Purchases Clearing Report Sage 500 Support and Insights Sage 500

And the second case where the trend line can be justifiably going up is when the purchasing department decides to use purchase orders to buy a larger proportion of the goods being purchased. In that case, the clearing account will probably increase in size. A steady stream of income can be difficult to keep track of, especially if customers do not attach an invoice or otherwise inform you of what the funds are for. The clearing account lets you track anything that is in transition or you will need to address in the future. One final note is that the clearing report is simply a status report.

It’s much more likely that the goods were delivered, in which case you have to find them and then persuade the receiving staff to log the receipt into the system. By doing that, the receipt is matched with the supplier invoice and the whole thing is flushed out of the purchases clearing account. Now let’s change the facts, so that the report indicates that 950 units were received and invoiced to the company. The supplier shipped a bit less than the full amount, and will either ship the remainder later, or the purchasing department should get around to formally cancelling the remaining amount.

Payroll Clearing Accounts

Second, it ensures that supplier invoices are always posted to the system, so that payments to suppliers go out on time. This tends to improve supplier relations, and also gives you more time to take advantage of early payment discounts. Let’s assume the same 950 units were received, but the report indicates that the supplier never issued an invoice – or at least, it was never logged into your accounting system. The amount in the clearing account will stay there until you can log in the supplier’s invoice, which hasn’t arrived. So, you need to contact the supplier, figure out what happened to the invoice, and get a copy of it.

For example, invoices entered in Accounts Payable Invoice
Data Entry do not affect this report. Typically, companies with a high volume of funds coming in or going out use clearing accounts. For example, you may have high amounts https://personal-accounting.org/clearing-account-accountingtools/ of payroll, a high volume of invoices, or both. Again, liability clearing accounts are for funds you owe and are waiting to move to another account. Let’s take a look at a common example of liability clearing accounts.

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In the latter case, I suggest doing a review a few days prior to the end of the month. That’s because it may take a few days to investigate what’s wrong and then correct the inventory and payables records in time for month-end. A good way to see if there’s something wrong is to plot the total dollar amount in the purchases clearing account on a trend line. If the balance in the account is perpetually going up, then you probably have a lot of issues clogging up the account.

• A reasonable assumption is that the purchase order was not actually issued, or the supplier rejected or lost it.
• If you handle thousands of transactions, it might be challenging to reconcile them using a spreadsheet.
• You create a clearing account for the invoice, which you will receive when Company B completes the work.
• Rather than showing funds that are coming in or going out, a cleaning account shows all the funds that are in limbo.
• The challenge with the Sage 500 Purchases Clearing report is that it always reflects data as of the current moment in time.

Working with MAS90 for 15 years, below are the three most common issues that can go wrong. The function of the Purchases Clearing account is to allow the receipt of purchase order items into inventory prior to receiving an invoice for the goods from the vendor. Let’s say you need a renovation to your shop, so you contract with Company B for $10,000. You create a clearing account for the invoice, which you will receive when Company B completes the work.

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Given that it serves as a holding area for all transactions, it is easy to spot anomalies that could indicate fraud or inaccuracies. Clearing accounts provide time to review and confirm each item before moving them to their correct locations. This additional step preserves the data integrity of the existing accounts when balancing the books. There’re two cases in which an increasing trend line does not necessarily indicate a problem. In that case, you can expect the clearing account to grow at about the same rate as the growth rate for sales – or, more accurately, the growth rate for purchases.

• If you are not using the Purchases Clearing report in Sage 100 ERP, maybe you’ve just never taken the time to learn.
• The purchases clearing report is located under the Purchase Order module, Period End folder.
• For example, have an asset clearing account that is separate from a liability clearing account.
• Temporary accounts compel the accounting team to double-check transactions.
• Because clearing accounts house transaction details, customer support representatives can easily review them if a dispute arises for pending transactions.

And then we have the other variation, where the clearing report shows that a supplier invoice was received, but the goods were not. In this case, either the supplier has somehow mistakenly issued the invoice but not the goods, or the goods were shipped somewhere else, or your receiving department didn’t log in the receipt. You can address all of these options by asking the supplier for a proof of delivery document, such as a FedEx or UPS signature from the recipient.