can be defined for each branch (for example, you can define a journal entry type for the northern branch called “NBI,” to be used as the default type for sales invoices issued by that branch). Whenever an employee opens a financial document, it automatically receives the transaction type defined for that employee’s branch. You can also define separate document numeration templates for each branch.
You can run reports that display sales data by branches (e.g., orders, shipping documents and invoices), and define separate document numeration templates, letterheads and logos for the documents printed at each branch.
Data access can be restricted per branch, allowing users to view only those data pertaining to the branches for which they have authorization.
Client Base and Contacts
Priority manages potential customers during the marketing or pre-sales stage. This precludes the need to open A/R accounts in the Financials module and maintain extraneous customer information until the relationship proceeds to the sales stage (i.e., an order is placed). Although potential and actual customers are considered separate entities, they are still maintained within the same client base. This allows for easier maintenance and the ability to obtain information for the entire customer pool.
A potential customer is converted to a regular customer by activating a program. Consequently, an account is automatically opened for the customer in the accounts receivable ledger. Alternatively, a billing customer can be assigned to the new regular customer. Of course, any information recorded for a potential customer preceding the conversion to a regular customer remains in the database.
The data maintained for each customer includes: addresses and telephone numbers; business classification; a description of the nature and scope of the business; marketing activities in which they participated; customer group assignment; sales representative; shipping destinations; key personnel, their positions and telephone numbers; price quotations; and the like.
Ten customer category fields in the Customers form and report generators enable you to classify customers into various cross-sections, for purposes of analysis and retrieval.
Customer related activities, from marketing on through sales and the recording of receipts, are all simplified by the ability to designate key personnel as contacts for distinct functions (price quotes, invoices, sales orders, blanket orders, shipments, customer statements, and/or receipts). This automatically directs all relevant documents to the proper individual. For example, once you have designated a price quote contact for a customer, this individual’s name will automatically appear on the printout of any quote prepared for that customer.
In addition, Priority provides two complementary mechanisms for simplifying the assignment of parts, prices and discounts to groups of customers:
• Representative customers – real or virtual customer records for which you can define price lists, part lists, special prices and discounts. Individual customers that are linked to the representative inherit these settings; however, they are overridden by values defined manually for the customer.
• The general representative customer – the settings defined for this customer apply by default to all customers; however, any values defined for a specific customer, or for a linked representative customer, override those defined for the general representative.
Maintenance of customer data is managed via statuses using the graphic BPM Flow Chart Customers. After defining the necessary statuses (and the paths that connect them), you can view their attributes in the Statuses for Customers form.
Pricing and Billing
Priority allows you to designate prices and discounts for each ordered item. These values become the defaults that appear automatically (with a display of the price source) in various sales documents (e.g., orders, shipments) and may be revised as needed. Pricing terms can be specified separately for individual customers or for groups of customers (by means of the general representative customer, which affects all customers by default, or a user-defined representative customer).
Billing data is recorded per customer (in the Financials module), including: • A/R account number
• Billing currency
• Billing customer
• Billing address
• Bank account details
• Payment terms
• Tax code (affects sales tax percentage)
• Credit limit
• Finance charges
• Restrictions on activity (when a customer’s credit limit is exceeded).
These values serve as defaults that appear automatically when sales documents are recorded. Most of them can be updated in the individual document, with the exception of those involving customer credit.
Prices and Discounts
Priority provides several tools for managing prices and discounts:
• Base price list – allows centralized maintenance of part prices and discounts to be applied to the general customer base;
• The general representative customer – predefined in the system, the general representative can be assigned price lists, discounts, special part prices and bonuses, which serve as default values for all customers in the system. You can use this tool to effect system-wide changes over a defined period, such as a holiday season;
• Pricing for a group of customers–by assigning prices and discounts to a user-defined representative customer. These values override those defined for the general representative customer;
• Pricing per customer – via customer price lists, special part prices and/or individual discounts for specific customers. These values override those defined for the general representative and representative customer;
• Pricing per order – by linking an individual order to prices in a given blanket order, price quotation or customer price list.
Each customer can be assigned several different price lists – such as one for each product line — and the same price list can be assigned to several customers (even if they have different billing currencies). Price lists can be maintained in different units of measure (for the same part) and in different currencies – e.g., in ounces and dollars for American customers and in grams and Euros for European customers. Any price list in a foreign currency is converted automatically into the currency of the sales document. A single price list can contain different prices for varying minimum quantities.
Price lists are easily maintained with tools for copying, updating by a percentage or set value, automatic addition of items to price lists, and batch assignment of discounts to a group of customers or parts.
You can also create a customer price list on the basis of a vendor price list (useful in buy-resell settings). Moreover, you have the option of adding the average shipping expense for the part to the vendor price.
Each price list is assigned its own list date. This allows for the maintenance of different versions of the same price list, only one of which can be in effect at a time. By copying and then updating the same price list over time, a pricing history is maintained.
Special Part Prices
Parallel to the price list mechanism, you can designate special part prices that are in effect for a limited time (e.g., during a sale period). During this period, prices in customer price lists and item discounts (but not overall discounts) are disregarded. You can even create a price list of special part prices, which allows you to offer the same special prices to a group of customers. In this manner, for instance, you can offer particularly low prices to high-priority or high-volume customers for a limited period of time; during this period, the customer’s regular price list and any item discounts will be ignored.
You can award three types of discounts to any given customer (or representative customer), which remain in effect for a designated period of time:
• Part discount – affects the item discount for an individual part
• Family discount – affects the item discount for any part in a part family
• Overall discount – applied to the document total.
Priority provides a sub-level of the Customers form, in which you can define discounts freely without the need for predefined discount codes.
To sum up, prices in sales documents (e.g., orders, shipments) are derived automatically, in the following sequence:
• The price recorded in the blanket order, price list or quote (provided the minimum quantity is ordered) linked to the individual order;
• Any special price granted to the customer(or representative customer) for a specific part (whether assigned individually or via a price list of special prices);
• The price of the part in the relevant price list assigned to the customer (or representative customer);
• The price of the part in the base price list.
Priority allows you to maintain customer part lists, including the customer’s own catalogue number and name for the part. This information will then appear (alongside the internal Priority number) on any printed price quotation, order confirmation, shipping document and invoice to the customer.
You can also restrict items recorded in sales orders and shipments to those parts appearing in the customer’s list, thereby preventing incorrect shipments.
A product assembly is a part that is sold as a single unit but actually comprises a variety of items. This can range from an actual assortment of products (such as a gift basket) to a part that is sold in various configurations (such as a computer system). When you record a product assembly in a price quotation or sales order, the form is automatically itemized with the assembly’s default component parts.
You can define substitutes for each component part in a given assembly; for instance, if a gift basket includes a bottle of wine, you can create a list of wines from which to choose. You can then enter the list of quote or order items and replace the default wine bottle with another from the item’s Choose list.
Each substitute component can have its own price; consequently, you can record several variations of the same product assembly in a single price quote. You can also omit prices for the component parts, and quote a single price for all variations of the product assembly.
Product assemblies can be defined as out of use, and reactivated when needed (e.g., during the holiday season).
Price quotations are offered to customers in order to document special pricing terms, which will be in effect for a fixed period of time. These terms are offered in return for orders that fulfill a designated minimum quantity.
The prices and discounts in a quote are filled in automatically on the basis of the price list and discounts that are currently in effect for the customer, with automatic currency conversions wherever necessary. These values can be revised manually. You can even quote prices in different currencies for specific line items (particularly useful in the dual-currency package), which are then copied as is into the order.
Profitability is a key consideration in determining prices quoted to customers, particularly in a buy-resell environment. Priority enables you to calculate profitability directly within the Price Quotations form, comparing the purchase price to the quoted unit price. The purchase price can come from its last price (i.e., the most recent purchase), the vendor price list or the part’s cost (as calculated by cost analysis). You can also make use of a mechanism to arrive at a recommended unit price, based on a designated markup percentage and taking into consideration the sales representative’s commission and discounts. By approving this recommended price, the unit price is updated automatically – providing you with the markup that you have requested. You can then view the amount of profit you will be making.
If you are using Cost Analysis for Manufacturers, Priority offers a mechanism for estimating prices when creating price quotations. This is particularly useful in the quoting of prices for parts that have never been manufactured before. The estimate takes into account the part’s current standard cost, any additional costs assigned to the quoted jobs, the desired markup and any sales rep commission.
An order can be based on a given price quotation, so that quoted prices and discounts are automatically assigned to items in that order. If the order is in a different currency, prices are converted on the basis of exchange rates effective on the order date. If different prices are offered for varying minimum quantities in this quote, this is taken into consideration: the appropriate price appears in the order according to the quantity ordered. Price quotations can also be used to itemize an entire order; in this case, all parts, quantities and due dates appearing in the quote are copied into the order.
Maintenance of price quotations is managed via statuses using the graphic BPM Flow Chart Customer Quotes. After defining the necessary statuses (and the paths that connect them), you can view their attributes in the Statuses for Price Quotations form.
Price quotes can be categorized by type (e.g., a quote for a sold product, a quote for a provided service). For each type you can record a separate set text; this will automatically appear on the printout of the quote. You can even assign a default quote type to an individual user (the person responsible for following it through); whenever a quote of this type is opened, that user will receive a mail message informing him/her of such and requesting that s/he follow through with the pursuit of this sale.
A variety of predefined print formats allow you to choose the data you wish to include in the printed quotes you send to your customers. For example, when you are quoting different prices for different minimum quantities of the same item, you can use the No Total format to hide the Final Price column, which is not relevant.
You can also use the Report Design Tool to customize your price quotation printouts by hiding or rearranging selected columns, according to the specific needs of each customer.
If you are working in a foreign language, a separate report allows you to print price quotations in English, on the basis of English-language values recorded in the system for that purpose.
Priority allows you to maintain records for sales representatives and calculate commissions on the basis of prices in sales orders (regular and commission sales), invoices and receipts. You can designate the percentage of commission each rep is to receive for all orders or for specific part families, as well as the maximum discount the rep is allowed to offer customers.
If one of your customers begins selling your product, you can define the customer as an external sales rep from within the Customers form.
You can link sales reps to their respective customers; consequently, the rep’s name will appear on any orders, invoices or receipts recorded for that customer. A sales rep can also be added manually to any sales document (e.g., price quote, order). The name will then automatically appear on any invoice or receipt based on the order. Invoices or receipts recorded independently by sales reps can be copied and incorporated into the system.
Commission due to sales reps is calculated in commission documents, which can be prepared automatically on the basis of customer invoices or receipts. Once the sales rep’s invoice for the commission is recorded in the system, you can link the commission documents to the invoice.
The Sales Representatives module features a full complement of reports covering all important data regarding sales reps, including orders, invoices and receipts per sales rep; the account balances of each rep’s customers; commission due to each rep; outstanding customer debts per rep; and any instances in which sales reps exceeded the maximum discount they are allowed to award customers.
Sales and Pricing Reports
Reports with asterisks are only available in the dual-currency package.
Data access can be restricted per sales rep, allowing users to view only those data pertaining to the sales reps for which they are authorized.
Prices and Price List Reports
- Customer Prices & Discounts
- Price List-Sorted by Part Number
- Price List-Sorted by Part Desc.
- Price List With Pictures
- Part Prices
- Net Vendor Prices
- Price Quotation Reports
•Print Price Quotation
•Print Quote in Foreign Language*
- Active Price Quotations
- Details of Active Quotes
- Quotes in Preparation
Customer and Sales Rep Reports
- Customer Contacts
- List of Customer Parts
- List of Customers
- Customers and their Sales Reps
- Customer Sites
- Customer Data Report Generator
- Orders per Sales Rep
- Discount Exceptions
- Invoices per Sales Rep
- Sales per Sales Rep (Invoices)
- Receipts per Sales Rep
- Acct Bals for Rep’s Custs(No.)
- Acct Bals for Rep’s Custs(Name)
- Outstanding Debts per Rep (No.)
- Outstanding Debts per Rep
- Aging by 30-Day period per Rep
- Sales Orders
Priority allows you to record sales orders on the basis of existing documents:
• An order can be based on a given price quotation,provided that the quote has the proper status , the order date precedes the quote’s expiration date and the minimum quantity (stipulated in the quote) is ordered. If the quote has been flagged to the Copy All column, all of the quote details are copied into the order (parts, quantities, due dates, prices, discounts). If the quote includes several prices for the same part, depending on the quantity ordered, this is taken into account in determining the part price in the order.
• An order can also be opened on the basis of a blanket order, thereby inheriting the prices and discounts recorded in that blanket order. The ordered quantity will be reduced from the balance in the blanket order until it reaches zero.
In both cases, additional details are also copied into the order (e.g., document currency, payment terms). In the absence of an existing document, these details are taken from the default billing data assigned per customer.
You can also open sales orders for one or more product assemblies, as defined in the Product Assemblies (Sales) form.
When the order is not linked to an earlier document, prices and discounts are determined by price lists, special prices and discounts assigned to the customer. You can also designate a specific price list to be used for an individual order; consequently, all prices will be taken from there.
In addition, sales order data can be loaded from an external source (EDI).
Sales orders can be classified by type. Remarks can be included per line item, which can then be printed out in the order confirmation.
Priority calculates profitability for any resold item, comparing purchase price to sale price and taking into account discounts and sales rep commission.
Additional details recorded in the sales order include: means of shipment, shipping destination (which can be different for each ordered item), due dates for each item, and budget item or profit/cost center per line item.
When a customer shipment is recorded for a given sales order, order balances are updated automatically. The item is closed automatically whenever its balance reaches zero or falls within the part’s defined tolerance range. Orders and order items can also be closed manually.
The user can determine whether to have customer credit calculated anew each time a sales order is recorded or calculated by a program activated at the user’s discretion. Based on either of the above calculations, the system will provide a warning whenever an order is recorded for a customer that has surpassed the defined credit limit.
