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Financial Management
Alliance's Financial Application enables the Chief Financial Officer, Controller and other accounting users to process financial transactions, review transactions and accounts, and analyzes the financial heartbeat of the company. Alliance Financial Applications include:
- General Ledger (GL)
- Financial Statement Report Writer
- Accounts Payable (AP)
- Credit Management
- Accounts Receivable (AR)
- Product Costing
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Account Numbering
Alliance General Ledger has a primary 15-position alphanumeric account number that can be partitioned in any manner on financial statements. In addition, each account number has a short alpha name and description that can be used as an alternative to entering the account number.
This feature allows you to assign meaningful alpha account names, such as rent, telephone, or freight for use in billing, cash, and voucher entry programs. This reduces clerical time and errors, and markedly improves the overall user-friendliness of the system.
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| Accounts Payable |
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1099 Reporting
A code in the Vendor Master File identifies 1099 vendors, who are subject to 1099 reporting.
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Aging the Open Payables
Alliance ages the open payables for each vendor into eight user-defined aging buckets.
An Alliance Data Area controls the number of days in each aging bucket and allows definition of unequal bucket sizes, as well as changes to a bucket whenever needed. Aging programs can re-age the entire Open Payables File on demand.
The aging buckets are separate from the aging buckets specified in Accounts Receivable.
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Batch Balancing and Period Control
Each group of vendor invoices should be organized into a batch, with a manually prepared batch total. The system tracks the value of input and posted invoices, allowing internal control over entries. If necessary, the batch balance can be adjusted to equal the value of the posted entries.
The AP system works on a financial period defined by an Alliance Data Area that is updated when the month-end program is run. However, sometimes a batch of late invoices needs to be booked into the prior month. To accommodate this requirement, Alliance allows you to override the financial posting period of any batch to be different from the current period.
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Check Registers and Reconciliation
The disbursement-processing program prints checks for all selected invoices.
A check register program generates GL detail transactions for the cash account, the AP liability account, and the cash payment discounts taken.
After checks are returned from the bank, make an entry in the Check Reconciliation file, which is populated by Alliance based on the check registers. Alliance prints open check listings to help manage outstanding checks.
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Cost Roll-up
Material costs can be based on purchase order receipts, or the roll-up of costs based on a Bill of Material structure. Alliance supports cost roll-up on an unlimited number of BOM levels.
The labor, fixed burden, and variable overhead cost elements are based on a routing structure attached to the item/warehouse: Alliance rolls up routing costs when available for each level of the Bill of Material before accumulating these costs into the next -level material costs of the bill.
The cost roll-up program can be run at any time, and can use and update either the standard, actual, or future cost elements on each run. Thus, simulations for future costs, given changes in bills of material, routings, or purchase price estimates can be created.
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Eight Cost Elements
Alliance has eight cost elements for each item in each warehouse: There are separate sets of cost elements for standard costs, actual current costs, prior standards and future costs. The cost elements include material costs, labor costs, fixed burdens, variable burdens, and four user-defined cost elements.
Average costs and lot-for-lot costs are material costs only.
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Held Invoices and Manual Payments
Once an invoice is held from payment, Alliance waits until it is manually released for payment; a report tracks all held invoices.
In addition to manually holding an invoice, Alliance can also automatically place all invoices for a vendor on hold if the vendor exceeds the per invoice limit set in the Vendor Master File.
If a manual check is needed, access the Payment Selection Screen to input the check information into Alliance. The invoice is processed as paid when the next check register is run.
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Interactive Payables Entry
If purchase orders are used, the AP cycle begins with the third leg of the three -way match among the purchase order, receiving document, and the vendor's invoice.
The AP system processes vendor invoices (vouchers) on a group (batch) basis. All entry and edit processing is done on-line; however, invoices should be grouped into batches for ease of editing and for batch balancing GL and vendor account balance amounts.
To enter a vendor's invoice, type the vendor number, invoice number, amount, and invoice date; parameters from the Vendor Master File supply all the remaining information, such as the calculated due date and allowable payment discount.
Now, switch to the expense distribution entry screen to account for the vendor 's invoice. If the vendor has a defined expense distribution, the entry screen automatically appears with the invoice amount distributed, awaiting approval and update.
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Inventory Costing
The Alliance system manages the accumulation of inventory and supply costs for sales orders, purchase orders, and inventory transactions. It provides reports and inquiries on inventory cost and valuation.
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Last In First Out and First In First Out Costing
Alliance supports FIFO reporting through the weighted average cost calculation.
LIFO costing is supported through the actual current costs, or through the valuation of inventory based on user entry of a LIFO cost figures in the Item Cost File.
