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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.

Prerequisites

Required Prerequisites

  • 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.
          • 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.

Optional Prerequisites

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.

Step 1: Creating the Brokerage Sales Program

To create a Brokerage Sales Program, navigate to the Sales Programs module in NorthScope, open the Programs page, click the New toolbar icon, and select Brokerage.

This will open the ‘Sales Programs: New Brokerage’ window with the Brokerage ID automatically assigned based on the Sales Programs preference for ‘Next Program ID’.

Completing the Header Fields

When creating a new Brokerage Sales Program, the following header fields will display for data entry:

  • 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.

Then, assign the Item Set(s) eligible for the Brokerage.

Assigning Item Sets

To assign an item set, open the Item Sets tab within the Sales Program record and click the New grid toolbar icon.

This will open a single line item for data entry with the following fields:

  • 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.

Multiple Item Sets can be assigned to a single Sales Program. To assign additional Item Sets, follow the steps above for each additional Item Set.

Assigning Customer Addresses

To assign a Customer Address, open the Customers tab within the Sales Program record.

The Customers tab will display all customer addresses with a check box, allowing the user to select the address(es) to assign to the brokerage. Each column within the list is filterable, allowing the user to easily narrow down the addresses that display to select the appropriate address(es) to assign.

Once finding an address to assign to the brokerage, select the checkbox that corresponds to the address and click the save grid toolbar icon. This will sort the selected address(es) to the top of the list to easily identify the address(es) currently assigned to the brokerage.

Assigning a customer address specific brokerage start date

Each customer address displays with a Start Date field, allowing the user to enter a unique start date, separate from the brokerage’s ‘From’ date, that is specific to that customer address.

If a Start Date is entered for a Customer Address, it must be between the From and to date of the brokerage for it to be recognized on a transaction. If no Start Date is entered for a Customer Address that is assigned to the brokerage, that Customer Address will inherit the start date of the brokerage.

Click the Customers tab Save grid toolbar icon to save any unique Start Dates.

Step 2: Entering a transaction with the Brokerage

Every  Sales Order line item is evaluated against every active brokerage program to determine what programs apply. For a Brokerage program to apply each of the following must be true:

  • The Order date must be within the Brokerage Program date range.
  • The Order Item must be included on one or more of the Item Sets assigned to the Brokerage Program.
  • The Customer Address must be assigned to the Brokerage Program

For each Brokerage Program where all of these are true, the brokerage will automatically be applied to the transaction and calculated accordingly.

To view the program’s effect(s) on the transaction, click the transaction’s Program Details header toolbar icon and open the Brokerage & Freight Accruals tab.

This tab will display all information regarding the effect(s) of the Brokerage on the transaction, per item affected, with the following details:

  • Program Type: Displays ‘Brokerage’ for all effects due to a Brokerage Sales Program.
  • Item - Description: Displays the item and item description of the transaction item affected by the program.
  • Method: Displays the calculation method of the program.
  • Rate: Displays the rate upon which the program was calculated. Negative rates will display within parentheses.
  • UOM: Displays the UOM upon which the program was calculated.
  • Adj. Rate: Displays a blank numeric text box for the user to enter a new rate to calculate the program for the corresponding line item. Entering a value here will override whatever rate is currently being enforced for the corresponding line item’s program’s calculations. To apply the adjusted program rate for the corresponding line item, click the Brokerage & Freight Accruals tab Save toolbar icon.
  • Quantity: Displays the quantity of the transaction line item upon which the program was calculated.
  • Amount: Displays the amount of the program as calculated for the corresponding line item.
  • Item Set: Displays the name of the Item Set assigned to the program to which the corresponding transaction item belongs.
  • Program ID: Displays the Program ID of the program for which the item’s corresponding program calculations were made.

Step 3: Posting the transaction with the Freight Accrual

If a Brokerage exists on a Sales Order transaction, no additional work is needed for the program to be posted with the transaction. Simply follow the steps to post the transaction and the program will be posted with it. Steps for posting Sales Order transactions can be found here.

However, the program rates cannot be adjusted once the transaction is in a status of Approved or greater.

Once the invoice is saved as Ready to Post, the invoice will be sent to the host system, so long as the ‘Enable Real Time Transaction Integration’ Sales Order preference is set to ‘Yes’, the Brokerage’s journal entry will be sent to the host system, and a settlement record will be added to the Sales Programs Settlement page for the transaction.

Step 4: Settling Brokerage transactions

To settle brokerage partially or in full, navigate to Sales Programs>Settlements and click New. This will display all brokerage settlement records available.

