Accrual & prepaid Issue

Question

Our current as is process:
-     For certain type of expenses (like AMC, insurance, property taxes etc) , we pay to vendors in advance for 3 months/ 6 months/12 months as the case may be.
-     In order to process the payment, user has to do reception of services in the system for the complete invoice amount on day one itself and the entire amount hits the respective expense a/c on that day rather than getting amortized over the total service duration.
-     Subsequent to this, AP team books the invoices for payment processing in AP module and being transferred to GL module.
-     Thereafter, GL team identify such cases based on period mentioned in the narration and transfers the amount to prepaid a/c pertaining to future period.
The above process is error prone and manual on following two counts:
-     Cases where user has done the reception but invoices are yet to be booked by AP at period end. The entire amount goes to P&L.
-     In cases where invoices are booked by AP team – completeness is an issue as this activity is manual and primarily depends on narration mentioned by AP team.
ALL THE ABOVE ARE DONE THROUGH P2P PROCESS I.E. STARTING FROM REQUISITION TO PAYMENT.
Hence, request you to evaluate the implementation of following suggested to be process:
To be process:
-     The complete invoice amount should move to prepaid a/c on reception by the user.
-     It should get transferred to respective GL code at the end of every-month by running the accrual engine or something equivalent.
Please evaluate the above or any other similar solution to avoid the issues mentioned above. In case of any query, please let us know.

Answer 1

HI
If you have created different links for each grade, then whenever the grade will change the old linked element entry will get end dated and new entry will get created as per your link definition for that grade. As far as absence is considered it will consider it as if one absence is end dated and new absence is assigned. In this case you will have to build a mechanism of transferring the old available balance whenever there is a grade change, but this is not the recommended approach at it will lead to lot of maintenance activity.
Whenever you design the absence solution try to create all the links a open links and try to manage the accrual into the formula as this is a salable mechanism which has minimum maintenance work and if in future you have any change in accrual logic you will have to only change the formula and not to worry about the link definition balance transfers ete etc..
Hope you get clarity and design the solution accordingly.
Thanks,
Sanjay