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Payment Terms
Alliance supports an unlimited number of payment terms, based on 3 payment models:
- Number of days until the invoice is discountable and due
- A specific future discount and due date
- Due dates based on a specific end-of-month (prox terms)
The payment terms are separate from the terms developed in Accounts Receivable, and can be overridden for any specific vendor invoice.
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Selecting Invoices for Payment, Automatic Discounts
After invoices have been posted, run a payment selection report at any time to identify invoices that should be paid by a given date. The result is a payment selection report for review.
When reviewing this information on-line, you can indicate which invoices should be held until released manually, held until a later payment cycle, or included for early payment, possibly due to vendor demand, or an early discount date.
Invoices identified for early discount payment are listed on a report of invoice discount due dates. However, Alliance automatically applies all eligible payment discounts when calculating the disbursement amount for an invoice.
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Simple End-of-Day Updates
Posted vendor invoices are processed through an end-of-day program that updates the Vendor Master File and updates the vendor aging.
Payment selection and disbursement processing follows. These programs can be run by automated program managers, such as IBM's Manage/400 utility.
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Standard and Actual Costing Methods
The Item Cost File is specific to stock keeping unit (sku-item) and warehouses. An item can have a different cost in each warehouse, allowing for the addition of freight, handling or storage costs that can vary by warehouse.
Alliance builds inventory costs on both a standard and current actual basis. The Item Cost File can retain both costs at the same time, as well as the prior standard cost and a future cost that can be used for simulations.
Alliance optionally allows updates to actual current costs through purchase order receipts.
Within the Item Cost File, select a costing method for each item at each warehouse. The choices include standard cost, actual current cost, weighted average cost, and lot-for-lot costing of lot controlled items.
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Three-Way Matching
During the entry of the vendor invoice totals, enter a "?" in the vendor Purchase Order Number field to display a window showing purchase order and receiving report numbers by vendor. Make a selection by positioning the cursor on the correct P.O ./Receiver combination. The system automatically retrieves all line item price and quantity information for received items and displays an edit and update screen.
To complete the matching process, change the quantity received or the price paid, if desired. Once the adjusted received value matches the vendor's invoice amount, post the invoice, automatically creating a purchase price variance (PPV) transaction for any differences.
In addition to creating a PPV, differences between the vendor invoice and the total received item value can be written off to specific GL accounts, perhaps for a freight or handling charge amount. This is done by pressing a function key to switch to an expense distribution screen for this vendor's invoice.
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Vendor Master File
The Vendor Master File contains all the information necessary to enter a purchase order for a vendor. One field in the vendor file points to a second Vendor Master record that serves as the remit to vendor for each purchase order vendor. These can be the same vendor number or they can be different, to allow purchase orders placed on multiple vendors or addresses to be consolidated into a single paying authority.
Within the Remit-to-Vendor File, Alliance maintains the payment terms code that guides the calculation of payment and discount due dates and discount amount for each vendor invoice posted to the Accounts Payable system.
Finally, the Vendor File contains a per invoice approval limit that controls whether a vendor's invoices are available for payment selection, or whether they will automatically go on hold.
A second code in the Vendor File can tell Alliance to hold every invoice for a vendor.
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Any Number of Periods Open Simultaneously
Within the General Ledger application itself, the accounting department can make manual journal entries to any open period, and can leave any number of periods open until they are ready to make a year-end closing. Any closed periods can be re-opened and adjusted, and financial reports can be run and re-run for any period at any time.
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Applications Close Independently at End of Month (EOM)
With Alliance, month-end processing is easier than ever as each application has its own cut-off and can be closed independently. To control the posting period of these detail journal transactions, Alliance allows you to note the closing of each subsidiary application individually.
In AP, a month-end update program automatically advances AP into the next fiscal period. However, each individual group (batch) of AP invoice vouchers can be coded for a specific fiscal period, giving you complete timing flexibility.
In AR, you mark the change from one period to another in a Data Area. In shipping and billing, you can indicate that a billing run will invoice as of a specific date, thereby controlling the fiscal period for that run.
Inventory and manufacturing transactions, shipments and receipts always book their GL transactions as of their actual transaction date. To help out with the month-end rush, shipping, receiving and inventory adjustment programs allow a transaction date override to the system date.
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Automatic Balancing, GL Account Assignment
Alliance automatically balances all debits and credits, supplying a temporary account number when necessary. Although Alliance does not offer Payroll and Fixed Asset applications, the GL output of these applications can be interfaced easily with Alliance General Ledger on either a detail or summary account level.
