Overview

Brokerage Programs are used to accrue brokerage expenses to the general ledger as well as make entries to a subsidiary payable ledger. When a transaction that contains a brokerage program is posted, a journal entry is created to Debit the Brokerage Expense account and Credit the Brokerage Payable account. The Credit is added to the Brokerage Settlement tables. Then, at a later date, someone can review the brokerage payables and approve them for payment via the Settlements page in the Sales Programs module. When a brokerage payment is approved one of two things happens: 1) an AP Invoice is created so a check can be cut on the next check run or 2) an AR Credit Memo is created that can offset an AR balance due.

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• Program Class Setup
  • To assign to the Sales Program for categorical purposes.
• Item Set Setup
  • Item Sets contain groups of items that are part of the Brokerage Program.
• Customer Address Setup
  • Brokerage Programs are assigned to one or more customer addresses.
• UOM Setup
  • To assign the UOM for any brokerage rate set to a calculation of $/UOM.

Optional Prerequisites

• Set the ‘Enable Real Time Transaction Integration’ Sales Order preference to ‘Yes’
• Set the ‘Summarize AP Documents by Vendor’ Sales Programs preference
  • Setting this preference to ‘Yes’ will summarize all settlements in a batch by Broker and send a single AP Invoice to the host system as opposed to sending individual AP Invoices for each Sales Transaction.
• Set the ‘Summarize AR Documents by Customer’ Sales Programs preference
  • Setting this preference to ‘Yes’ will summarize all settlements in a batch to send a single AR Credit Memo to the host system per Customer as opposed to sending an AR Credit Memo for each settlement transaction for the same customer.
• Account Setup
  • If the Brokerage Programs accounting rules are set to Use Item Debit Accounts, Use Item Credit Accounts, or Specify Both Accounts, a GL Account must be manually select to determine the debit and/or credit account for the accounting of the Brokerage Accrual, thus requiring that these accounts be setup.
• Customer or Vendor Setup
  • If the Settle To method is ‘AR Credit Memo’, a customer must be selected for the AR Credit Memo to be created for, thus requiring the customer is setup. However, if the Settle To method is ‘AP Invoice – Paid In Full Orders’ or ‘AP Invoice – All Orders’, a vendor must be selected for the AP Invoice to be created, thus requiring the vendor is setup.

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Understanding the Data Flow

A Brokerage Sales Program will automatically be applied on any eligible Sales Order transaction, as determined by the program’s assigned Item Set(s), Customer Address(es), and date range, and will calculate automatically based on the program’s calculation method and rate for the applicable item set(s). When the Brokerage Sales Program is applied to a Sales Order transaction, it will not display as a line item on the invoice but it will create a separate journal entry with distributions for the brokerage determined by the Accounting Rules selection made on the Brokerage. The brokerage’s journal entry will be created when the corresponding invoice is saved as ready to post. In addition, the brokerage amount will create a settlement in the Sales Programs Settlement list view, to be settled in a separate step, most likely at a later date.

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• Description: Enter the description of the program. This will display in the Programs list view and will help differentiate the sales program from all other Brokerage programs.
• Class: Select the Program Class to assign to the Brokerage. This is for categorical purposes and the lookup will only include those program classes assigned a program type of ‘Brokerage’. This field is required.
• From: Enter the date as of which the Brokerage is eligible. This field is required.
• To: Enter the date as of which the Brokerage is no longer eligible.  This field is required.
• Settle To: This field defaults to ‘AP Invoice – Paid in Full Orders’ but is editable for the user to select the method by which the brokerage is settled. The available options include ‘AP Invoice – All Orders’, ‘AP Invoice – Paid In Full Orders’, and ‘AR Credit Memo’. This field is required.
  • AP Invoice – All Orders: This option will create an AP Invoice when any of this brokerage’s settlements are paid. Because this option creates AP Invoices, the brokerage record will display a Vendor header field that is required to determine whom the brokerage’s settlement invoices are created for. This option will identify all settlement records, for transactions with this brokerage ‘Settle to’, flagged as eligible to pay regardless of whether or not the sales transaction has been paid in full by the customer.
  • AP Invoice – Paid In Full Orders: This option will create an AP Invoice when any of this brokerage’s settlements are paid. Because this option creates AP Invoices, the brokerage record will display a Vendor header field that is required to determine whom the brokerage’s settlement invoices are created for. This option will identify all settlement records, for transactions with this brokerage ‘Settle to’, flagged as eligible to pay only if the sales transaction has been paid in full by the customer..
  • AR Credit Memo: This option will create an AR Credit Memo when any of this brokerage’s settlements are paid. Because this option creates AR Credit Memos, the brokerage record will display a Customer header field that is required to determine whom the brokerage’s settlement credit memos are created for. This option will identify all settlement records, for transactions with this brokerage ‘Settle to’, flagged as eligible to pay only if the sales transaction has been paid in full by the customer. This option would most likely be used for bill backs.
• Frequency: This field defaults to blank but displays a drop-down menu of options to determine the frequency the brokerage gets settled. The available options include Annually, As Needed, Monthly, Quarterly, and Weekly. This field is only used for information purpose and does not have any functionality tied to it.
• Vendor/Customer: This field updates to display the correct entity type depending on the Settle To method selected. If the Settle To method is set to ‘AR Credit Memo’, this field will display Customer. If the Settle To method is set to ‘AP Invoice – All Orders’ or ‘AP Invoice – Paid In Full Orders’, this field will display Vendor. This field will display a lookup of all Customers for the user to select the Customer to which the AR Credit Memo will be created for settling the brokerage is created or this field will display a lookup of all Vendors for the user to select the Vendor to which the AP Invoice will be created for settling the brokerage.
• Accounting Rules: This field defaults to ‘Use Item Accounts’. However, this field also includes the options ‘Use Item Debit Accounts’, ‘Use Item Credit Accounts’, and ‘Specify Both Accounts’ for the user to choose from. This field is required.
  • Use Item Accounts: Will use the Brokerage Expense and Brokerage Accrual accounts of each individual item in the assigned Item Set(s) to account for the Brokerage via the journal entry created from the brokerage when the transaction is posted.
  • Use Item Debit Accounts: Will use the Brokerage Expense account of each individual item in the assigned Item Set(s) to account for the Brokerage’s expense and will use the selected account for the Credit/Accrual value to account for the Brokerage’s accrual.
  • Use Item Credit Accounts: Will use the Brokerage Accrual account of each individual item in the assigned Item Set(s) to account for the Brokerage’s accrual and will use the selected account for the Debit/Expense value to account for the Brokerage’s expense.
  • Specify Both Accounts: Will use the selected account for the Debit/Expense value to account for the Brokerage’s expense for all items and will use the selected account for the Credit/Accrual value to account for the Brokerage’s accrual for all items.
• Debit/Expense Value: This field will default to ‘[From Item]’ and will not be editable if the Accounting Rules selection is set to ‘Use Item Accounts’ or ‘Use Item Debit Accounts’. When the Accounting Rules selection is set to ‘Use Item Credit Accounts’ or ‘Specify Both Accounts’, this field is editable. When this field is editable it will display a lookup of all active GL accounts for the user to select the expense account to use for the Brokerage. If this field is editable, it is required and will apply to all items within the assigned item set(s).
• Credit/Accrual Value: This field will default to ‘[From Item]’ and will not be editable if the Accounting Rules selection is set to ‘Use Item Accounts’ or ‘Use Item Credit Accounts’. When the Accounting Rules selection is set to ‘Use Item Debit Accounts’ or ‘Specify Both Accounts’, this field is editable. When this field is editable it will display a lookup of all active GL accounts for the user to select the accrual account to use for the Brokerage. If this field is editable, it is required and will apply to all items within the assigned item set(s).