You can restrict the parts that can be sold to a customer (i.e., can be recorded in a sales order or shipping document) to only those items that appear in the customer’s list of parts. An error message will be received any time an attempt is made to record an order for such a part.
One or more purchase orders can be opened automatically on the basis of a sales order, by defining a vendor for each line item in the Order Items sub-level of the Sales Orders form. You can also open a single purchase order on the basis of multiple sales orders, when the ordered parts are supplied by the same vendor.
Blanket sales orders offer special pricing terms to customers in return for a commitment to order a specified quantity over a designated period of time. By definition, a blanket order generates several different sales orders. Priority provides the means of tracking how much of the blanket order remains to be ordered, as well as the financial value of this balance. The order balance, which is originally identical to the quantity of the order, decreases as orders linked to the blanket order are placed for this part. Once the balance reaches zero, the blanket order item is closed automatically. You can also close the item manually, as well as close an entire blanket order.
When you base a sales order on a blanket order, prices and discounts are automatically taken from the latter, provided that it is still in effect when the sales order is opened. In other words, only orders placed prior to the blanket order’s expiration date will obtain its special conditions.
Forecast and Stock Orders
The Sales Forecasts module can be used to create forecast orders for a specific customer, for a group of customers or for general stock. Priority provides a unique mechanism for using forecast orders to fill actual sales orders: both material requirements planning (MRP) and production planning (finite capacity planning) use the stock planned for forecast orders and orders to stock to meet quantities actually ordered by customers, thereby preventing over-production and reducing inventory carrying costs.
A table of monthly or annual forecasts can be prepared manually or automatically. This table, which delineates those parts expected to be ordered and in what quantities in each month, can be used as the basis for opening forecast orders. This is similar to opening a regular sales order, except that the parts, quantities and due dates are taken from the forecast table.
The default day in the month that serves as the due date for any forecast order item is determined by a constant value. This may be manually revised for specific forecasts.
Keeping Track of Sales Orders
In Priority, you can view a cross-section of data on any open sales order (per line item), which enables you to detect irregularities and supply delays, as well as to scan due dates, shipment dates and expected payment dates (according to the payment terms designated for the customer).
In the dual-currency package, projected payments are converted into the local currency in order to provide a base of comparison and project cash flow.
A variety of reports provide both summarized and detailed information regarding orders per customer, part and/or family; demands versus available inventory; planned supply dates; and supply delays.
When the Sales module is used in conjunction with the Production module (including production planning), you can view the progress of work orders intended for specific orders — namely, the scheduled date of a given order item’s completion by production lot. You can also see current inventory balances and other existing orders for each item in an order.
Priority allows you to track the financial status of each sales order. For example, you can view a customer’s current advance payment balance (how much the customer has already paid, less the amount of advance payment that has already been deducted from invoices).
Any order that was linked to either a price index or foreign currency can be displayed in reports for which price adjustments have been made.
You can also make use of summary reports to arrive at a forecasted cash flow, as well as the value of all balances to ship in open sales orders.
Priority‘s bonuses mechanism allows you to offer bonus items to customers when they order specified quantities of a designated product, or products belonging to a designated part family. There are two types of bonus, the regular bonus and the special bonus:
A regular bonus is awarded to all customers upon purchasing a given product, or products from a given part family.
A special bonus is defined for a specific customer and is only awarded to that customer.
Bonuses can be graduated according to quantity, in order to increase customer incentive by providing larger rewards for larger purchases.
Sales Order Reports
A variety of sales order reports are offered (reports with asterisks are only found in the dual-currency package):
Sales Order Reports
- Order Confirmation
- Order Confirmation–Foreign Lang*
- Sales Orders
- Orders to Carry Out (by DueDate)
- Orders to Carry Out (by Cust.)
- Backlog/Cust. & Inventory Bal.
- Backlog per Customer
- Backlog per Assigned User
- Backlog per Part
- Backlog per Family
- Orders per Project Manager
- Ordered Qty per Part & Customer
- Demands and Inventory
- Work Order Costing for Orders
- Order Supply Reports
•Orders per Part and Due Date
•Available to Promise (Proj Bals)
•Backlog per Customer
- Backlog/Cust. & Inventory Bal.
- Track POs for Sales Orders
- Backlog per Assigned User
- Order Payment Reports
- Financial Status of Orders
- Advance Paym Balances per Order
- Advance Paymt Balances per
- Adjusted Order Prices
- Customer Analysis Reports
- Orders per Customer
- Orders per Customer and Part
- Orders per Customer and Month
- Orders per Month and Customer
- Part Analysis Reports
- Orders per Part
- Orders per Part and Month
- Orders per Month and Part
- Family Analysis Reports
- Orders per Family
- Orders per Family and Part
- Orders per Family and Month
- Orders per Month and Family
- Sales Comparison Reports
Blanket Order Reports
- Blanket Order Confirmation
- BlanketOrder Confirm- ForeignLang
- Status of Blanket Orders
The Commission Sales module allows you to document each stage of a commission sales transaction:
• Price quote – RFQs sent to the vendor, price quotes sent to the customer
• Commission sales order
• Commission sales invoice – reporting the delivery of goods to the customer
• Credit notes – recording the receipt of commissions and the bank transfers by which the vendor paid them.
The commission sales mechanism is different from the general sales mechanism in that it is not connected to the Financials module and does not affect inventory transactions.
Commission Price List
Prices in commission sales are managed in one of two ways, according to a system constant: through the part catalogue or through vendor price lists. The designated price of an item in a commission sale (regardless of which method is used) is entered as the default in any price quote and, if there is no quote, in the commission order itself.
Commission price lists are handled in exactly the same manner as regular vendor price lists and supported by the same maintenance tools (e.g., update, copy, effect date).
Price Quotations (Commission Sales)
A price quote for commission sales is similar to a regular price quote, with the following exceptions:
• The price quote serves two main purposes: to record the customer’s RFQ and to request a price quote from the vendor. After the vendor returns a price quote, the agent records his or her own price quote according to the vendor’s reply and sends it to the customer.
• The prices recorded in the commission sales price quote are taken from the vendor’s commission sales price list or from the commission price designated in the part catalogue.
Maintenance of commission sales price quotations is managed via statuses using the graphic BPM Flow Chart Commiss’n Quotes. After defining the necessary statuses (and the paths that connect them), you can view their attributes in the Statuses for Comm. Sale Quotes form.
A commission order is similar to a regular sales order, with the following exceptions:
• The order is written not only in the customer’s name, but also in the name of the relevant vendor.
• The order can be based on a price quote for commission sales, in which case parts, prices, due dates and the like are taken from the quote.
• If there is no quote, prices are taken from either the vendor’s commission price list or the commission price designated in the part catalogue.
• The commission fee expected from the vendor for the sale is recorded for each item. A default value (which can be changed) is taken automatically from a user-defined commission percentage. This percentage can be designated per vendor or per part family sold by the vendor.
• Calculation of the commission depends upon the value of a system constant. Using the first option, the prices that appear in the vendor price list include the agent’s commission. This commission is calculated according to the formula: (commission percentage × price) / 100. Using the second option, the prices that appear in the vendor price list do not include the agent’s commission. The commission is calculated according to the formula: (commission percentage + 100)/(commission percentage × price).
In each commission order, you can view such data as:
• The order’s status
• Details of reported sales
• The order balance
• The remainder of commission to receive
• Whether the order has been closed (i.e., fully shipped)
Maintenance of commission sales orders is managed via statuses using the graphic BPM Flow Chart Commiss’n Orders. After defining the necessary statuses (and the paths that connect them), you can view their attributes in the Statuses for Commission Orders form.
Tracking Order Supply – Commission Sales Invoice
The Commission Sales Vendor Invoice serves as a shipping report for commission orders. Each line in the invoice reports the shipping of a parallel line item in the order, and updates the order balance.
Maintenance of commission sales invoices is managed via statuses using the graphic BPM Flow Chart Commission Invs. After defining the necessary statuses (and the paths that connect them), you can view their attributes in the Statuses for Invs (Comm Sales) form.
The system includes credit notes that allow you to track the receipt of commissions from vendors. For each credit note you can record the journal entries opened when debiting the vendor’s account for commissions due, and when receiving payment of the commissions.
Commission Sales Reports
Reports with asterisks are only available in the dual-currency package.
Price Quote Printouts
- Print Quote for Commission Sales
- Print CommSale Quote- ForeignLang*
- Print RFQ to Vendor (Comm
- Print RFQ(CommSales)- Foreign Lang*
- Commission Order printouts
- Print Confirmation of Comm Order
- Print CommOrd Confirm- ForeignLng*
- Print Purchase Order to Vendor
- Print PO to Vendor-Foreign Lang.*
- Delivery of Commission Orders
- Commission Due- Invs. & Credit Notes
- Commission Orders per Sales Rep
- Open Quotes (Commission Sales)
- Commission Sales Analysis
- Commission Orders Rep Generator
- Invoice Rep Generator (CommSales)
- Commission Order Analysis (OLAP)
- Comm. Sales Inv. Analysis (OLAP)
The Delivery Scheduling module enables you to plan the delivery of goods to customers by assigning distribution routes and delivery dates to sales orders. You can use an automatic scheduling mechanism, or schedule deliveries manually.
The Schedule Deliveries program assigns a sales order to a delivery according to its due date, the distribution route, the default days of the week the customer routinely receives deliveries, and the company’s operating hours.
Sales order statuses contain an automatic scheduling flag, so that only orders that have the right status are scheduled for delivery.
You can also produce a Delivery Picklist report, which displays a list of all sales orders scheduled for delivery, sorted by distribution route and date. This report is useful for company drivers as they distribute goods to customers.
The Fashion module is designed for manufacturers and distributors in the fashion industry, who supply chains of stores with a variety of styles, each of which is sold in a variety of sizes and colors. Since these transactions involve large numbers of catalogue parts in an almost infinite number of possible combinations, Priority has been equipped with powerful new tools designed to facilitate the massive documentation that is usually required in this field.
The central tool in this module is the assortment matrix, a multi-dimensional chart used to itemize inventory transactions. The chart’s X-axis represents the range of sizes in which the style is produced, and its Y-axis includes a list of colors. The cells of the chart are used to specify how many units of a particular color/size combination are required. The Number of Sets column determines the quantity of complete assortments involved in the transaction.
By assigning a distribution type to every kind of store you supply and a product type to every fashion style, you can create a number of default assortments that prevent you from having to fill in each matrix manually. Furthermore, distribution types allow you to create an automatic distribution list of your customers, from which you can generate purchase orders and packing slips that are itemized by assortment.
In the fashion industry inventory transactions occur between a central warehouse (usually a factory) and specially defined retail warehouses. These latter warehouses may be factory outlets that belong to your company or franchises that belong to your customers. Inventory control is maintained in both cases, in order to ensure that sufficient merchandise is available for sale, even though goods shipped to a franchise are no longer considered company inventory.
Companies using the Fashion module benefit from the following special features:
• User-defined default assortments for inventory transactions
• The ability to update a work order assortment during production
• Automated generation of purchase orders, subcontractor shipment documents and goods receiving vouchers displaying cumulative assortment charts
• Sales rate analysis on the basis of style or store (per style)
• Logistical management including automatic distribution planning (via a unified sales order), purchase orders based on the resulting plan and packing slips
• Automatic conversion of parts in an assortment (e.g.,to Class B merchandise)
• Assortment totals in all documents (in addition to itemization)
• A work area that displays inventory balances on a given date according to style
• The Fashion Wizard, which includes comprehensive explanations, step by step, on how to work with the Fashion module.
Unlike most other computerized costing facilities, which are generally subject to the constraints of the accounting system, Priority offers manufacturing enterprises a module specifically designed for product costing, transaction costing and inventory valuation.
The following costing options are available:
• Actual costs by the FIFO (first in, first out) method;
• Actual costs by the Moving Average method;
• Standard costing (with variances), for use with the COGS module.
In addition, Priority provides for:
• Distribution of expenses (e.g., shipping) over material costs;
• Work order costing;
• Maintenance of actual cost, standard cost and last price — for each part.
Priority offers a separate costing mechanism for retail businesses and a more sophisticated one suitable for manufacturing environments.
Cost Analysis for Businesses
Cost analysis for businesses supports part costing, transaction costing and inventory valuations calculated solely on the basis of material costs. It also has the capability of distributing additional costs, such as shipping fees.
Costing by Last Price or Standard Cost
You can choose to base part costs on last prices or standard costs, instead of calculating actual costs. This method is much faster and simpler than running cost analysis.
• The last price of a purchased part is updated automatically whenever vendor invoices are recorded and finalized. It can also be updated by the user on the basis of a price quote, purchase order or vendor price list, even before the next invoice is received. In addition, a part’s last price can be designated manually. You can calculate the last price of a manufactured part by means of a special program, which takes into account parent-child ratios in the bill of materials, as well as the last prices of required components.
• Standard costs of purchased parts are defined manually by the user. You can calculate the standard cost of a manufactured part by means of a special program, which takes into account parent-child ratios in the bill of materials, as well as the standard prices of required components.
Transactions are costed as they are recorded, according to the purchase price and the quantity in the transaction (see below). Results are used by the COGS module to record inventory transactions against inventory, COGS and variance accounts (for more on COGS, see Section 4.6). Inventory valuations are determined by the inventory balance and the cost of the part.
Priority provides online costing automatically. This is in addition to the more exacting option of running cost analysis programs (see below).
Online costing calculations are based on the order in which transactions are recorded in the system, not on the chronological sequence of events.
Consequently, the more your record keeping reflects the order in which the transactions actually occurred, the more precise the calculations will be.
Online costing works as follows:
• Each receipt of goods is automatically assigned a transaction cost based on available data (e.g., invoice, order).
