Get Some Sage (100) Advice on the Purchases Clearing Account
If you are not using the Purchases Clearing report in Sage 100 ERP, maybe you’ve just never taken the time to learn. Maybe in the disconnected delivery of inventory and invoice, you entered one part of the transaction but never completed it with the missing data. Your accounting, however, will benefit from proper use of the Purchases Clearing Account. So let’s begin an education.
The Purchases Clearing Account is a way to record inventory in limbo. It is a holding account that appears as a liability on your balance sheet because either:
- You have received your order but not an invoice, or
- You have received a bill but no goods.
At Period End, the credits and debits in a Purchases Clearing Account should be reconciled by balancing the Purchase Order module to the General Ledger Purchases Clearing accounts. Of course that may be easier said than done.
Because of the gap between receipt of goods and accounts payable, you need to pay close attention to items received after invoicing as well as invoices received late. Typically an out-of-balance situation occurs when one piece of the transaction is made in the Purchase Order module, but the other is made in another module such as Accounts Payable.
Invoices entered in Accounts Payable typically post to the inventory account, so the amount credited to the Purchases Clearing Account when Receipt of Goods was run is not reversed.
To make reconciliation of the Purchases Clearing Account easier, use the same date on Receipt of Invoice and Receipt of Goods in the General Ledger Account.
The Purchases Clearing Report in the Purchase Order module under Period End should be worked each month to help complete open Purchase Orders and also to identify potential processing problems.