Once completing the header fields, click Save.

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• Seq: This field defaults to the next number in the sequence and is not immediately editable. However, once the Item Sets tab is saved, each Item Set can be dragged and dropped into the correct order of hierarchy.
• Item Set: Select the Item Set to assign to the brokerage. Duplicate Item Sets are not allowed to be assigned to the same sales program. This field will display a drop-down menu of all Item Sets assigned a ‘type’ of ‘Sales Programs’ or ‘All Modules’. This field is required.
  • To setup Item Sets, go to Inventory>Item Sets and click new. Enter the Item Set name and description and select the item set’s ‘Type’. By default, all new Item Sets include all items. To limit the items included in the item set, apply as many filters as necessary to include only the items meeting the filtered criteria. Filters can be placed on the following item values: Item ID, Item Type, Attribute Class, UOM Schedule, Item Class, all Item Attributes, and Inactive. Once the desired filters have been applied to the Items list grid, click Save. When a new item is added to NorthScope that fits the filtered criteria of an Item Set, that item is automatically added to the Item Set and therefore assigned to any sales program the Item Set is assigned to. 
• Calculation Method: Select the method by which the brokerage will be calculated. This field displays a drop-down menu of calculation methods including the following:
  • $/UOM: Calculates the brokerage based on the rate assigned to the item set for the brokerage and the UOM assigned to the item set for the brokerage. This calculation is the rate times the quantity (of the Brokerage UOM) that exists on the invoice for all items belonging to the item set. If this calculation method is selected, the UOM field is required.
  • % Gross $’s: Calculates the brokerage based on the percentage rate assigned to the item set for brokerage and the total dollars of all items on the item set. This calculation is the percentage rate times the sum dollar amount of all items belonging to the item set on the invoice.
  • % Net $’s: Calculates the brokerage based on the percentage rate assigned to the item set for brokerage and the total dollars of all items on the item set. This calculation is the sum dollar amount of all items belonging to the item set on the invoice less the charges from all other sales programs times the percentage rate.
  • % off Total Invoice $’s: Calculates the brokerage based on the percentage rate assigned to the item set for the brokerage and the invoice’s total amount. This calculation is the percentage rate times the total invoice dollar amount, including items not belonging to the assigned item set(s).
• Rate: Enter the rate by which to calculate the brokerage. If the Calculation Method is set to $/UOM, the rate being entered must be a dollar amount to be charged/discounted per 1 unit of the selected UOM. If the Calculation Method is set to anything other than $/UOM, the rate being entered is a percentage to be charged/discounted.
• UOM: Select the unit of measure by which to calculate the brokerage. If the Calculation Method is set to $/UOM, the UOM field is required and will determine the unit by which the rate is charged/discounted. If the Calculation Method is set to anything other than $/UOM, the UOM field is disabled and will display %.
• # Items: This field is never editable by the user and will automatically update once the Item Set is saved to display the number of items on the item set, which are now assigned to the Sales Program.

Once entering all the Item Set fields, click the Save grid toolbar icon.

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