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Automatic Reversals from Accruals
A major source of accruals and headaches in a typical month-end or period-end closing cycle is estimating the value of purchase receipts without a vendor invoice. Alliance solves this problem neatly by generating a received not vouched liability account entry for each purchase receipt transaction. This offsets the asset or expense account debit from the receipt.
Other accruals are made through manual journal entries. To prepare the reversal of these entries, the accountant simply makes an on-line copy of the accrual, using the reversal feature to reverse the amounts and setting the copy to go into the next period. If this is the first journal entry in that new period, the system prompts you for information to open that new period.
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Budgets
Alliance enables you to enter a budget amount per account per period. Budgets can be entered as annual amounts, and spread by three algorithms: 12 equal amounts, 13 equal amounts, or a four-four-five week spread of the quarterly amount. If you would rather enter the budget by period, Alliance can roll-up the individual period entries into the total annual budget.
In addition to direct budget entry, Alliance can generate a budget for an account as a percent of the prior year's actual for that account, or any other single account. This is a quick way to build budgets for the new year based on last year's actual figures.
During financial reporting, budgets can be called up from the GL database, and compared to actual amounts and prior year amounts.
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Complete Audit Trails
Once detail transactions have been made, it is up to the general ledger accountant to request that Alliance merge these detail journals as summary accounts into the Alliance General Ledger application.
All transactions in a detail journal are sorted by account number. The sum total of debit and credit amounts by account is brought into a General Ledger journal summary file, with a system generated reference number relating to the detail source, one journal entry line per account. Each summary journal is automatically in balance because all detail transactions are already in balance.
Once inside the Alliance General Ledger application, the accountant can review and change any summary journal, as well as make additional manual journals and accruals for payroll, depreciation, and cash transfers.
Finally, each GL journal is posted and the net transaction balance per account per period can be uploaded at any time into the General Ledger Account Summary File. This file contains balances and budgets by period by year for each account. Since only balanced journals can be posted, all entries to the GL summary file are automatically in balance.
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Copying a Journal Entry
Recurring journals are just one form of the journal copy function. In fact, any journal in any period can be copied to form another journal in the same, or any other, period. You can copy the entire journal (accounts and amounts), reverse the journal (accounts and negative amounts), or copy the account structure without any amounts. New amounts can be added later.
When you copy the journal into a new journal, Alliance will prompt for period-opening information.
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Detail Transactions
AP and AR generate detail transaction journal entries, typically every night, when completed groups (batches) of vendor invoice vouchers, disbursements, payment registers, cash receipts and adjustments are processed to generate the GL entries, and to update year-to-date and aging status information.
Sales order billings generate the AR and sales revenue detail journal transactions by item in a system-defined journal that can be merged into GL as often as every invoice cycle, or once a month.
The shipping process generates an item transaction audit trail of the shipment, as does the purchase order receiving process. All other inventory transactions, such as physical count adjustments, scraps, transfers, and manufacturing issues and receipts also generate item transaction audit trail transactions. This audit trail can be translated into GL detail transactions any time and as often as required during the accounting period--even daily if desired.
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Download to PC Spreadsheets
Alliance will produce an extract file of the general summary file (account balance by period) in a DIF file format that can be easily imported into Lotus 1-2-3 and other spreadsheet programs. This is a very useful feature for financial reports based on spreadsheets.
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| Financial Reporting System |
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Account Detail, Departmental, and Summary Statements
Alliance offers user-defined row structure for each report. In addition to headings, page breaks, and nine sub-total levels , you insert account-level detail, summary accounts, labels and masks into report row definitions.
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Actual, Budget, and Year-to-Date Information
FRS has user-defined columnar formats. Using the actual and budget figures available within the Alliance data base, you can develop custom columnar formats within the printing width limitations of your system printer, define period to period, year to year, and budget to actual comparisons for balance sheets, income statements, and other financial statements.
You must first define the columnar layout of a report, utilizing any combination of current year actual, prior year actual, and current year budget information. Through a feature called Variables, Alliance combines any of these fields into new arithmetic columns for reports. Thus, many meaningful totals can be created: year-to-date, prior -year-to-date, quarter-to-date, this year/last year variances, actual/budget variances and other comparative amounts.
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Financial Statements
Alliance gives you the ability to create custom financial statements with the Alliance Financial Report Writer System (FRS). With FRS, you can create summary and detail balance sheets, income statements, cash flow reports, and other departmental and analysis reports.
Using the Action Bar Print option, all reports can be viewed on screen to find a specific result or to review their suitability before printing.
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Labels
A label is an arithmetic combination of specific accounts (detail or summary). For example, a label may combine the current asset accounts, and thus be the single current asset entry in a summary balance statement definition.