• Costing for any other type of transaction is calculated automatically, according to the Moving Average method.
• Whenever a receipt of goods is recorded, the current part cost of any received item is updated by calculating the weighted average of its existing cost (prior to the receipt) and the value of the new receipt.
• A warehouse assembly is assigned a transaction cost based on the actual costs of its component parts.
• Whenever a warehouse assembly is recorded, the current part cost of the assembled part is updated by calculating the weighted average of its existing cost (prior to the assembly) and the value of the new assembly.
Part Costing by Moving Average or FIFO
Priority‘s part costing mechanism is a unique utility that allows for the precise calculation of costs, based on component parts and related transactions (e.g., shipping expenses). Unlike online costing, the chronological sequence of transactions is taken into full consideration.
The costing mechanism is highly flexible. By running it in conjunction with the past balance facility (which enables you to capture and freeze a picture of inventory balances for any particular date), inventory valuations based on part costs can be calculated for any date in the past.
Priority offers two methods of costing:
• The FIFO method (first in first out) views the warehouses like a pipe — inventory enters and exits in chronological order; what comes in first goes out first. That is, inventory is valued according to the cumulative cost of the most recent incoming transactions (going backward in time until the entire quantity of existing inventory is covered).
• The Moving Average method views the warehouses like a vat — all inventory that enters is mixed with existing inventory, and what comes out is composed of this mixture. Under conditions of inflation, Moving Average generates lower costs than FIFO.
The calculation of moving average is as follows:
new cost = (previous cost × qty in inv.)
+ cost of new transaction ———————————————————–
current quantity in inventory + new quantity
Costing for purchased items is determined by the price of the item in the transaction, plus the cost of any additional expenses (e.g., shipping) recorded against the transaction.
Each purchased part receives an entry value determined by one of the following:
• The price of the part as it appears in the vendor invoice (after subtracting all discounts), plus any additional expenses (shipping, insurance, etc.)
• When no invoice is available, the price in the purchase order (after deducting discounts).
• When there is no order, the part price in the most recent price list received from the vendor in question.
• When no price list is available, the price in the most recent quote still in effect from the relevant vendor.
• If none of the above exists, the standard price of the part. Transaction Costing
Transaction costing is managed through the Cost Analysis module, rather than through inventory accounts. This allows for the retroactive adjustment of a transaction cost based on updated data — for example, when an invoice for shipping charges is received after the goods have been transferred to another warehouse.
Priority calculates costs online each time an inventory transaction is recorded (that is, every inventory transaction recorded in the Audit Trail receives an updateable online value). This initial cost is updated when the actual invoice or shipping charge is received (generally after the GRV is recorded).
When one of the costing programs is activated, any inventory transaction involving purchased materials is costed as follows (multiplied by the number of units involved in the transaction):
• In the case of a receipt of goods from a vendor,or a return based on that receipt, the (updated) entry value is taken. For instance, if the receipt was initially costed based on prices in a quote from the vendor and an invoice has been received, the cost is now based on the prices in the invoice.
• The same holds for any other transaction in which a purchased part is involved, so long as its lot number can be traced to the original GRV.
• Any other transaction is costed according to a moving average.
Cost Analysis for Manufacturers
In addition to all of the costing options offered in the Cost Analysis for Business module, Cost Analysis for Manufacturers provides for the costing of processed parts, taking into account the bill of materials, the routing, labor and machinery costs, overhead on the plant floor, other attached costs (set-ups, subcontracting, rework), and production reporting. Like Cost Analysis for Businesses, it also calculates the costs of purchased parts, both those used as raw materials in the production of processed goods as well as finished items sold to customers. Here, too, transaction costs derive from part costs and serve as the basis for the Cost of Goods Sold (COGS) program. Inventory valuations may be based on actual or standard costs.
The costing programs for manufacturers enable calculations of standard and actual costing, where the latter may be determined by either the Moving Average or FIFO method.
Standard Costing of Parts
The standard cost of a processed part derives from the sum of the standard costs of its raw materials and the standard production costs of all sub- assemblies in its bill of materials (BOM), based on parent-child ratios recorded during factory modeling.
The following is a detailed list of the relevant costs:
•Standard part costs of all raw materials in the BOM (standard purchase price × standard parent-child ratio)
•Machinery costs of all operations executed on all parts in the BOM:
- Direct machine costs
- Direct set-up costs
- Indirect machine costs
- Labor costs of all operations executed upon all raw materials in the BOM (skilled and unskilled labor):
- Direct labor costs
- Direct set-up costs
- Indirect labor costs
- • Additional costs
- Subcontracting costs for each part in the BOM
- Charges for related services or non-inventory parts (e.g., consulting fees, storage)
- Charges for supplies required for production that are not part of the BOM (e.g., machine oil)
- The following is a detailed description of the standard processing cost components:
- Standard Machinery Costs
There are three types of recorded standard machinery costs: direct costs for job processing, direct set-up costs and indirect costs.
- • Direct Processing Costs = Hourly machine cost × machine time
• Set-up Costs = Hourly machine cost × (set-up % × machine time)
• Indirect Costs = Indirect machine cost × [machine time + (set-up % × machine time)]
- Standard Labor Costs
There are three types of labor costs: direct costs for job processing, direct set-up costs and indirect costs. There are two methods of calculating labor costs, depending on whether the worker is skilled or unskilled.
- Costs of unskilled labor at any given work cell are as follows:
• Direct Costs = Hourly labor cost × unskilled labor time
• Set-up Costs = Hourly labor cost × (set-up % × unskilled labor time)
• Indirect Costs = Indirect labor cost × [unskilled labor time + (set-up % × unskilled labor time)]
Costs of skilled labor at any given work cell are as follows:
• Direct Costs = Hourly skill cost × number of skilled workers × skilled labor
• Set-up Costs = Hourly skill cost × number of skilled workers × (set-up % × skilled labor time)
• Indirect Costs = Indirect skill cost × [(number of skilled workers x skilled labor time) + (number of skilled workers × set-up % × skilled labor time)]
- The direct and indirect costs of skilled labor are defined per skill.
Standard Costs of Indirect and Additional Costs
There are three types of costs that are added to standard part costs: the standard cost of using a subcontractor, standard charges for related services or non-inventory parts, and standard charges for supplies.
• Standard subcontracting costs refer to the average cost of subcontracting for the part in question.
• Charges for related services (non-standard costs) refer to the average burden added to the part cost from orders of non-inventory parts (e.g., consultations, storage). These are charged to the part when they are purchased.
• Charges for supplies (supply costs) refer to the average expense added to the part cost from materials required for production that are not part of the BOM, but which are necessary for production (e.g., machine oil, pencils, lavatory soap). These expenses are charged to the part when the supplies are issued.
Actual Product Costs and Work Order Costing
Priority is capable of managing product costing and inventory valuation for each individual work order. The cost of the part in question is calculated, either by the Moving Average or the FIFO method, in accordance with costs of any work orders closed during the designated costing period.
Costing of an open work order (required for inventory valuation) is determined by its accumulated production outlays less the cost of the quantity (for the same work order) that has already been transferred to a warehouse. The cost of the transfer is calculated by multiplying the quantity of items involved in the transaction by the part’s standard cost.
When work orders are not maintained for a particular part, the part cost equals its standard cost. The one exception to this rule is assembled parts (warehouse assemblies); these are calculated by reported quantities of assembled components multiplied by their actual costs.
Product Outlay Based on Reports of Production
Whereas the costing of purchased parts simply entails linking their purchase price to any given inventory transaction, the costing of manufactured items also requires the calculation of production costs. Moreover, for many processed parts, costs are calculated per individual work order. Costing for a work order needs to take into account the costs of any component work orders (i.e., the work orders of child parts). As at least some of these parts are likely to be issued to the parent before their costing has been calculated (because final costing is not determined until the work order is closed), the cost recorded for them does not necessarily reflect their actual cost. Consequently, in the absence of a retroactive update of the value of issues to work orders (both for purchased and manufactured parts), the calculated cost of the work order is considerably removed from the actual cost.
In most costing systems, work order costing is carried out by opening an account or cost center and attaching the costs of transactions to it. This approach is problematic when it comes to recording costs other than those of materials, such as labor, machine time, set-ups, rework and indirect production costs.
Priority‘s product costing system, in contrast, applies an innovative approach to the costing of work orders, based on reported production. A special program records all the outlays that have accumulated and/or been updated for a specific work order since the last costing run. It also takes into account the standard costs of completed but unreported production steps (based on the part routing). In this way, the user receives an up-to-date picture of all the actual costs for the work order in question.
Work Order Costing
The actual cost of a manufactured part is determined by the costs of all work orders for that part that have been closed since the last costing run. This calculation is made on the basis of either the Moving Average or the FIFO costing method. If no work order has been closed, the part’s actual cost is copied from the previous costing run. If this is the first run, it is determined by its standard cost.
The cost of a given work order is determined by its own processing costs (machinery and labor), material costs and additional costs, as well as those of any child parts in the part’s bill of materials.
Processing costs are calculated on the basis of production reports for the work order in question (e.g., quantities reported, machine time, labor time, employee number in the case of skilled labor). For any unreported operations in the routing (i.e., floor inventory that is estimated by backflushing), standard production costs are be taken into account.
Finally, additional costs are determined by the costs of any subcontracting, supplies, purchased services and the like that have been charged to the work order in question.
Distributing Costs of Issued Items to the Work Order
Another difficulty in managing floor inventory and assigning costs to processed parts stems from the issue of items to kits (i.e., the manual issue of costly components to specific work orders, as opposed to regular issues from floor stock automatically calculated by backflushing). Frequently, the quantity of the component that is needed for the kit is considerably smaller than the quantity included in a single package of this material. When dealing with a very expensive item, which should remain in its packaging as long as it is not being used, it is common practice to issue the entire package to the work order and subsequently record a return of the balance to the warehouse. If the work order has been closed (or costing has been calculated) before the warehouse return has been recorded, its actual cost will inaccurately include the cost of all the material in the package, and not just the amount actually used for the work order.
Priority resolves this problem by offering the option of manual, controlled issues from floor stock. The entire package of materials is issued to the plant floor (rather than to the work order), and then the precise quantity needed is issued manually to the work order.
As with costing for businesses, you can maintain last prices for all purchased parts. In addition, a special program allows you to calculate the last prices of processed parts, based on all parent-child ratios in the BOM, as well as the last prices of any required raw materials. The program updates the last price not only for the designated final product, but also for any intermediary parts in its BOM of materials (i.e., sub-assemblies). You can also designate a last price for any manufactured part manually.
Cost Analysis Reports
The following costing reports are available (reports with asterisks are offered only in the dual-currency package):
Cost Analysis for Businesses
- • Actual Cost Analysis
- • Analysis of Standard Cost
- • Analysis of Last Price
- • Analysis of Standard Cost (2nd Curr)*
- Costing for Manufacturers – Parts
- Material Costing
- Product Cost Components
- Time-phased Part Costing
- Part Costing Comparison – 2nd
- Standard Cost Analysis
- Product Costing
- Product Cost Components – 2nd Curr*
- Part Costing Comparison
- Cost of Incoming Transactions
•Actual Cost Analysis
Costing for Manufacturers – Lots and Work Orders
- Lot Costing
- Work Order Cost Components
•Work Order Costing
•Work Order Cost Components – 2nd Curr*
- Issues to Work Orders
- Work Order Outlays per Period
- Work Ord Outlays per Per. – 2nd
- Actual vs Std Production Costs
- Actual vs Std Production – 2nd Curr*
- Inventory Valuation
One of the most important tools Priority provides for determining inventory values for any given date is the ability to calculate past balances. This mechanism allows you to obtain a picture of inventory at any set moment in time, and specifically for a date in the past.
- Inventory valuations are carried out on a past date whenever the Costing for Past Balance Date program is run. This enables the dynamic calculation of inventory values, as past balances can be calculated for virtually any date. Valuations take into account the quantity of inventory on the past balance date (past balance quantity).
- In addition, inventory valuations can be calculated for today’s date by running the Costing for Current Date program.
- There are three types of valuations: standard, actual and materials: Standard Value = Part’s past balance quantity × part’s standard cost Actual Value = Part’s past balance quantity × part’s actual cost
Materials Value = Part’s past balance quantity × part’s actual material costs
- The value of inventory in an open work order that is still on the plant floor is determined by the total value of production outlays for the work order in question and for all children at all levels of the part’s BOM, less the (standard) value of any quantity of that work order that is no longer in the factory (e.g., because it was issued to a parent part, sent to the customer, disposed of).
- Only inventory in warehouses (including the plant floor) that are flagged for costing are taken into account.
- Transaction Costing and Inventory Valuation Reports
The following transaction costing and inventory valuation reports are available in the Cost Analysis for Businesses and/or Cost Analysis for Manufacturers modules (asterisked reports appear only in the dual-currency package):
Transaction Costing Reports
- Transaction Costs per Part
- Summary of Trans. Costs & Qtys
- Summary of Trans Costs by
- Summary-Warehouse Trans. Values
Total Inventory Valuation Reports
- Inventory Valuation Summary
- Inventory Valuation by Warehouse
- Inventory Valuation by Part
- Inventory Valuation per Family
- Inventory Valuat’n by Lot/Wk Ord
- Std Valuation by Cost Component
- Inventory Aging
- Materials Inventory Valuation Reports
- Materials Inv Valuation Summary
- Mater Inv Valuation by Warehouse
- Materials Inv Valuation by Part
- Materials Inv Valuation by Lot
- ABC for Material Inv. Valuation
- ABC for Mat. Inv Valuation – 2nd Curr*
- Part Inventory Valuation Reports
- Part Inv. Valuation – Summary
- Part Inv Valuation by Warehouse
- Part Inv. Valuation per Part No.
