Reconciling stock used with invoicing, and receipting

Under certain circumstances, reconciling these three areas is very simple. If you raise a non-contract invoice for a single stock item (whose price is a multiple of 8 cents) and receipt the invoice within the same accounting period, then all three areas will match up perfectly.
In real life, a number of factors make things more complex.

• If, as usually happens, invoices are receipted later (in another accounting period) then receipts and invoices for either period will not match.

• If invoices contain more than one stock item where the price is not a multiple of 8 cents then there may be discrepancies in the GST. This happens because of working to whole cents. As a simple example, if an invoice contains four items each priced at $1.00 then the GST at 12.5% on each item will be 12c (since you can't have half a cent) for a total of 48c. However the GST on the total of $4.00 will be 50c not 48c. This is unavoidable.

• If an invoice is created and subsequently deleted within the same accounting period then the positive and negative values will cancel out. However if an invoice is created in one accounting period and deleted in a later accounting period then both periods will be affected. This is covered in more detail below ('Deletions and Reversals').

• When a 'Contract' invoice is generated, the invoiced amount bears no resemblance to the total of the stock used. For this reason the 'Non-Contract' and 'Contract' parts of reports must be treated differently. How the numbers are handled depends on whether you are interested in the total amount of stock used ('How many sutures did we physically use last month?') or the billable stock ('How many sutures which contributed to billing did we use last month?').

• Inventory 'Credit Note' transactions reduce the total stock used and the total income but are not 'Invoices' per se and hence don't show on the Invoice Transaction Report.

• Non-inventory invoices (i.e. those entered via Patient.Transactions.New) add to the invoicing but have no effect on stock usage at all.

• Credits and Credit Writeoff transactions cause the receipting to differ from invoicing.

Deletions and Reversals

Consider the following scenario:

• An invoice for $5000 is generated in April.

• At the end of April a report is printed of invoices during the month which shows, say, $25,000 generated in the period.

• In May the $5000 invoice is selected and deleted. In effect this is saying 'We were wrong, this invoice never happened'.

• After the deletion we want a printout of invoices for April to show $20,000. Unfortunately we may already have supplied a printout showing $25,000 (printed at the end of April) to the board or our accountants.

• We want to be able to know what happened in May, even though the invoice involved was an April invoice.

How this is handled in an SPM report depends on whether both the invoice and the deletion happened in the period being reported, the reporting period covers only the invoice, or the reporting period covers only the deletion date. The examples below are illustrated with respect to the 'Invoice Transaction Report' (Reports – Financial Reports – Invoice Report).
 

Only the invoice is in the reporting period (April, above):

• The invoice is shown as at the invoice date but with the tag (Del.) to show it was later deleted.

• The 'Total Invoices' figure includes the invoice. This amount is therefore the same as it was on any previous copy of the report which was printed at the end of April.

• The 'Total (Del.)' figure includes the amount of the invoice. That is, the $5000 of the invoice appears both in the total invoices and in the total deletions.

• The Total Billing' figure shows Invoices – Deletions (+ Reversals) so the amount of the invoice ($5000 - $5000) is cancelled out.

• I.e. the invoice represents part of the invoices for the month (since it was printed) but not part of the billing (money invoiced in the month that you will, hopefully, be paid in due course).

 

Only the deletion is in the reporting period (May, above):

• The deletion of the invoice is shown as at the date of the deletion but with the tag (Rev.) to show it represents a deletion of an invoice from a previous period. The dollar amount is shown as –ve.

• The 'Total Invoices' figure includes the deletion (i.e. -$5000).

• The 'Total (Rev.)' figure includes the deletion (-$5000).

• The Total Billing' figure shows Invoices (– Deletions) + Reversals so the amount of the deletion ($5000 - $5000) is cancelled out.

• The deletion has no effect on the money, for the month of May, that you expect to be paid.

 

Both invoice and deletion in reporting period:

• The invoice is shown as at the invoice date but with the tag (Del.) to show it was later deleted.

• A 'Reversal' is shown as at the date the invoice was deleted. This reversal is a negative value and tagged with (Rev.) to show it is a reversal.

• The 'Total Invoices' figure includes the invoice and the deletion.

• The 'Total (Del.)' figure includes the amount of the invoice.

• The 'Total (Rev.)' figure includes the (negative) value of the deleted invoice.

• The Total Billing' figure shows Invoices – Deletions + Reversals (i.e. +$10000 –$5000 -$5000) so the invoice is cancelled out and has no effect.

 

 

Invoicing in Period by Contract Type

Inventory stock categories can be marked as 'Contract', 'Implant', or neither of these. The choice of stock from these categories, combined with the type of invoice, controls the way in which invoices are created and how they should be handled when reporting. Invoices can be created in SPM in four basic ways:

• A simple non-contract invoice in which the total of the stock used is equal to the invoice value.

• A contract invoice where any implant items, if they exist, are not charged. The invoice value is drawn only from the contract items.

• A contract invoice where implant items are charged in addition to the contract price. The invoice value is drawn from the contract items + the implant items.

• A non-inventory invoice where there isn't any stock involved.

The 'Invoicing in Period by Contract Type' (Inventory – Inventory Analysis Reports – Invoicing in Period by Contract) report analyses each invoice (and reversal) in the period to sort out which type of invoice it is, and for which contract. The report breaks up the stock used by category then groups these categories into each individual contract or implant category and one group 'Stock' made up of the remaining categories. The report then works out which components make up the invoice. For example all the invoices where the value is the total of items from the 'ACC Contract' and 'Implant' categories will be grouped together. Each group is also marked as 'C' for contract or 'NC' for non-contract to make comparisons with the 'Invoicing in Period by Account Code' report.

 

• Note that stock from many other categories was probably used for these invoices and would show up on the 'Stock Used in Period' report. However these stock items did not contribute to the billable value of the invoices at all.

• Those invoices, if any, which can't be matched up to the stock used (e.g. non-inventory invoices) are listed separately in the 'Mismatched' group.

• The grand totals for this report should match (within a small amount caused by GST rounding) to the totals on the 'Invoice Transaction Report'.

• The allocation into 'Contract' and 'Implant' type categories is based on the current settings. There is absolutely no good reason why these would ever be changed but if this has been done then invoices may be grouped as 'Mismatched'. The grand totals will still be correct but the mismatched invoices do not contribute to the totals by invoice category.

 

Invoicing in Period by Contract Type (Summary)

If the 'Mismatched' invoices in the 'Invoicing in Period by Contract Type' report are minimal or non-existent then the summary report (Inventory – Inventory Analysis Reports – Invoicing in Period by Contract Summary) can be run. This report collects up all the categories from the previous report (i.e. only those categories which actually contributed to billing) and reports them.

If you want to see what is driving the billing in a simple and compact form, this is the report you want.