Charging vendor invoices to multiple projects

By February 14, 2015Dynamics AX

One of the scenarios we see quite often at our clients,  is the ability to charge a vendor’s invoice to multiple projects. The typical implementation of Project, in Dynamics AX, will use Project Categories to define, code, and track costs. As such, it is key that an organization be able to charge their vendor costs to projects, under separate line items. Let’s consider an example, where the a company has a vendor, in our example, FedEx, who will provide services to the organization, shipping products between different projects, but will furnish a single invoice to the company monthly. The invoice for the month is for all services that have been delivered, but has multiple line items detailing shipments between each project. In order to maintain accurate cost forecasts, the customer must be able to charge each line item on the vendor invoice to different projects.

Let’s take a look at a sample invoice from FedEx.

Invoice Date:  1/3/2015

Date Description Cost
12/15/2014 Shipping – Project A $150.00
12/16/2014 Shipping – Project B $200.00
12/19/2014 Shipping – Project C $500.00
Total Due $850.00

 

In this instance, the client will receive an invoice for $850.00 from FedEx. The natural instinct, would be to create multiple journal lines in the invoice journal to reflect each line item on the invoice, and charge them off to the project. We’ve found, the problem in doing so, is that when it comes to both, paying the invoice, and running reports in AP, each line item will show up as a new invoice for the vendor.

The correct way to handle this, is pretty simple.

Solution:

  1. Enter the invoice amount for $850 with Verizon selected as the vendor, the offset account will be the GL account that this posts to. This is the same for any invoices that are going directly to overhead.
  2. Enter invoice journal lines with the account type selected as Project, the Account “Project A”, with a debit as $150.00 and the offset account as the same GL account as above.  Enter the project category in the project tab.
  3. Enter invoice journal lines with the account type selected as Project, the Account “Project B”, with a debit as $200.00 and the offset account as the same GL account as above. Enter the cost code in the project tab.
  4. Enter invoice journal lines with the account type selected as Project, the Account “Project B”, with a debit as $200.00 and the offset account as the same GL account as above. Enter the cost code in the project tab.

 

 

Net effect:

  • The invoice is recorded in the system, and is available for marking and remittance in the payment journal, with one entry in the amount of $200
  • The project expense journal for each of the projects will be charged their pertinent amounts with the correct cost code.
  • Any cost from the invoice NOT allocated to a project will be charged to whichever GL account the invoice was coded to.

 

Let’s take a look at how to accomplish this.

 

First, navigate to the following path, we want to be within the Invoice Journal under Accounts Payable:

Company > Accounts Payable > Journals > Invoice Journal

Invoice-Journal

Accounts Payable > Journals > Invoice Journal

 

Click “New” and select the AP Journal in the first field:

Invoice-Journal-2

Accounts Payable > Invoice Journal > New Journal

Once the new journal has been created, click “Lines” in the header to create or view new Invoice Journal lines. On the next screen, we will want to create a journal line to record the full invoice $850.00. Enter the following details:

Account Type: Vendor
Account: Select the Vendor who submitted the invoice for payment.
Invoice: Enter the invoice number that was provided by the vendor.
Description: Enter a description for the invoice, in this instance, we are choosing “December Invoice”
Credit: Enter the full amount of the invoice, in our scenario, this will be in the amount of  $850.00
Offset Account
: Select “Ledger” as we will be posting the full invoice to the GL.
Account: Select the account where the invoice will post to.

Invoice-Journal-3

Invoice journal voucher, entering the full invoice amount

Now that the Invoice has been entered, the next step is to charge this full amount off to each of the project’s expense journals. In order to do so, create three new lines to reflect the line items that were on the invoice.

For each of the line items, choose the following:

 

Account Type: Project
Project: Select the project where this line item will be charged off to
Invoice: Enter the invoice number that was provided by the vendor. Note: In order for this to work, the system must be configured to allow Invoice number reuse.
Description: Enter a description for the invoice, in this instance, we are choosing “December Invoice”
Debit: Enter the line item amount of the invoice, that reflects the amount to be charged to this particular project.
Offset Account: Select “Ledger” as we will be posting the the line item to the GL account which project has been configured to.
Account: Select the account where the invoice will post to. In this instance, the travel expense account is being selected.

 

Charging Invoice line items to project expense journals

Enter one line for each project entry that will be charged for this invoice

 

The next step, as with any invoice journal, is to Validate and Post the journal vouchers.

Once these journal vouchers have been posted, you can see the voucher transactions, as being posted to the project accounts, as shown below.

Invoice Journal Voucher Transactions

Invoice journal voucher transactions for project postings