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Masks
A mask is an arithmetic combination of a range of accounts based on a wildcard definition of the account number. A wildcard could be total department expenses where department is the last part of an account number; for example, sum all accounts 7xxx123 , where xxx represents all expenses for the 7000 account series for department number 123.
A mask could also be a particular expense over all departments, such as telephone expense 7500; in this case, the mask would be 7500xxx where 7500 is telephone expense, and xxx represents all departments.
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Report Tailoring
Each report is first defined within FRS, and is then submitted to a program that builds an RPG/400 program representing that report. If necessary, this RPG code can be modified for a specific effect beyond the capability of FRS.
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Running Current Reports
FRS reports can be run at any time during the month, using the most current GL posting. Alliance accomplishes this by submitting each report to an update program that recalculates the current value of each variable, label, and mask based on the values in the general summary file for the period included on the report.
Reports can be built with wild card data elements representing the current period and current period last year. One report definition can be used in any reporting period.
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Trial Financial Statements
One of the great advantages of Alliance's FRS is that financial reports can be run in a trial mode before the closing period. Since FRS uses the values in the general summary (account value by period) file, you need only to upload posted journal entries to this file before running reports developed through FRS. Since posted journal entries can be uploaded to the general summary file at any time, trial financial statements can be produced at any time during the period.
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Fiscal Periods
Alliance General Ledger offers a choice of 12 or 13 periods for each year's fiscal calendar. Simply define the calendar by noting each period's ending date. This promotes complete flexibility in defining any period structure, such as monthly, four-four -five week quarters, or any irregular pattern of ending dates.
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General Ledger Reports
In addition to the detail transaction and summary journal reporting already described, Alliance can produce a GL trial balance report based on the general summary (account balance by period) information saved for each account.
Other queries can link period balances to journal and transaction detail, if needed to support analysis or an audit.
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Journal Inquiries
To view the details of a system-generated summary journal, Alliance enables you to run a printed report, or to perform an on-line inquiry into transaction detail by account number, customer account, vendor account, or journal reference. Alliance also provides both reports and an inquiry to view all manual journals and journal summaries for a specific account, as well as all accounts used in manual and summary journals for a specific account reference.
At the general summary file level, Alliance provides an on-line inquiry into a single account, showing period by period balances for the selected fiscal year with comparisons to the prior year and the current year's budget.
In addition, Alliance provides a trial balance of the general summary accounts showing specific period and year-to-date account balances.
These inquiries and reports provide Alliance users with extensive GL details. If necessary, you can access the actual journals and make corrections to incorrect entries.
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Month-End Development Workshop
The Controller will use these different control levels to develop a smooth, flexible month-end procedure. To aid in this process, SWIFTEC has prepared an education workshop devoted just to month-end processing.
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On-line, Recurring Journal Entries
All Alliance manual journal entries are made on-line--no batch or update processes are required before a journal entry can be reviewed and edited. All detail transactions that reach General Ledger as journal summary records are also available for on-line inquiry and editing, because they are records in the same file as the manual entries.
Two differences are that journal references are system-assigned based on detail source, and that journal entries are the sum totals of detail debits and credits.
Recurring journal entries are defined journals that are copied upon your request from their structured database into any open period. The defined structure can consist of account numbers and/or amounts.
The account/amount approach is useful for an entry such as depreciation, where the journal amounts are fixed.
The account-only structure is useful for a payroll journal, where amounts are variable, and are entered after the account structure has been copied into an open period. Regardless of the approach, you give the recurring journal structure a unique journal name each time it is copied into an open period.
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Summary Accounts
In addition to the dual naming convention, you can define accounts that are summaries of other accounts and accounts that are the entry point for automatic distribution to other accounts. Summary accounts accumulate their values and allocation header accounts spread their values automatically each time GL journals are posted to the General Summary File of account files by period.
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Unification
The Alliance General Ledger application features total unification with all other Alliance functions including:
- Inventory transactions
- Purchase order receiving
- Sales order shipping and billing
- Voucher entry and disbursements
- Cash receipts entry and adjustment
Each of these applications updates the detailed GL Account Journal Transaction File that merges in summary version into Alliance General Ledger. The GL application gives you the ability to inquire into summary journals and detail transaction journals for any period in any fiscal year.
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Virtually Unlimited Company/Division Numbering
Alliance has a three-position company and a three-position division prefix for each GL account number. Use these prefixes to define multi-division and multi-company financial accounting structures.
Alliance generates all operational transactions, related multi-division and multi -company transactions, and generates financial statements that can compare and consolidate divisions and companies.
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