Settling Brokerage in Full

Find the settlement record to be fully settled and check the document’s corresponding checkbox. Checking the checkbox will automatically assume the brokerage is to be settled in full and will calculate the Approved, Write Off, and Remaining amounts as such. To view the line item detail, expand the record by clicking the corresponding arrow. The line item accounting can also be viewed at this level by clicking the Accounting icon, which will also allow the user to change the accounts to which the settlement posts.

To save these auto-calculated amounts, click Save. This will create a batch in NorthScope with the included settlement(s).

To settle with these auto-calculated amounts, click Process. This will create the corresponding settlement document(s) in the host system, within a batch, ready to be posted. If the brokerage is settled to an AR Credit Memo, an AR Credit Memo will be created in the host system for the Customer on the brokerage program. If the brokerage is settled to an AP Invoice, an AP Invoice will be created in the host system for the Vendor on the brokerage program.

Once the transaction is sent to the host system, the settlement record will no longer display in the Settlements list view as it has been paid in full.

Be sure to post the settlement transaction’s batch in the host system for all accounting to hit the GL.

Settling Brokerage Partially

To edit the amount being settled so that the brokerage settlement is not paid in full, find the settlement record to be partially settled and check the document’s corresponding checkbox. Checking the checkbox will automatically assume the brokerage is to be settled in full and will calculate the Approved, Write Off, and Remaining amounts as such. To edit the approved amount, expand the record by clicking the corresponding arrow. Then, click inside the Approved Amt field, delete the current amount and enter the amount to settle.

Note: The line item accounting can also be viewed after expanding the settlement record by clicking the Accounting icon, which will also allow the user to change the accounts to which the settlement posts.

After entering a partial amount to settle, the Write off Amt field will auto-calculate to display the sum of the Unpaid Amt minus the Approved Amt. For this amount to not be written off, delete the amount in the Write off Amt column.

Deleting the Write off Amt value will auto-calculate the Remaining Amt field to display the sum of the Unpaid Amt minus the Approved Amt minus the Write off Amt.

To save these amounts, click Save. This will create a batch in NorthScope with the included settlement(s).

To settle with these amounts, click Process. This will create the corresponding settlement document in the host system, sent in the corresponding batch, to be posted. If the brokerage is settled to an AR Credit Memo, an AR Credit Memo will be created in the host system for the Customer on the brokerage program. If the brokerage is settled to an AP Invoice, an AP Invoice will be created in the host system for the Vendor on the brokerage program.

Once the transaction is sent to the host system, the settlement record will display in the Settlements list view with the new Unpaid Amt as the original settlement was only partially settled.

Be sure to post the settlement transaction’s batch in the host system for all accounting to hit the GL.

Writing Off Brokerage

To write off all or partial brokerage, find the settlement record to be partially settled and check the document’s corresponding checkbox. Checking the checkbox will automatically assume the brokerage is to be settled in full and will calculate the Approved, Write Off, and Remaining amounts as such. To edit the write off amount, expand the record by clicking the corresponding arrow. Then, click inside the Approved Amt field, delete the current amount and enter 0, click inside the Write off Amt field, delete the current amount, and enter the amount to write off.

Note: The line item accounting can also be viewed after expanding the settlement record by clicking the Accounting icon, which will also allow the user to change the accounts to which the settlement posts.

Adjusting the Approved and Write off amounts will auto-calculate the Remaining Amt field to display the sum of the Unpaid Amt minus the Approved Amt minus the Write off Amt.

Settlement can be partially paid and partially written off at the same time. To do this, simply enter the amount to be paid in the Approved Amt field, which will auto-calculate the Write off Amt to be the remaining amount owed. To change the amount to be written off, simply edit the Write off Amt field.

Once all values are entered correctly, click Save. This will create a batch in NorthScope with the included settlement(s).

To settle with these amounts, click Process. This will create the corresponding settlement document in the host system, sent in the corresponding batch, to be posted. If the brokerage is settled to an AR Credit Memo, an AR Credit Memo will be created in the host system for the Customer on the brokerage program. If the brokerage is settled to an AP Invoice, an AP Invoice will be created in the host system for the Vendor on the brokerage program. The transaction sent for the settlement will include distributions to the Brokerage Write Off account for the write off amount.

If the settlement was written off in full, once it is sent to the host system, it will no longer display in the settlements list view. If the settlement was only partially written off, the settlement will display in the settlements list view with the new unpaid amount.

Be sure to post the settlement transaction’s batch in the host system for all accounting to hit the GL.

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