Setting up Purchase Allocations

• 27/04/2022
• 15 minutes to read

Purchase allocation is the act of temporarily posting the amounts of a purchase document (an invoice or a credit memo) to the general ledger (GL). When the purchase document is sent for approval, a purchase allocation – a header with a number of lines – is created. The manual or automatic posting of this purchase allocation then generates both allocation entries and corresponding GL entries, and these temporary entries are later reversed and made permanent as such in the GL, once the document has been approved and posted. In this way, purchase allocation allows you to provisionally preregister document amounts which can then later be converted into actual GL entries.

For example, whenever you receive a purchase invoice, the invoice amounts will not be immediately visible in the GL, but you can easily make them appear in the GL through the use of purchase allocations. This may be useful or even necessary for auditing purposes or similar. If you enable automatic purchase allocation, one or more provisional purchase allocation entries will be created and posted to the GL once you send the invoice for approval. When the invoice is then approved and posted, Continia Document Capture will reverse these provisional entries and replace them with actual entries in the GL.

As described below, you can configure Document Capture to create and post purchase allocation entries automatically, or it can be set up to enable you to do this manually yourself. Note that this article focuses on invoices, although purchase allocation works equally well with credit memos.

To create and post purchase allocation entries automatically

1. Choose the icon, enter Document Capture Setup, and then choose the related link.

2. In the action bar, select Approval Setup > Purchase Approval to open the Edit - Document Capture Setup / Purchase Approval page.

3. Under Purchase Allocation, enable purchase allocation by toggling the Enable switch.

4. In Amounts, specify if Document Capture should use purchase invoice lines or imported amounts to retrieve the amounts used for purchase allocatation. Note that if you select Use Lines or Imported Amounts, purchase invoice lines will be given priority, but if no such lines exist, imported amounts will be used instead.

   Note

   If you choose Always use Imported Amounts here, G/L Account Type can't be configured in step 5 below, and the purchase allocation accounts you set up in Vendor Posting Groups (DC) will then be used for the creation and posting of purchase allocation entries. For more information, see To configure posting accounts below.

   The term imported amount refers to the total amount of the invoice.

5. In G/L Account Type, specify which cost accounts to use when purchase allocation entries are created. You have the following options:

   • Use Posting Setup: Document Capture uses the purchase allocation accounts you've set up in the General Posting Setup (DC). To set up these accounts, see General Posting Setup (DC) below.
   • Use Account on Purchase Lines: Document Capture uses the GL accounts assigned to each of the purchase invoice lines. If some invoice lines don't have a GL account assigned, the General Posting Setup (DC) will be used instead. See To configure posting accounts for more details.

6. Enable automatic creation and posting of purchase allocation entries by toggling the Post Automatically switch.

7. In Posting Date on Reversal, select which posting date should be used when purchase allocation entries are reversed. You can choose either the original date when the purchase allocation was posted or the date when the invoice is posted.

Whenever you send an invoice for approval, a number of provisional purchase allocation entries will now be created and posted to the GL, and these provisional purchase allocation entries will then be automatically reversed and replaced with actual entries in the GL once the invoice has been approved and posted.

To create and post purchase allocation entries manually

In order to be able to create and post purchase allocation entries manually, you must first enable and configure purchase allocation in the Document Capture Setup. To do this, follow the guide above, but skip step 6 to leave Post Automatically disabled.

Once you've completed the setup guide, you can create and post purchase allocation entries manually by following these steps:

1. In the Role Center, under Continia Document Capture Activities, go to Purchase Approval - Invoices and select Open PIs to open the list of open purchase invoices.
2. From the list, select the invoice for which you want to create and post purchase allocation entries.
3. In the action bar, select Related > Invoice > Allocations to open the Purchase Allocation List.
4. In the action bar, select New to create a new purchase allocation.
5. On the Purchase Allocation page that opens, in the action bar, select Create Lines to fill all required fields with the relevant data. You can also do this manually under Lines.
6. In the action bar, select Post to post the purchase allocation to the GL.

To configure posting accounts

Whenever you set up either automatic or manual creation and posting of purchase allocations as described above, you must specify which amounts to assign under Amounts and which cost accounts to use under G/L Account Type. No matter what you specify in these fields, you must also set up accounts in Vendor Posting Groups (DC). The balance accounts you assign here will always be used for the creation and posting of purchase allocations, whereas the purchase allocation accounts you assign here will only be used in certain scenarios – just like the purchase allocation accounts from the General Posting Setup (DC), which you may also have to set up.

Which of the purchase allocation accounts will be used depends on what you select under Amounts and G/L Account Type in the Document Capture Setup:

General Posting Setup (DC):

To set up purchase allocation accounts in the General Posting Setup (DC), follow these steps:

1. Choose the icon, enter General Posting Setup (DC), and then choose the related link.

2. In the action bar, select Edit List.

   Note

   The list is in fact a table, and each line of the table represents a combination of a general business posting group (for the vendor of an invoice) and a general product posting group (for the GL account or item of an invoice line). When the combination of a table line matches that of an invoice line, the purchase allocation account that you've assigned to that table line will be set up as the cost account of the matching invoice line.

3. Locate the table line that you want to assign a purchase allocation account to, and select Purch. Account (Allocation).

4. Select the three dots on the right of the Purch. Account (Allocation) field to open the G/L Account List. In the list, under No., select the account that you want to assign to the selected table line.

5. Repeat steps 3-4 for every additional table line that you want to assign accounts to.

The accounts you've assigned will then be used for the purchase allocation entries that are created and posted to the GL whenever you send an invoice for approval – but only when the following conditions apply:

• In the Document Capture Setup, under Purchase Allocation > Amounts, the option Use Lines or Imported Amounts must be selected.
• There must be one or more lines in the invoice.
• One of the following:
  • In the Document Capture Setup, under Purchase Allocation > G/L Account Type, the option Use Posting Setup must be selected.
  • The relevant purchase invoice line(s) must be of a different type than GL account.

Vendor Posting Groups (DC):

To set up accounts in Vendor Posting Groups (DC), follow these steps:

1. Choose the icon, enter Vendor Posting Groups (DC), and then choose the related link.
2. In the action bar, select Edit List.
3. Locate the table line that you want to assign an account to, and select Payable Account (Allocation).
4. Select the three dots on the right of the Payable Account (Allocation) field to open the G/L Account List. In the list, under No., select the account that you want to assign to the selected table line.
5. Under Purch. Account (Allocation), select the three dots on the right of the field to open the G/L Account List. In the list, under No., select the account that you want to assign to the selected table line.
6. Repeat steps 3-5 for every additional table line that you want to assign accounts to.

The accounts you've assigned will then be used as follows for the purchase allocation entries that are created and posted when you send an invoice for approval:

• Payable Account (Allocation) – the balance account – is always used.
• Purch. Account (Allocation) – the cost account – is only used when Always use Imported Amounts has been selected in the Document Capture Setup.