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Sales Group Abbreviations

In another topic, the Sales Group Abbreviation code was used solely to record unit COGS and warranty expense accruals while posting the bill to the same project. Revenue is recognized for the project when it is calculated and posted. However, with the Sales Group Abbreviation code, you can post your unit COGS, billings, and sales using many different scenarios.

For example, you could charge the unit COGS and recognize the sales for one project, yet post the bills to another project. Or you could record unit COGS for a project and post both the sales and bills to another project. You can implement these different scenarios using the Set Up Sales Group Abbreviations screen. Using the Proj Reqd column, designate the transactions types as using the same project as the bill, or specify a different one. Eight different transaction types are available, but select only the ones that are needed to complete your posting method.

In the first example given previously, your company can use separate organizations to represent different product groups. Each of these groups may be responsible for manufacturing a specific piece that goes into a final product. Each group can record its project costs, such as labor, materials, travel, and other direct costs. You may want each of these groups to recognize sales on their contribution to the final product. For billing purposes, however, the final product is billed to various customers using another project.

To accomplish this, access the Set Up Sales Group Abbreviations screen and select Cost of Sales Account, Clearing Account, Warranty Accrual Account, and Warranty Expense Account. Set these transaction types as Required to allow you to specify what project is to be charged. This means that the unit COGS and warranty expense accruals are not charged to the project that is billing the units.

Next, select the Sales Account Transaction Type and also mark it as R (Required) in the Proj Reqd column. You cannot select and save a Sales Account or a Deferred Revenue Account Transaction Type without also selecting either an Accounts Receivable Account or an Unbilled A/R Account. Select an Accounts Receivable Account Transaction Type and designate it as Substitution Allowed so that Costpoint uses the project of the bill you are posting for the accounts receivable account. Note that you must first select the Sales Order check box on the Set Up Sales Group Abbreviations screen before you select Accounts Receivable Account. Costpoint Sales Order Entry is an add-on module that allows manufacturing and inventory companies to streamline their order processing.

When you post the bills or units, instead of unbilled receivables being credited, the account specified as the Sales Account is credited with the sales. In other words, the sale is recognized when the bill is posted. In this scenario, use the revenue formula Equal To Project Ledger Sales to capture the proper amount of revenue when the bill is posted and revenue is calculated. You can post the sales to a Deferred Revenue Account, where it is recorded as a liability until it is reclassified as revenue.

In some scenarios, you may need an Unbilled A/R Account Transaction Type to make up the difference between the billed A/R account, which is always debited, and the credit accounts, such as sales, sales tax, and shipping charges.

The Sales Group Abbreviation can be used with the Standard Bills, Project Product Bills, or Customer Product Bills. To find the accounts to use, Costpoint checks the Sales Group Abbreviation first, followed by the Default Accounts on the Manage Customers screen, then the accounts set up on the Configure Accounts Receivable Settings screen.

The Sales Group Abbreviation allows your company to set up many different scenarios. Before establishing a group, you should consider the projects, organizations, and accounts that are affected when the bill is posted.