- Part Inv. Valuation per Family
- Part Inv Valuation by Work Order
- Inv Val – Open Work Orders (WIP)
- Time-Phased Inventory Valuations
- Inventory Valuation per Part
- Inventory Valuation by Warehouse
- Inv Val per Part and Warehouse
- ABC Reports
Priority offers two ABC reports:
• The ABC for Material Inv. Valuation report displays the value of material inventory according to ABC class, for a specified costing date, calculated by last price, standard cost or actual part cost.
• The ABC for Raw Materials report displays the total value of all issues of raw materials over the designated period, according to ABC classes. The types of issues covered include issues to floor stock, issues to kits, manual issues, issues of supplies, warehouse assemblies and automatic transactions (i.e., backflushed issues).
The designation of percentile values for each class is flexible and determined by the user. The predefined defaults are 10%, 20% and 70%. In the ABC for Raw Materials report, the value of issues for a particular part determines the ABC class to which the part is allocated. The report compares the part’s “standard” class with the class assigned to it over the period for which the report is run. The former remains constant over time, whereas the latter may change every time a new report is generated. Both are displayed in the report.
A broad spectrum of reports is included in this module, which allow for the analysis of sales revenue from a number of different perspectives (customers, parts, families).
The distinction between this module and the Customer Relations Management, Sales and Inventory modules is merely a logical one. In practice, there is a constant flow of data between the modules. For instance, invoices can be generated on the basis of unbilled shipments; or they can record the shipment of goods as well as payment due (combining an inventory transaction with a financial one), on the basis of a sales order. Similarly, financial data can flow to the Sales module — for example, to inform sales representatives of the financial position of customers, particularly their credit balances.
In the same manner, financial transactions that transpire in the Accounts Receivable module directly affect data in the general ledger: recording of an invoice or receipt automatically creates a journal entry, which can then be authorized and posted with the push of a button, or posted automatically. These journal entries then further affect additional processes in the Financials module, such as cash flow forecasts, projected profit and loss, budget analysis, etc.
4.2.1 Customer Invoices
Invoices can be created on the basis of sales orders and/or shipping documents. This linkage allows for the automatic retrieval of data, such as prices and discounts, payment terms, order balances, and shipped quantities. In the case of an invoice that doubles as a shipping document (i.e., sales invoice), shipped quantities are compared to the order’s balance to ship, taking into account the defined order tolerance. These features provide important controls for preventing errors (in terms of quantities, prices and discounts), while eliminating the need to retype existing data. The price source of each item is displayed in the invoice, as is an electronic signature.
Invoices (and receipts) can include prices in currencies other than the customer’s billing currency, even when the latter is a foreign currency (all sums are converted automatically to the customer’s billing currency when entered in the journal).
Until an invoice has been approved, it is considered pending. At this stage, it may be revised or deleted and it may only be printed as a draft. Any invoice can be flagged as “being checked,” which prevents it from accidentally being finalized before the check has been completed. Once authorized and finalized, a journal entry will be recorded, with sums distributed among accounts in keeping with the designated entry code.
If errors are discovered after the invoice has been finalized, a cancellation invoice can be created, which both cancels out the original document and creates a reversing journal entry. (If the invoice doubles as a shipping document, a reversing inventory transaction is created as well.) All this is achieved by a simple mouse click from the invoice form. You have the choice of canceling on today’s date (i.e., the cancellation invoice and its accompanying reversing entry will be dated on the current date) or on the original transaction date.
If a particular customer has been assigned a billing customer, the journal entry for the invoice is recorded against the billing customer’s account in the ledger. For each customer, you can determine whether invoices are sent to the actual recipient of the goods or to the billing customer.
The system also supports the recording of invoices for a general walk-in customer (per company or per branch). All walk-ins are assigned a general account (shared by all customers who do not have their own A/R account), eliminating the need to open a new account every time a sale is made to such a customer. The actual customer’s name and other identifying information are recorded directly in the invoice in question, while the journal entry associated with the transaction is recorded against the general walk-in account in the accounts receivable sub-ledger. A separate form enables you to retrieve existing invoices and/or receipts for a given walk-in customer by customer name. Aging for walk-in customers may be viewed per order.
A number of types of customer invoice are available in Priority:
• Sales invoices
• Over-the-counter invoices
• Multi-shipment invoices
• Advance payment invoices
• Pro forma invoices
• Export invoices (dual-currency package only).
Each type of invoice is explained in detail below.
Sales invoices combine two functions: invoicing and shipping. They are used to debit sales and to record the supply of goods to the customer. As such, they also reduce inventory levels of the sold part in the warehouse.
Sales invoices may be itemized automatically on the basis of one or more sales orders, or they may be prepared manually. If based on a sales order, the invoice is filled in with ordered parts, their balance to ship, prices, discounts and payment terms — all taken from the designated order. If order prices are linked to a price index or foreign currency, prices in the invoice are adjusted accordingly. All of these details may be manually revised as long as the invoice is still pending (i.e., has not been finalized).
The quantities of items in the invoice are based on the order item’s balance to ship, and that balance is updated accordingly. If goods have already been packed for the customer, these packed goods are sent to the customer. If not, goods are taken from available warehouse stock (from any status which is considered saleable, i.e., “Goods”). If the quantity of packed goods is insufficient to fill the order balance, additional goods are taken from general stock. In all cases, warehouse balances are updated accordingly. As with a regular shipping document, the system allows items stored in different bins to be recorded in the same document.
If the invoice is not based on an order (and has therefore been itemized manually), prices and discounts are filled in automatically with those ordinarily assigned to this customer.
A sales invoice can also be used to record the return of goods from a customer and to credit the account for the return, by designating negative quantities in the invoice.
Over-the-counter invoices are used when a customer pays for goods immediately upon their receipt during an over-the-counter sale.
Such invoices are considered both an inventory transaction and a financial transaction: they reduce inventory of the sold part and record the sale in the general ledger. In addition, they record the receipt of payment from the customer.
An over-the-counter invoice can be itemized automatically (parts, prices, discounts, quantities) on the basis of a specific sales order or selected order items, or prepared manually, just like a sales invoice. Itemization of payments (cash, checks, credit card payments, etc.) is carried out in a similar manner to that of a regular receipt.
An over-the-counter invoice cannot be finalized unless the sum of the payments equals the amount owing in the invoice. Once the invoice is final, a journal entry is recorded (similar to a sales invoice). In addition, the balance of the cashier at which the money is deposited is updated.
Multi-shipment invoices are used to debit sales to customers when you want to create an invoice independently of a shipping document (e.g., when the invoice is not mailed together with the shipment, or when you want to bill several shipments in the same invoice). In addition, they may include credits to the customer for goods that were returned or overcharged. These credits are deducted from the total amount owing in the invoice. Note that the creation of a multi-shipment invoice has no effect on warehouse balances, in contrast to sales invoices and over-the-counter invoices.
A multi-shipment invoice can be recorded on the basis of a single customer shipment, all shipments made over the course of a specified period, or a number of shipping documents.
Multi-shipment invoices can be prepared automatically, by linking them to one or more documents (customer shipments, projects, service calls, service contracts), or they can be itemized manually. When linked to a customer shipment, parts, prices, discounts, payment terms and quantities are taken from the inventory transaction.
You can use the Prepare Multi-Shipment Invoices program to create a batch of invoices for multiple documents and customers. If a customer is set up to be billed at regular intervals, a single invoice is prepared for all documents of the same type (e.g., customer shipments) that were recorded within the designated period (negative quantities are used to credit returned goods). Otherwise, a separate invoice is prepared for each document.
Invoices may be prepared for the date recorded in the document, today’s date or any other specified date. If an invoice has already been opened for the customer on the date in question, the new charges are added to the existing invoice. Should any of the customers in question have a billing customer, the invoice is prepared for the latter. Furthermore, all documents of the same type that were recorded for different customers but specify the same billing customer are combined in the same invoice.
Advance Payment Invoices
Priority allows you to record advance payments against a given sales order without the need to designate specific parts. When the invoice in question is finalized, the advance payment balance of the order is updated. Each subsequent invoice recorded for this order is then reduced by a certain percentage (designated in the order) against the advance payment, until the advance payment balance on account reaches zero.
The advance payment facility is useful for large orders where several deliveries and invoices are sent to customers. It enables you to keep track of advance payments and/or installments. By recording advance payment invoices and receiving advance payments from the customer, you create an advance payment balance. Consequently, subsequent invoices sent to the customer for these same shipments will be smaller than usual. That is, they will be reduced by a percentage of the invoice’s total value, according to the advance payment percentage specified in the order. This deduction from the invoice will appear on a separate line, for the “Prepayment” item and will have a negative value. The amount deducted in the invoice will also be deducted from the advance payment balance until it reaches zero.
Pro Forma Invoices
Priority offers a comprehensive utility for managing business transactions on a cash basis, including pro forma invoices and journal entries, which do not affect the ledger balance or appear in financial statements. You can perform separate reconciliations for pro forma entries and for regular entries, and you can run customer credit reports and aging reports that take pro forma transactions into account.
When working on a cash basis, you do not debit the customer’s account in the ledger until after receiving payment for services rendered. Consequently, you cannot use regular invoices to bill the customer for these services. Instead, you record a pro forma invoice after performing the service and prior to receipt of payment.
Pro forma invoices can be prepared in batch, on the basis of sales orders, customer shipments, service calls, service contracts and warehouse transfers.
When payment is received, you can open receipts on the basis of the pro forma invoice, then record a multi-shipment invoice on the basis of the receipt(s). Once this invoice is finalized, a regular journal entry is opened automatically for the invoice and reconciled with the entry for the receipt(s). You can also open and reconcile pro forma entries manually.
Export Invoices (dual-currency package only)
The system enables you to record invoices and credit memos to customers in English, when working in a foreign language. These documents are created in a similar manner and have the same attributes as multi-shipment invoices.
Crediting the Customer
In the event of an overcharge or a return of goods, there is a need to credit the customer’s account. Priority offers two basic methods for this purpose. One way is to record a credit memo; the other is to credit the return in an invoice. You can either record credits together with debits in an invoice, in which case the credits appear as negative amounts, or record only credits, in which case the invoice can be setup to appear as a credit memo, using positive values.
A credit memo does not affect inventory levels. It is therefore always used when you wish to credit the customer for an overcharge. When a customer returns damaged or unwanted goods, the credit memo must be accompanied by a separate return document (which does update inventory balances). Another option is to include the credit for the return within a sales invoice, as a negative quantity (as that also affects warehouse levels).
Credit memos for a return of goods can be created automatically based on one or more customer return documents. Credit memos for overcharges are itemized manually.
Receipts are used to record payments from customers, as well as to apply those payments to specific invoices (or orders, in the case of a walk-in customer). Payments can be made against several invoices; likewise, several receipts can be reconciled against the same invoice (that is, partial payments can be recorded). Receipts may also be recorded without reference to any invoice or order.
Once a receipt is finalized, a journal entry is created that credits the customer’s account. Consequently, the invoices being paid are reconciled automatically with the receipt. The same reconciliation number appears against the two journal entries in the customer’s account.
You can easily designate which invoices are being paid for, selecting them from a list of outstanding invoices for that customer. All flagged invoices, together with the newly recorded payment, are be reconciled when the receipt is finalized.
The system allows you to record partial and/or installment payments. Outstanding balances are maintained for each invoice, and you can view the current status of any given invoice in the Outstanding Debt by Invoice report. When a partially paid invoice is displayed in the Outstanding Invoices form, both the sum originally owed as well as the current payment balance are displayed.
You can record a variety of payment means: cash, checks and credit card payments, and so on. Once all details have been checked and the document is finalized, the balance of the receiving cashier is updated.
Receipts can include prices in currencies other than the customer’s billing currency, even when the latter is a foreign currency (all sums are converted automatically to the customer’s billing currency when entered in the journal).
Receipts are similar to other financial documents in that they can be printed and, if need be, canceled. Pending receipts can be deleted.
The Receipt Details – Paid Invoices report displays the details of designated customer receipts, including the invoices or other financial transactions against which the receipts were made. You can choose to exclude pending and/or canceled receipts from the report.
Each customer can be assigned a rate of finance charges that will be owed in the event of late payment. This entails an initial rate to be charged so long as amounts owing remain within a designated range, as well as a penalty rate to be applied once the account balance exceeds that limit. Finance charges are calculated on a daily basis, taking into consideration the customer’s account balance for that day.
• The Daily Finance Charges report displays finance charges owed by designated customers, calculated on a daily basis.
• The Charges Billed to Customers report displays a record of finance charges already billed to designated customers (based on final invoices created for this purpose).
Credit and Aging
Priority allows for the calculation of customer credit, determined by:
open orders + delivered goods/services not yet invoiced + invoiced goods/services for which payment has not been received
In the dual-currency package, customer liability is also calculated, based on the above formula with the addition of post-dated checks. When the customer pays with a post-dated third-party check (or with a bank check), the system does not add the sum to the customer’s liability.
Credit (and liability) limits can be assigned to each customer. Balances indicate what portion of the limit has already been used. Once a customer has exceeded the assigned limit, a warning message appears whenever subsequent orders are placed (as well as when new shipments, service calls or invoices are recorded). You can choose between online calculations of credit usage (as documents are recorded) and periodic calculations at your discretion.
A number of reports are available to give you an overall picture of customer debt:
• Customer Credit – displays the total amount of credit already afforded to the customer on the day the report was run. A negative credit balance indicates that the customer has overstepped the credit limit.
• Customer Liability (dual-currency package) – displays the liability of designated customers. A negative liability balance indicates that the customer has overstepped the liability limit.
• Customers’ Average Late Payment – based on past performance, displays the average number of days that the customer is late in paying bills.
Aged Receivables and Open Invoices
Priority offers a variety of reports on outstanding customer debts and aging. Some reports summarize the amount owed per customer; the more detailed reports delineate outstanding invoices:
• Aging by 30-DayPeriod–displays the amount owed by individual customers per 30-day aging period, i.e., current debt, 1–30 days, 31–60, 61–90 and over 90 days.
• Aging Work Area–displays information similar to the periodic aging report, and features a number of retrieval and sorting options.
• Monthly Aging by Account – displays the amount owed by individual customers per month.
• Monthly Aging by Trial Bal. Item – displays the amount owed by a group of customer accounts (represented by the same trial balance item) per month.
• Daily Aged Receivables – displays the amount owing from individual customers on a daily basis, together with the number of days payment is overdue.
• Weekly Aged Receivables – displays the amount owing from individual customers on a weekly basis.
• Aged Receivables by Invoice–displays all overdue invoices sorted by due date. In the dual-currency package, this same report is also available in the account currency.
• Detailed Aged Receivables – displays invoices that have not been paid, receipts for partial payments against these invoices and early payments.
• Outstanding Debts by Orders – displays overdue invoices for (walk-in) customers whose payments are reconciled by order (all invoices linked to a particular order are outstanding until the whole order has been paid for).
• Open Transactions as of Date – Detailed – displays all invoices that were owed on any specified date. This is useful for viewing the state of the customer’s account at some point in the past (e.g., the end of the previous month).
• Open Transactions – Monthly Summaries – displays amounts owed per month from a specified (past) date. The user determines the number of months for which figures will be displayed. Any open transactions that fall before the given starting point will appear in a pre-period column.
• Consolidated Aging – a pair of reports that display aging data for a multi- company enterprise.
• Restricted Customers – a list of customers who have been restricted or are about to be restricted (i.e., have been warned) owing to outstanding debts. Certain financial documents cannot be recorded for restricted customers, as defined in the attributes of customer statuses.
Priority offers the following customer statements:
• Print Customer Statement – includes all transactions recorded against the customer’s account.
• Print Customer Statement With Aging – displays outstanding transactions recorded against the customer’s account; also presents the outstanding account balance broken down into aging periods.
• Print Customer Statement With Aging – Engl (only available in the dual- currency package).
• Customer Statement: Cash-Based Accounting – includes all transactions recorded against the customer’s account during the designated period, when working on a cash basis.
4.2.6 Sales Revenue Reports
A number of reports display revenues per customers and per sold part over a designated period. Selected reports also display generated profits. Most of the reports are based on finalized invoice data. Other reports allow you to include pending invoices.
Some of the analyses report revenue on a monthly basis (e.g., Customer Sales per Month); others report over a user-designated period (e.g., Customer Sales). Part analysis reports display quantities sold in addition to revenues (e.g., Part Sales per Month).
In addition to standard reports, you can run the Invoice Analysis (OLAP) report in a variety of cross-sections and formats. You can also custom-design a variety of reports using both the Sales Report Generator, which takes into account final shipping documents and sales invoices, and the Customer Invoice Report Generator, which takes into account data from all types of final invoices. The former is useful when shipments are billed on a monthly basis, such that invoice data is not available until the end of the month; the latter is useful when you want to focus on invoice data (disregarding unbilled shipments). You can use either facility to design summary reports, which provide a broad overview, as well as more detailed reports that offer specific information about individual sales transactions.
The following reports are available (asterisks indicate reports offered in the dual-currency package only):
Invoice Analysis Reports
• Monthly Sales (by Invoice)
- • Branch Sales (Invoices)
- • Inactive Customers
- • Invoice Analysis (OLAP)
• Sales per Sales Rep (Invoices)
• Invoices and Their Payment
• Customer Invoice Rept Generator
Customer Analysis Reports
- • Customer Sales (Invoices)
- •Sales in Period-Inc. Pend. Invs
- • Customer Sales per Month (Table)
- • Customer Sales by Part (Inv.)
- • Detailed Customer Sales (Inv.)
- • Customer Sales per Month (Inv.)
- • Monthly Sales per Customer (Inv)
Part Analysis Reports
- Part Sales in Period (Inv.)
- Part Sales per Month (Inv-2nd Curr)*
- Part Sales per Quarter (Inv.)
- Monthly Profit from Part (Inv.)
- Part Sales per Month (Inv.)
- Part Sales per Month (Table)
- • Profit from Part Sales (Inv.)
- Acct Family Analysis Reports
- Part Sales per Family (Invoices)
- Quarterly Sales per Family (Inv)
- Monthly Sales per Family (Invs.)
- Profit per Family (Invoices)
A broad spectrum of reports is included in this module, which allow for the
analysis of purchasing expenses from different perspectives (by vendor, by
The distinction between this module and the Purchasing and Inventory modules is merely a logical one. In practice, there is a constant flow of data between the modules. For instance, invoices can be generated on the basis of unpaid goods receiving vouchers (thereby updating outstanding balances), or they can record the receipt of goods as well as payment due (combining an inventory transaction with a financial one), on the basis of a purchase order.try
Similarly, financial data can flow to the purchasing department — for example, in regard to outstanding debts and payment balances.
In the same manner, financial transactions that transpire in the Accounts Payable module directly affect data in the general ledger: the recording of an invoice, check payment or bank transfer automatically creates a journal entry, which can then be authorized and posted with the push of a button, or posted automatically. These journal entries then further affect additional processes in
the Financials module, such as: cash flow forecasts, projected profit and loss, budget analysis, and the like.
Invoices from Vendors
Invoices received from vendors can be automatically recorded on the basis of purchase orders and/or goods receiving vouchers (GRVs). This linkage allows for the automatic retrieval of data, such as prices and discounts, payment terms, order balances, and received quantities. In the case of an invoice that doubles as a GRV (i.e., a “vendor invoice”), received quantities are compared to the order balance, taking into consideration the defined order tolerance. These features provide important controls for preventing errors (in terms of quantities, prices and discounts), while eliminating the need to retype existing data. The price source of each item is displayed in the invoice, as is an electronic signature. In addition, debit memos to vendors can be prepared automatically in the event of an overcharge.
Until an invoice has been approved, it is considered pending and may be revised or deleted. Any invoice can be flagged as “being checked,” which prevents it from accidentally being finalized before the check has been completed. Once authorized and finalized, a journal entry is recorded, with
sums distributed amongst accounts in keeping with the designated entry code.
If errors are discovered after the invoice has been finalized, a cancellation invoice can be created, which both cancels out the original document and creates a reversing journal entry. (If the invoice doubles as a goods receiving voucher, a reversing inventory transaction is created as well.) All this is achieved by a simple mouse click from the invoice form. You have the choice of canceling on today’s date (i.e., the cancellation invoice and its accompanying reversing entry are dated on the current date) or on the original transaction date.
If necessary, you can prevent the preparation of payments for a given vendor or for a specific purchase invoice. In the latter case, the invoice may be recorded in the ledger, whereas payment is blocked.
Priority provides a number of methods for distributing the costs of shipping, storage and the like (including customs duty in the dual-currency package) over the cost of purchased materials. If these indirect costs are billed in the same invoice as the purchases, the former are distributed over the latter.
Another option is to assign a fixed percentage of the part cost and calculate that as the average indirect cost. This is particularly useful until an actual invoice is received for these additional expenses. When expenses are recorded in separate invoices (e.g., from different vendors), they can be attached to purchases via a shipping voucher. An Expense Invoice Work Area allows you to quickly prepare single-item expense invoices.
The system also supports the recording of invoices for a general one-time vendor. All one-time vendors are assigned a general account (shared by all vendors who do not have their own A/P account), eliminating the need to open a new account every time a purchase is made from such a vendor. The actual vendor’s name and other identifying information are recorded directly in the invoice, while the journal entry associated with the transaction is recorded against the general walk-in account in the accounts payable sub-ledger.
You can record invoices received from vendors in one of two ways:
• As a vendor invoice (which doubles as a receiving transaction)
• As a multi-GRV invoice (which bills several shipments simultaneously).
Each type of invoice is explained in detail below.
Vendor invoices combine two functions: invoicing and receiving. In this way, you document both the billing and the receipt of goods themselves (eliminating the need to record a separate goods receiving voucher). Once the transaction is documented, inventory levels are updated for the received parts.
Vendor invoices may be itemized automatically on the basis of one or more purchase orders, or they may be recorded manually. If based on a purchase order, the invoice is filled in with the ordered parts, the balance to be received, prices, discounts and payment terms — all taken from the designated order. If order prices are linked to a price index or foreign currency, prices in the invoice are adjusted accordingly. All of these details may be manually revised as long as the invoice is still pending (i.e., has not been finalized).
Vendor invoices can include prices in currencies other than the customer’s billing currency, even when the latter is a foreign currency (all sums are converted automatically to the customer’s billing currency when entered in the journal).
Received quantities are checked against the order balance, taking into consideration the defined percentage of order tolerance. If the check succeeds, the quantities of items in the invoice are based on the order item’s balance to be received, and that balance is updated accordingly (as are warehouse levels of the received parts). Each received part is assigned its pre-determined entry status (designated per part). The receipt of parts with serial numbers is tracked as in a regular receiving document).
If the invoice is not based on an order (and has therefore been itemized manually), prices and discounts are filled in automatically with those ordinarily afforded by this vendor, using the same method applied in regular goods receiving vouchers.
Multi-GRV invoices are used to record vendor invoices received independently of shipping documents and goods (e.g., when the invoice does not accompany the shipment, when the vendor bills you for several shipments in the same invoice). In addition, they may include credits for goods returned,
which are deducted from the total amount owing in the invoice. Note that the creation of a multi-GRV invoice has no effect on warehouse balances, in contrast to vendor invoices.
A multi-GRV invoice can be recorded on the basis of a single goods receiving voucher (GRV); all receipts of goods over the course of a specified period; or a number of specific GRVs.
Multi-GRV invoices can be itemized automatically by linking them to one or more goods receiving vouchers. Consequently, parts and quantities are taken from the vouchers (with returns in negative quantities). Additional items may be recorded as well. Prices are based on the appropriate purchase price, unless the designated GRV was linked to a purchase order; in that case, the order number is filled in and prices are taken from the order. If order prices are linked to a price index or foreign currency, prices in the invoice are adjusted. At any rate, prices and quantities can be manually revised.
The multi-GRV invoice can also be itemized manually.
Receiving Credit from the Vendor
Priority offers three basic methods for recording credit due for an overcharge or a return of goods:
• If you have received a credit memo from the vendor, you can record a copy of that memo.
• If you have received credit within an invoice, you can record the credit (using negative amounts) in the copy of the invoice that you enter into the system.
• If the vendor has not given you credit, you can request it via a debit memo. Credit Memos From Vendors
In the event of overcharging or the return of goods to a vendor, it is possible to record a copy of the credit memo sent by the vendor. These memos do not update inventory balances. Therefore, if goods have been returned, the credit memo must be accompanied by a return document (which revises warehouse levels accordingly).
You can itemize a credit memo for returned goods automatically by basing it on a return to vendor document.
Crediting Amounts in an Invoice
You can use a vendor invoice to record returns by designating negative quantities. If the return is for all of the received goods, this can serve as a cancellation invoice; by linking it to the original invoice, the two are reconciled automatically. Consequently, the original (now canceled) invoice ceases to
appear in outstanding debt reports.
Debit Memo to Vendor
You can also initiate a memo that debits the vendor for returns of goods or for overcharging (as opposed to credit awarded by the vendor).
The memo can be itemized automatically by linking it to a return to vendor document (in case of returns) or a multi-GRV invoice (in case of overcharging). You can also open a debit memo manually. When the debit memo corrects for overcharging in a recorded multi-GRV invoice (identified by its internal invoice number), it is automatically itemized with all the parts for which there was a discrepancy between the order and the invoice — in terms of price, discount or quantity.
Priority offers two options for recording payments to vendors: check payments and bank transfers.
Payments may be made against specific invoices or they may be unrelated to any particular invoice. They can be prepared automatically in batches or manually per payment document (see below).
Once the payment has been checked, authorized and finalized, a journal entry is created that credits the vendor’s account. Consequently, the invoices for which the payment is being made are automatically reconciled with the payment. Checks and bank transfer instructions can be printed once payment has been finalized.
Batch preparation of payment documents entails four main steps:
1. Flagging the outstanding invoices to be paid.
2. Designating partial payments (where applicable).
3. Preparing the payment documents.
4. Printing the checks or bank transfer notices.
Flagging Invoices for Payment
Invoices can be flagged for payment either manually or automatically. When working manually, you select the desired invoices from a list of outstanding invoices (i.e., those which have not yet been reconciled with payments).
Automatic flagging is carried out separately for each vendor. A special program allows you to flag all outstanding invoices from the vendor in question, which are due up to a specified payment date (or recorded up to a specified invoice date). You can revise results by flagging additional invoices
and/or deleting flags that were inserted automatically. You can also flag other transactions recorded against the vendor’s account, such as previously unapplied payments and debit memos.
If payment is due in instalments, each payment date appears on a separate line and can be flagged individually. If you wish to perform a partial payment for an invoice due in a lump sum, simply use the sub-level form to split the payment, specifying each payment amount and the remittance date on a
separate line. Or you can use the same form to designate a partial amount to be paid now. The invoice in question continues to be considered outstanding until full payment has been made. The next time that you prepare a payment for this invoice, any partial payment(s) that have already been recorded will appear in the Previous Payments for Invoice form.
Once the invoices that require payment have been flagged (together with unused credits), payment documents can be opened automatically for each vendor. If you wish, you can request payments due in the future to be postdated; these will be recorded in separate payment documents dated on the
(future) due date. All other payments will be dated on the current day (or any other user-designated date).
After indicating the bank account from which payments will be remitted, you choose the means of payment via a pop-up menu (either Check or Bank Transfer). The appropriate payment documents are consequently created. The total payment per vendor is determined automatically by the sum of the amounts owed less the total amount of credit.
Payments can also be prepared manually by entering the Check Payments form or the Payments by Bank Transfer form. Invoices for payment can be flagged or recorded directly into the relevant sub-level form. You can also record partial payment of any invoice.
Check payments or bank transfer payments that are not connected to a recorded invoice (or pre-payments made prior to the recording of a regular invoice) can be manually prepared.
Regardless of how it was prepared, once the payment document has been checked, authorized and finalized, a journal entry will be opened debiting the vendor and crediting your bank account.
In the dual-currency package, withholding tax is calculated for each vendor (assuming that tax percentages and exemptions have been properly assigned). When payment is finalized, the journal entry not only debits the vendor and credit your bank account, but also credits the withholding tax
Priority offers you the option of printing checks to vendors.
This mechanism in question ensures that you can only print those checks that appear in finalized payment documents and which have not yet been printed. The program enables the user to select the maximum number of checks to print at any one time (useful, for instance, when there are only five checks left in the printer whereas there are ten that need to be printed). The program also displays the number of the next check to be printed. If the latter does not tally with the first number on the checks in the printer, it may be revised. One of the financial constants determines the number of check copies that can be printed at any given time, while another determines the maximum number of
characters that fit on a single line of a check.
Printing Bank Transfer Notices
The following printouts are available in regard to bank transfers:
• A letter of notification to the vendor that his/her account has been credited as a result of the bank transfer. The letter includes details of the transfer, as well as details of the invoices covered by the payment (including any debited sums).
• A notice to your bank, requesting that funds be transferred to the vendor. The notice includes the details of the account being debited, the amount (both in digits and written out), and the vendor’s account to be credited.
• Payments to Vendors • Payments to Vendors – Details
• Pending Payments • Outstanding Invoices – Detailed
• Form 1099 (U.S. package only)
Withholding Tax (dual-currency package only)
Priority offers a mechanism for withholding taxes when paying vendors, supplemented by a set of withholding tax reports.
You can define both a maximum percentage of withholding tax (applicable to most vendors) and, for vendors with partial or full exemptions, the (lower) percentage to be withheld as well as the date on which authorization for this special treatment expires. You can also create an account to be credited
when tax is withheld.
When taxes are withheld from vendors, a journal entry is recorded that credits the designated withholding tax account.
Reports on withheld taxes are based on all such instances, whether the vendor was paid by check or by bank transfer. They include:
• Withheld Taxes • Annual Withheld Taxes
• Withheld Taxes (for 0856B) • Withheld Taxes – Vendor’s Copy
• Withheld Taxes – Vendor’s Annual Copy
• Consolidated Withholding Tax
• Withheld Tax Versus Payments
• Annual Withheld Tax Versus Payments
• Expiration of Reduced Withheld Tax
• Missing Data for Withhd Tax Rep.
Material Costs: Shipping and Other Expenses
Priority offers two mechanisms for taking into account expenses related to purchased parts (e.g., shipping, storage) when calculating their actual costs:
• Calculating shipping expenses as a fixed average percentage of the part cost; and
• Determining costs by means of a shipping voucher (which combines all relevant invoices of purchased parts and expenses).
While the first method provides a relatively clear picture of added shipping expenses, in certain circumstances such a calculated cost will be unsatisfactory, as other factors (e.g., the size and contents of the shipment) play a role as well. In such cases, a shipping voucher is used instead.
In fact, you can utilize both methods: recording the cost of the received goods according to the designated fixed percentage in the initial stage, reducing the distortion of the part’s cost, and then using a shipping voucher when all the charges related to the shipment and import of the goods have been received. In fact, Priority’s cost analysis mechanism takes such updates into account
even when they refer to a previous fiscal period.
In the dual-currency package, the same mechanisms can be used for distributing import expenses (e.g., customs duty).
Expenses as Fixed Percentage of Part Cost
When you work with a fixed percentage, the part’s additional expenses are calculated as a proportion of the purchase price. For instance, if the average cost of a shipped part is 10% of the part price, and the part costs $100 in a given receipt, then an additional $10 will be added to its cost in this particular
Average shipping costs are designated per vendor and part, for each method of shipping (air, land and sea). When this mechanism is used, the cost recorded against the receiving transaction (usually a goods receiving voucher) consists of the purchase price plus the added percentage for
additional costs. The purchase price is taken from the vendor’s invoice (if it has been received) or from the purchase order (if it has not).
Shipping vouchers allow additional charges related to the shipping and importing of goods to be linked to vendor invoices and thereby attached to specific purchased parts. For example, you can attach an invoice received from a duty agent or shipping company (billing for such expenses as import fees, shipping charges, insurance premiums, storage space, port taxes) to
one or more invoices billing the purchase.
Priority distributes shipping and import expenses among part costs according to a designated burden type. There are four possible types:
• Price – Expenses are distributed among purchased parts based on the extended price of each part relative to the total price of the shipment.
• Quantity – Expenses are distributed according to the quantity of purchased parts; this method is only advisable for parts measured in the same unit.
• Volume – Expenses are distributed by multiplying the unit volume by the quantity of purchased parts, relative to the total volume of the shipment.
• Weight – Expenses are distributed by multiplying the unit weight by the quantity of purchased parts, relative to the total weight of the shipment.
Once the shipping voucher is finalized, actual part costs for each shipped item are calculated and attached to the receiving transaction. This method provides a more precise picture of the actual costs for each shipment.
In the dual-currency package, Priority allows you to maintain bonded warehouses and track inventory transactions into or out of such warehouses via shipping vouchers. The cost of receiving goods into inventory is calculated separately for each partial release of goods from the bonded warehouse. This calculation takes into account the cost of storage in the bonded warehouse and any additional costs connected with the release of the goods (e.g., import duty), in addition to the import costs, such as shipping, that preceded the entry of the goods into the bonded warehouse.
Aged Payables and Open Invoices
Priority includes a variety of reports on outstanding debts to vendors and
aged payables. Some reports summarize the amount owed to each vendor; the more detailed reports list outstanding or partially paid invoices.
The following describes each of the aging reports in greater detail:
• Aged Payables by 30-Day Period – displays the amount owed to individual vendors per 30-day aging period (i.e., current debt, 1–30 days, 31–60, 61–90 and over 90 days).
• Monthly Aged Payables – displays the amount owed to individual vendors per month.
• Weekly Aged Payables – displays the amount owed per week
• Daily Aged Payables – displays the amount owing to individual vendors on a daily basis, together with the number of days payment is overdue.
• Aged Payables by Invoice – displays all overdue invoices sorted by due date.
• Outstanding Invoices – displays all overdue invoices sorted by invoice date.
• Open Transactions as of Date – display all invoices that were owed on a specified date. This is useful for viewing the state of the A/P account at any point in the past (e.g., the end of the previous month).
Purchasing Analysis Reports
A number of reports display purchases from vendors and expenditures on parts purchased during a given period. Most of the reports are based on finalized invoice data, particularly the Purchase Invoice Analysis (OLAP) report, which allows you to analyze purchasing data in a variety of crosssections and formats. An exception is Purch in Period-Incl. Pend. Invs, which is based on both pending and finalized invoices opened during the designated period.
Some of the reports are run on a monthly basis (e.g., Monthly Purchases per Vendor); others cover a user-designated period (e.g., Purchases from Vendor in Period). The part analysis reports display quantities purchased in addition to expenditures (e.g., Monthly Purchases by Part).
There is also a mechanism for calculating and viewing monthly data on vendor invoices, as well as a report generator for designing your own vendor invoice reports.
Vendor Analysis Reports
• Purchases from Vendor in Period • Detailed Purchases in Period
• Purch in Period-Incl. Pend. Invs • Purchases from Vendor per Month
• Monthly Purch. per Vendor-Table • Monthly Purchases per Vendor
• Purchases from Vendor by Part • Unbilled GRVs Part Analysis Reports
• Part Purchases in Period • Monthly Purchases by Part
• Monthly Purch by Part (Table) • Quarterly Purch by Part (Table)
Priority’s Cash Management module enables you to keep track of the transfer of funds (cash, checks, credit card vouchers) to and from cashiers and into bank accounts and credit card accounts. The Cash Journal ensures traceability of every payment made, received or deposited (i.e., receipts from customers, deposits, check payments, bank transfers, over-the-counter invoices).
Priority allows for the designation of an unlimited number of cashiers, as well as a wide variety of payment means (e.g., cash, checks, various credit cards, coupons).
The funds at each cashier are managed and documented separately. Funds can be transferred from one cashier to another, into a bank account or to a credit card company.
Additional cash management features:
• You can correct errors made in the recording of checks and/or credit card slips (even after the document to which it relates has been finalized).
• You can record returned checks, create a returned check notice and debit the customer for the check amount plus any penalty.
• You can deposit post-dated checks in the bank, record them in a separate account, and then credit the bank on the payment date.
• Received checks and credit card vouchers are automatically reconciled with the appropriate deposit slip transactions.
Priority enables you to prepare deposit slips automatically or manually. These slips are used not only for deposits into bank or credit card accounts, but also for transfers of funds from one cashier to another. When preparing a deposit slip, you can flag the checks or credit cards slips intended for deposit or transfer from among those that are currently in the cashier.
When the deposit slip is prepared automatically, its contents are determined by the destination of the deposit. In the case of a bank deposit, all checks currently at the designated cashier (and dated within the specified period) appear in the slip. When the deposit is to a credit card company, all relevant credit card vouchers are included. In the event of a transfer to another cashier, it contains all checks and credit card slips currently at the original cashier. Once preparation is complete, each line can either be authorized or deleted from the deposit slip. Any cash deposits can be added manually. The final slip can then be printed.
Like other financial documents, a deposit slip is considered pending until it is finalized. Once finalized, a journal entry is recorded. Deposit slips can be canceled, if necessary.
Cash Management Reports
The following reports are available (reports with asterisks are only offered in the dual-currency package):
• Cashier Balance • Cashier Balance w/Daily Totals
• Check Transactions • Cash Journal
• Postdated Checks Cashed in Bank*
• Postdated Checks Held in Bank*
One of the most important tools available when working with an account ledger is the Audit Trail. This tool makes it possible to move, with the touch of a key, from any transaction recorded in the account to the original transaction document (invoice, receipt, payment, deposit). This feature is a concrete expression of the overall integrative nature of the Financials module (specifically the general ledger) with the rest of the system.
In the dual-currency package, Priority records each transaction in two currencies (local and second) according to their exchange rate at the moment the transaction is recorded. This feature enables the production of reports in two currencies for the sake of comparison, without the need to carry out additional price adjustments.
In addition, any foreign currency account can be maintained in yet another currency. All transaction values are then recorded in the appropriate account currency.
It is possible to maintain up to fifteen fiscal periods in each fiscal year. The system automatically defines twelve periods (one per calendar month), which may be revised. Additional periods are defined according to user requirements. Each period must be opened before transactions can be recorded for it and is closed when transaction recording is completed (although it can be reopened). This helps prevent the posting of entries to the wrong period.
You can close a fiscal period by transaction date, by reference date, or by both. If you close a period by reference date, no further journal entries can be posted whose reference date falls within that period. If you close the period by transaction date, no further journal entries can be posted whose transaction date falls within that period.
In the dual-currency package, maintenance of price index values allows for the production of indexed reports and the indexing of transactions.
Chart of Accounts
Priority’s accounts are maintained in three separate charts of accounts: the main Chart of Accounts (for general ledger accounts), the Chart of Accounts Receivable (for customer accounts) and the Chart of Accounts Payable (for vendor accounts).
For each account, it is possible to view, among other things, the following information:
The current balance in the account currency (in the dual-currency package, account balances are also displayed in the designated second currency).
Ledger transactions for the current year and for multiple years.
Monthly balances for the current year and for multiple years.
Cumulative balances, which are recalculated automatically when the user re-sorts the displayed record order.
Unreconciled transactions in the account.
General Ledger Accounts
All income, expense and balance sheet accounts appear in the Chart of Accounts, except for customer and vendor accounts (which are maintained in subsidiary charts of accounts). All accounts appearing in this form are considered general ledger (GL) accounts.
When setting up the system you can run an account initialization program that automatically opens GL accounts based on a list of predefined accounts.
You can define specific accounts as secured, so that only those users who have received authorization in their Personnel File can view them.
When working in a multi-company enterprise you can designate transfer accounts in the Chart of Accounts. This enables the automatic transfer of transactions between branch and parent companies and generates parallel recording of entries in both companies’ ledgers.
Transfer accounts can also be used when you want to distribute expenses over two or more branch companies. You can record expenses in one company and then transfer a portion of those expenses to another. For example, payment of a bill at the branch company will automatically debit an expense account of the parent company.
Priority can automatically update exchange rates in all companies comprising the multi-company enterprise. Any rates specified in one company are automatically copied into the others. Moreover, consolidated financial statements, including aging and customer credit reports, can be produced for such enterprises.
Chart of Accounts – A/R and A/P
All customer and vendor accounts are designated in the Chart of Accounts Receivable or Chart of Accounts Payable, respectively.
Customer accounts are normally opened beforehand through the Marketing and Sales module. When a potential customer is converted to a regular customer, an account is opened automatically (accounts are not maintained in the Financials module for potential customers). If a customer account is first opened in the Chart of Accounts Receivable, a customer record is opened automatically in the Marketing and Sales module.
When a vendor record is added to the Purchasing module, an account is automatically opened in the Chart of Accounts Payable.
Exchange Rate Adjustments
If you work with foreign currency accounts, fluctuations in exchange rates need to be taken into account periodically in order to produce more accurate financial statements. This is accomplished by journal entries, created automatically, which adjust account balances compensating for the varying exchange rates. Adjustment entries are generally recorded against a default adjustment account. However, individual contra accounts can be designated for specific foreign currency accounts.
Index Linkage (dual-currency package)
Linkages to a price index are carried out for accounts that have been flagged as indexed accounts. The type of indexing that is used with each account is determined by its balance sheet item. Depreciation transactions are indexed according to the base value of the index on the day the asset was purchased.
Auxiliary Financial Programs
Combining Accounts: allows two GL accounts to be merged (e.g., when two accounts were accidentally opened for the same purpose).
Transferring Prepaid Expenses: a mechanism for distributing expenses paid out in one lump sum (e.g., insurance) over the course of the fiscal year. This is achieved by creating an interim account that holds the unused portion of the expense. As the year progresses, sums are gradually transferred from this account to an expense account.
Cash Postdated Checks: in the dual-currency package, a mechanism for dealing with post-dated payments from customers, by recording journal entries that transfer balances from post-dated check accounts to the main GL account for each bank.
Priority’s Entry Journal provides convenient and efficient maintenance of entries (pending, posted and provisional), as well as on-the-spot traceability to the original financial transaction (e.g., receipt, invoice, credit memo). With the touch of a button from the Reference column of the entry, you are able to access the type of financial document in question and open the appropriate form (dynamic form activation).
Three distinct dates may be maintained for each entry:
A transaction date (determining the fiscal period to which the transaction belongs)
A due date (e.g., payment date)
A reference date (the original date on which the transaction was recorded).
This distinction is particularly useful when the reference date differs from the transaction date, such as in a vendor invoice that was received late. In addition, the system automatically records the last date the transaction was revised (time stamp).
The system supports the management of journal entries in batches. Working in batches is particularly convenient for businesses in which different users are responsible for recording different types of journal entries (for example, one user handles salaries, another purchasing and a third expenses). Batches are created and closed automatically by means of programs designed for this purpose. In addition, you can use a separate form to review and revise batch entries. The system provides two options for posting a batch of entries to the ledger: the first posts all entries included in the chosen batch, while the second posts all selected entries, even if they belong to different batches or do not belong to any batch.
Recording Journal Entries
Every financial transaction (e.g., sales invoice, receipt), once finalized, automatically opens a journal entry for the monetary amount of the transaction. Furthermore, the entry is itemized automatically. That is, the entry sum is broken down into amounts that are to be debited and credited to various accounts, without any limit to the number of entry lines. There is also an option for recording journal entries manually.
Priority maintains pending journal entries, which are assigned a temporary number (T1, T2, …, T100, …) until they are posted. This number allows for easy identification and separate handling, as pending and posted entries are recorded and reviewed in the same form. Once the entry is posted to the ledger, the accounts in question are credited or debited, and the entry is assigned a unique final number.
The system offers three methods for posting journal entries, among which the user can choose the one best suited for the organization’s needs:
Posting single entries
Posting a batch of entries together
Automatically posting entries as they are opened, i.e., when the original financial document is finalized (this option only applies to journal entries created on the basis of a financial document).
The process of posting includes checks to ensure that the journal entry meets the following conditions:
It is itemized.
The sum of the credits and debits equals the total sum of the transaction.
The transaction date falls within an open fiscal period.
The entry is not undergoing checks.
The sum of the entry is not zero.
The system allows for certain minor revisions in posted entries (e.g., transaction date, reference), along with documentation of the change.
A mechanism is also available for reversing posted entries, activated by a single keystroke. A reversing journal entry is automatically recorded with the same reference number as the original entry.
Journal Entry Types
Priority maintains journal entry codes that determine the accounts that are to be debited and credited in a given type of entry. For example, a sales invoice to a customer who pays tax will: 1) debit the customer’s account; 2) credit the sales tax account; 3) credit the appropriate income account. (Note that income accounts can be designated per sold item or group of items.)
You can also define journal types that allow the entry of negative sums (e.g., to record a credit or debit memo).
The system provides a list of predefined entry codes for each standard financial document. In some cases, the manner in which the entry is constructed may be modified. Moreover, completely new entry codes may be defined to meet the specific needs of the organization. There is no limit to the number of accounts that may be credited or debited in any one journal-entry code. For example, a special journal entry code may be created for recording property or municipal taxes, which distributes the debit amongst the company’s various departments.
Every type of financial transaction is assigned a default journal entry code that may be revised at the time the document is recorded. In the case of a manual entry, the code may be selected as the entry is recorded.
You can record entries for anticipated transactions that are unrelated to a specific order or invoice (e.g., salaries, loan repayments), as well as for forecasted or fictitious transactions. These transactions can then be included in the various cash flow forecast reports without affecting account balances or the general ledger.
Provisional entries receive a unique number prefixed with the letter “A”. They are maintained in the same form as regular journal entries, where they can be retrieved and viewed. Subsequently, provisional entries can either be converted to regular journal entries and posted to the ledger, or deleted.
The Create Provisional Entries program allows data from sales, purchasing and inventory transactions to be incorporated into cash flow forecasts. The program enables the automatic creation of provisional journal entries based on: open sales orders, unbilled customer shipments; open purchase orders and/or unbilled goods receiving vouchers.
Connection to Financial Documents
When working with the Entry Journal, you can take advantage of one of the more advanced features of the system: dynamic form activation. This utility enables you to drill down directly from a record displayed in one form to another containing information relevant to that record. For example, while viewing a journal entry based on a sales invoice, it is possible, with the touch of a button (from the Reference column), to open the invoice on which it is based. The system identifies the type of transaction in question and opens the appropriate form. This drill down feature allows you to view and further research the source of the journal entry.
Priority supports both reconciliations within accounts (between debit and credit entries) and reconciliations of bank and credit card statements with journal entries. In both cases, reconciliations can be carried out automatically (according to user-defined reconciliation methods) or manually. Automatic reconciliations are considered pending until the user authorizes them. Manual reconciliations are carried out with the help of a worksheet.
Reconciliation Methods and Codes
Automatic reconciliation matches entries using a set of reconciliation methods (e.g., by reference number, details, sum), which are defined within a reconciliation code. The reconciliation method determines the basis of comparison; the code defines the sequence in which comparisons are made. A default code, made up of a predefined set of methods, is provided for each type of reconciliation (account, bank/credit card); however, you can revise the defaults and construct new codes of your own.
When constructing or updating a reconciliation code, you can specify:
What should be compared (amount, reference)
The permitted range in days (over which to compare due dates)
A restriction on the number of characters to compare(e.g., only the last five characters of the reference)
Permitted variance between the sums of two or more items
A limit on the number of items being reconciled with one another (i.e. one bank statement item with one journal entry item)
Whether or no the items must be on different sides of the balance sheet (one credit with one debit).
Take, for example, the method designed for the system’s default reconciliation code for bank statements:
1. Match Reference 1 (e.g., the check number in the statement) with Reference 2 (e.g., the check number for the entry) for the same date.
2. Match Reference 1 with Reference 2 up to a difference of two days.
3. Compare by details.
4. Compare amounts only for the same date.
5. Compare amounts only up to a difference of one day.
6. Compare amounts only up to a difference of two days.
All reconciliations — whether automatic or manual, for accounts or for bank/credit card statements — are carried out with the aid of a worksheet. Once the worksheet is prepared with a set of unreconciled items (by means of a program), you can activate automatic reconciliation, view results in the worksheet and make any necessary corrections or additions. Until results are authorized, the reconciliations will be considered pending.
Account reconciliation is carried out with the aid of a worksheet, which displays all unreconciled journal entries for the designated account. Reconciliation can also be carried out for several accounts simultaneously.
Once the worksheet is prepared with a set of unreconciled items, you can activate automatic reconciliation. The system will reconcile entries according to the selected reconciliation methods. Results can be viewed in the worksheet, and any necessary corrections or additions can be made there. Until results are authorized, the reconciliations will be considered pending.
Alternatively, you can enter the worksheet and reconcile amounts manually. Here, too, reconciliations are not considered final until they are authorized.
Two or more entry items may be reconciled even if their amounts are not identical. A small variance (e.g., one cent) may be permitted.
When reconciling matching entries that do not balance (e.g. when writing off underpayment of an invoice), the variance can be written to a special adjustment account. Once the reconciliation is finalized, an adjusting entry will be posted against that account.
Multiple entries can be reconciled together.
Reconciliations can be canceled.
Bank and Credit Card Statement Reconciliations
You can reconcile bank or credit card statements with journal entries once you have recorded these statements in the system. In credit card statements, you can also designate the percentage of commission charged by the credit card company.
Reconciliations are carried out in a manner similar to that of account reconciliation. A program is activated which loads all unreconciled entries for the designated bank or credit-card company into a worksheet. Here, too, reconciliations can be performed automatically or manually.
Priority provides a broad range of reports that reflect the financial position of your company.
Financial statements may be accompanied by schedules. The structure of statements is predefined, but may be revised. For instance, you can change headings and sub-headings in a balance sheet report or add new ones.
The following list displays the standard reports provided by the system (those with asterisks are only available in the dual-currency package). All reports can be run by transaction date or by reference date, and can include pending or provisional journal entries. Additional reports can be constructed by means of a set of report generators.
Priority provides two types of cash flow reports. The first documents actual cash flow into and out of the bank, sorted by cash flow code (different types of expenses and income). The second type of report is a cash flow forecast.
The Cash Flow Forecast report displays expected cash intake and outflow over a designated time period. The report is based on recorded financial transactions whose due dates fall within the specified future period. For example, expected receipts from customers are based on unpaid invoices, while forecasted payments to vendors are based on unpaid vendor invoices. You can also run the Create Provisional Entries
program to record temporary journal entries for open orders, unpaid goods receiving vouchers and unbilled transactions, which can then be included in cash flow forecast reports. This program allows you to create separate entries for each transaction, include pre-payments, include or exclude taxes and exclude individual purchase orders. Orders with the Draft status are automatically excluded.
In addition, you can include anticipated cash flow that is not based on orders and invoices (e.g., salaries) by recording them in the Cash Flow Forecast Sums form.
Financial Report Generators
In addition to the wide variety of standard financial reports available in the system, Priority provides a set of report generators that enable you to create reports with an unlimited number of structures and criteria. These generators are easily operated by the average user, and are particularly useful for accountants and comptrollers.
Ledger Report Generators
This pair of generators is used to design reports of transactions recorded against ledger accounts (GL, A/R and A/P). One generator calculates opening balances and sorts transactions by their transaction dates (which determine the fiscal period in which they fall); the other uses their reference dates (the date on which the transaction actually occurred). The latter is particularly useful when dealing, for instance, with vendor invoices that were received late.
In both cases, you select the columns to be included in the report, determining the order in which they appear. Column titles and widths are assigned automatically, but may be revised.
Transaction Report Generator
This generator can be used to design reports for account transactions based on a variety of criteria (e.g., budget items). Reports can be detailed (i.e., display information for individual transactions), or they can summarize financial data. Moreover, consolidated reports can be produced.
As with the ledger report generator, the user determines the columns to be included in the report, the order in which they will appear, their titles and widths. You can also select the columns that will serve as input parameters for the report.
Financial Statement Generator
This generator is used to customize financial statements: balance sheet, profit and loss reports and trial balances, including schedules.
Priority breaks down each user-designed statement into two main components: a set structure of rows and a set structure of columns (column bar).
The row design determines the items which will appear (e.g., Fixed Assets, Equity, Current Liabilities), including sub-totals and/or totals; the groups of accounts attached to each item; the amount of detail that will be displayed per item (per account versus item total); and the like.
The column bars determine how the data for each row is presented. For instance, to compare quarterly figures, you would include data for each quarter in a separate column. To create a consolidated report, you would need each company’s data in a separate column, followed by a column of totals. Or you can include a percentile column (e.g., percentage of income) alongside a column of figures.
Rows and columns are defined separately, affording you the flexibility to mix and match. For example, you can use the same balance sheet items and present them with monthly figures (Column Bar A), quarterly figures (Column Bar B) and consolidated figures (Column Bar C). When running the report, the user selects not only the type of report desired (e.g., balance sheet, P&L), but also the column bar to use.
Schedules can be attached to any statement. In fact, you can attach more detailed schedules to less detailed ones in a recursive fashion. More experienced users can create complex statements, with a hierarchy of attached schedules (e.g., a factory-wide summary, a detailed report with department figures, and an even more detailed report with balances for each account).
Cost of Goods Sold
By means of the COGS module, Priority records the cost of inventory transactions in the general ledger. This in turn allows for the financial tracking of purchases and sales from a variety of perspectives. It also provides the ability to track other types of inventory transactions in the system, such as inter- warehouse transfers, inventory disposals and the like.
Default Accounts for Transactions
Default GL accounts can be set up for various inventory transactions and for variances.
Some of these accounts are credited or debited immediately:
•Income – both taxable and tax-exempt sales are credited (in two separate accounts) when the customer invoice is recorded.
•Materials Inventory/Purchases – all purchases are debited when the vendor invoice is recorded.
•Price Variance – any variance between standard price and invoice price is credited or debited when the vendor invoice is recorded.
Other inventory transactions are recorded in the entry journal when the Post Cost of Goods Sold program is run:
•Cost of Goods Sold – COGS for materials, labor, burden
•Other Inventory – all labor and machinery (burden) costs attached to inventory
•Variance between standard and actual labor and burden costs (labor efficiency variance, burden efficiency variance)
•Material Efficiency Variance – the variance between issued materials and parent-child ratios in the BOM, as well as variances created by rounding when backflushing reported production on the floor
•AssemblyVariance–the variance between the standard cost of an assembled part and the standard costs of its assembled components (e.g., when the assembly quantities differ from the BOM)
•Variance generated by changes in standard part costs
•Variance created by inventory conversions
•Offset – labor and burden offsets
•Inventory Count Variance – the value of any variances in inventory counts
•Inventory Disposal – the value of any inventory disposals
•Part Sampling – the value of any inventory sampling for laboratory tests
•Production Costs – the value of any issue of supplies to the plant floor.
Note that the above list of accounts only applies if you are basing COGS on standard costing. If, instead, you choose to work with actual costs, the following occurs:
•All inventory costs are posted to the same account (Materials Inventory/Purchases);
•All COGS values are posted to the same account (COGS–Materials);
•The variance accounts (except for Inventory Count Variance) are disregarded.
Greater Differentiation of Accounts
Priority allows you not only to set up a single default account for each type of transaction, but also to create separate accounts — one for each warehouse, each accounting family or even each family within each warehouse. In addition, you can assign income and COGS accounts per customer group.
•Account for each warehouse If a separate account has been assigned to a warehouse that is involved in an inventory transaction, the value of the transaction is recorded in the special warehouse account as opposed to the general default account.
•Account for each accounting family Another alternative is to assign separate accounts per accounting family. Consequently, whenever a transaction involves a part in this family, the cost is recorded in this account as opposed to either the general default account or the account assigned to the warehouse.
Note that the assignment of parts to accounting families is completely separate from their assignment to part families in the Marketing and Sales and Purchasing modules.
•Accounts for families within warehouses You can also maintain account balances per accounting family within a specific warehouse (with the exception of plant-floor warehouses). If an account has been assigned to a family in a warehouse, the transaction cost is recorded against this account (as opposed to all other possibilities) whenever a part belonging to this family and located in this warehouse is involved.
This is the most complex method of managing inventory, obtaining the most detailed results. For example, it allows the management of account balances according to production lines in a specific warehouse.
•Accounts for customer groups Finally,you can assign default income and COGS accounts to individual customer groups, enabling you to track income and the cost of goods sold for different categories of customers (e.g., from different geographical areas) in the general ledger. This will override both types of income accounts (taxable and tax-exempt) as well as all three types of COGS accounts (materials, labor, burden) assigned on a system-wide basis. It will not override accounts designated per warehouse or family.
A variety of reports help to explain the results of the COGS program (those marked with an asterisk belong only to the dual-currency package):
- COGS Posting Preview
- COGS Details per Part
- Price Variance Analysis
- Actual vs Std Production Costs –2nd Curr*
- Actual vs Standard Issues – 2nd Curr*
- Variances from Inv. Conv. – 2nd Curr*
- Variances from Assemblies – 2nd Curr*
- Variances from Rounding – 2nd Curr*
- COGS Transactions per Account
- Details of COGS Transactions
- Actual vs Std Production Costs
- Actual vs Standard Issues
- Variances from Inv. Conversions
- Variances from Assemblies
- Variances from Rounding
- Standard Inv. Cost Variances
•Std Inv Cost Variances – 2nd Curr*
Most computerized systems manage budgets by opening accounts in the general ledger. This means that an expense is not recorded in the budget account until its invoice is received. Yet, in practice, there are likely to be charges against the budget (such as purchase orders or recorded receipts of materials) for which invoices have not yet been received, and therefore there will be no indication of them in the budget account.
In Priority, charges to the budget are traced through the entire chain of purchasing transactions: from the purchase requisition to the purchase order to warehouse receipts and finally the invoice. This is achieved by “rolling” charges from one stage to the next (requisition to order, order to receipt and so on) as each transaction is recorded. This tracing of budget charges may also take place for income items recorded in sales transactions.
Priority’s online budget control checks for deviations from the budget each time a transaction is recorded, resulting in an error or warning message whenever a deviation is encountered. A financial constant determines the level at which budget deviation is checked; that is, if deviation is checked on a monthly basis, a message is received as soon as the monthly budget is exceeded. If, however, deviation is checked on an annual basis, a message is only received when the entire annual budget has been exceeded.
Budget Trees and Versions
Budgets are created in Priority using a hierarchical “tree” structure. The system allows for the creation and maintenance of an unlimited number of budget versions. Each version consists of a list of budget items that have been assigned monthly appropriations of funds. Budget versions are generally distinguished by different monetary appropriations. Only one version of the budget may be in effect at a time. All other versions are considered drafts. The use of budget versions allows you flexibility in changing and planning budgets.
Although budgets are managed separately from general ledger accounts, several types of relations may be established between the two:
• One budget item to one account;
• The same budget item to several accounts;
• The same account for several budget items.
If a given budget item is assigned its own GL account, designation of the account in a given transaction will determine the budget to be charged. Similarly, if the GL account has been assigned its own budget item, designation of the latter will determine the account to be debited or credited.
Priority provides a sophisticated mechanism for defining budget trees top down on up to five levels, with the actual budget items on the lowest level. Budget items can be predefined for the various levels of the budget tree, similar to the way predefined part parameters are used to create parts. You can define rules for each item that protect the integrity of the budget hierarchy. For example, unless a given budget category is flagged to allow additional sub-categories, you will receive an error message if you try to define a new item beneath it. The system automatically checks each new item for conformity with these rules.
As mentioned previously, the Budget Explorer allows you to open each budget hierarchy and view the details of each value on each of its levels.
You can also run the Budget Analysis (OLAP) report to view cross-sections of budget data on every level of the tree.
You can compare budget appropriations with actual expenses and income by attaching budget items to specific financial transactions, or by attaching them to an item in a relevant purchasing, sales or inventory transaction (i.e., purchase requisition, purchase order, goods receiving vouchers, vendor invoice, sales order, customer shipment or invoice). When budget items are tracked in this fashion, you can compare appropriations and expenses/income through the entire chain of financial transactions. That is, you can view not only billed transactions, but also unbilled transactions, open orders and open PRs.
Maintenance of budget versions is made easy by tools that allow you to copy versions, update and add to existing versions, and delete outdated ones. Furthermore, you can change the sums in a budget version that is in effect, and the change will be documented in a log.
Maintenance of budget versions is managed via statuses using the graphic BPM Flow Chart Budget Versions. After defining the necessary statuses (and the paths that connect them), you can view their attributes in the Statuses for Budget Versions form.
- Budgeted vs. Actual
- Budget Version (Graph)
- Budgeted vs Actual as of Date
- Budgeted vs. Actual – Detailed
- Summary of Budgeted vs. Actual
- Consolidated Budget vs. Actual
- Profit and Loss for Budgets
- Print Budget Version
- Comparison of Budget Versions
- Transactions w/out Budget Item
- Print Budget Version (Tree)
- Budget Analysis (OLAP)
The cost allocation module enables you to analyze the profitability and costs of various portions of your enterprise. This is achieved by defining profit centers and cost centers. Profit centers incur direct costs and generate revenues. Cost centers incur indirect costs that are then distributed among various profit centers.
Analysis of the profitability of profit centers and/or the accumulated expenses of cost centers is carried out on the basis of journal entries recorded for these profit and cost centers.
Division of a given enterprise into profit centers depends on your organization’s specific needs. For instance, in a manufacturing setting, a profit center might encompass an individual warehouse, a specific product line (i.e., an accounting family), a product line within a given warehouse, and so on. In a non-manufacturing setting, each project or division might be considered a separate profit center. Alternatively, a profit center might encompass a particular group of customers.
Priority allows you to define a single warehouse, accounting family or family in a warehouse as a unique profit center. Consequently, any financial transaction involving this warehouse or family will automatically be attached to the profit center in question.
Priority allows you to maintain up to five different groups of profit centers, to which you can assign all invoice and journal entry items. You can also organize profit centers into a hierarchical structure of up to three levels in a profit center tree.
All profit center reports display data for all five groups of profit centers, including pending transactions. Profit centers that are no longer in use can be flagged as inactive.
Cost centers incur indirect costs that are then applied to one or more profit centers. As with profit centers, division of a given enterprise into cost centers depends on your organization’s specific needs. For instance, you might make the entire sales department into a single cost center, or you may split it into several different cost centers (office expenses, travel expenses, etc.). You might also make a materials warehouse into a cost center, so as to calculate its periodic costs.
A given cost center is tied to various profit centers (an individual warehouse, an accounting family or a combination thereof). Each cost center is assigned a base of allocation that determines how its indirect costs will be distributed among the profit centers linked to it.
Like profit centers, you can organize cost centers into a hierarchical structure of up to three levels (i.e., a cost center tree). All cost center reports display data for all five groups of cost centers, including pending transactions. Cost centers that are no longer in use can be flagged as inactive.
Bases of Cost Allocation
A base of allocation determines how a cost center’s indirect costs are distributed among profit centers. This entails the designation of three main factors:
• Which profit centers are to absorb the indirect costs
• How to divide the costs among the profit centers
• At what date the current allocation ratio will expire.
Cost center costs are distributed among profit centers for a designated period in one of two ways:
• By weighted parameter
• By direct cost.
Cost Allocation by Weighted Parameters
Priority allows you to allocate indirect costs among various profit centers according to weighted parameters — such as area, number of employees, sales volume. Thus, for instance, a profit center with a greater number of employees will absorb more costs that one with a smaller work staff.
Cost Allocation by Direct Costs
Another way to distribute indirect costs is in terms of the direct costs incurred by the profit centers. This method is especially useful when the distribution of expenses is related to the profit center’s changing volume of activity. Thus, a profit center with greater activity (and more direct expenses) over a given period will absorb more indirect costs.
Cost Allocation Reports
Profit Center Reports
- List of Profit Centers
- Profit Center Analysis
- Profit Center Tree Analysis
- Profit Center Costs
- Profit Ctr Costs by Expense Acct
- P&L Statement per Profit Center
- Consolidated P&L per Profit Ctr
- Profit & Loss Summary
- Profit Center Analysis (OLAP)
- Profit/Cost Ctr Analysis (OLAP)
- Cost Center Reports
- List of Cost Centers
- Bases of Cost Allocation
- Cost Summary
- Cost Summary by Tree
- Cost Center Analysis
Priority‘s Fixed Assets module manages assets owned by the company. It contains forms and programs that record the company’s fixed assets, calculate depreciation, record asset transactions in the general ledger and produce various reports.
Priority manages depreciation records for tax purposes and accounting purposes in parallel.
The system supports both straight-line and accelerated depreciation, calculated in either nominal, linked or dollar values. Different depreciation parameters can be set for different intervals, for accounting and/or tax purposes.
When data is transferred from other systems to Priority, the accumulated nominal depreciation is retrieved from the previous system, and Priority takes this figure into account when calculating depreciation.
Scrapping and Appreciation
• Partial Scrapping – Priority can scrap part of an existing asset via a unique mechanism that divides the asset into two parts. After division, the new asset can be scrapped, thus reducing the value of the original asset.
• Appreciation–Appreciations are listed as new assets,for which depreciations are calculated separately. These new assets are then linked to their original asset.
Fixed Asset Parameters
A fixed asset record is opened for every new asset. This record includes the asset’s purchase data (or sale data, after it is sold) as well as the asset group to which the asset is assigned. You can also enter a category for classification (for example, the company department to which it belongs), the asset’s physical location, and the investment plan to which it belongs. These parameters allow for more varied and efficient reports.
Fixed Asset Groups
You can define common depreciation percentages and ledger accounts for all assets in a given asset group. You can also override these definitions for individual assets.
Fixed Asset Accounts
Each asset is linked to four main GL accounts:
• An asset account
• An accumulated depreciation account
• A depreciation expense account
• A capital gains account.
Depreciation expenses can be allocated to several expense accounts or profit/cost centers. The system allows each account or profit/cost center to be assigned a percentage of the overall depreciation.
Linkage to Additional Modules
General Ledger Module
The system automatically records journal entries for depreciation and scrapping in the general ledger. Depreciation is recorded each month, quarter or year, as defined by the user. Scrapping is recorded on the date of the scrapping.
New assets can be opened through purchase invoices recorded in the Purchasing module.
Assets can be sold using customer invoices recorded in the Sales module.
Fixed Asset Reports
The system includes a number of reports pertaining to the status of assets owned by the business. Depreciation reports can be issued both for tax and accounting purposes, in either linked, nominal or dollar values. The following reports are available in the Fixed Assets module:
- Form 11
- Cost and Depreciation
- Capital Gains
- Pos & Neg Changes in Cap Gains
- Add’l Deduction for Depreciation
- Capital Gains for Tax Authority
- Appendix to Calc. Capital Gain
- Tax vs Accounting Depreciation
- Report Generators
The Fixed Assets module includes two report generators with which you can create custom-designed reports: the Fixed Assets Report Generator and the Tax Report Generator.
The financial interfaces offered by Priority are useful for importing/exporting accounting data both from or to an external system and between companies (in a multi-company enterprise).
The Account Interface is used to transfer account numbers and names from one company to another. Account data are downloaded from each source company or program into an ASCII file and are then loaded into the target company in two stages: first, they are loaded into an interim table where they can be checked and any necessary revisions made; next, they are loaded from the interim table into the ledgers. When transferring data, you can add a prefix that will distinguish one company’s accounts from another’s.
Journal Entry Interface
The Journal Entry Interface can be used to transfer entries from an external system (e.g., payroll). The interface can also be used to load entries for transfer accounts from one company branch to another. This is necessary when distributing expenses among branches, where the data for each branch is stored in a separate installation. Finally, it can be used to export data to other financial or accounting applications.
As with the account interface, journal entry data are downloaded from each source company into an ASCII file and loaded into the target in two stages: first, they are loaded into an interim table where they can be checked and revised; next, they are loaded from the interim table into the entry journal.
Interface for Importing Data
Priority has the ability to import data files from external programs through a variety of interfaces. The imported files must be ASCII files, configured in the appropriate manner for each interface. The importing of external data is especially useful during the initial stages of setting up the system and results in a speedier transition from the previous work environment to Priority.
The following types of data can be imported from external programs:
- Chart of Accounts
- Chart of Accounts Receivable
- Journal Entries
- Chart of Accounts Payable