Using Company Credit Cards
You can easily use company credit cards to manage expenses in AcctVantage. Here are the necessary steps:
Setup
In order to simplify the credit card reconciliation process, keep these tips in mind when setting up the system:
If there are multiple company credit cards that are all included on one statement, the best practice is to create one G/L account for the credit card company (e.g. AMEX) and also create a unique Payment Type for each employee's credit card (e.g. Bob's AMEX, Jane's AMEX, etc.). Assign the same G/L account to each of the Payment Types.
If there are multiple company credit cards that each receive their own statement, the best practice is to create one G/L account and one Payment Type for each credit card.
Basically, one G/L account per credit card statement is the goal here.
G/L Account
Create a new G/L account (within the liability account range). Enter the Account Name, Account Code and check the Reconcilable setting.
Payment Type
Create an new alternate Payment Type for each credit card. Enter the same G/L account that was created above and enable the Available on voucher setting.
If you have more than one company credit card that will be assigned the same G/L account, you can repeat this step for each card.
Voucher entry
By entering a Voucher for each credit card expense or inventory purchase, you will be able to cleanly reconcile your credit card statement each month.
Example 1: using a credit card to pay for non-inventory expenses
This voucher will not be included as an open payable on the A/P aging report since we're not using accounts payable as the Payment Type.
Here are the G/L transactions that will be created (as of the Post To Date) when the voucher is posted:
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Debit: Expense account(s) that are entered in the G/L line item area.
Credit: The liability account that is associated with the credit card Payment Type.
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You can use a generic vendor for expenses (such as meals & entertainment or travel) where you aren’t concerned with tracking the expenses by vendor. The system allows for a default Payment Type for the vendor so you don't need to manually select the credit card Payment Type every time a voucher is entered.
These types of expenses can also be entered via Adjusting Journal Entry.
In this example, we use a generic vendor rather than creating a vendor for every restaurant, coffee shop, airline, etc. If you prefer to create a vendor for every credit card purchase, that would work too (although it would require a lot more work!)
- Create a voucher using a generic vendor.
- The voucher amount should match the total of credit card receipt(s).
- Payment Type is associated with the company credit card.
- Appropriate expense account(s) are used in the G/L section.
Example 2: using a credit card to pay for inventory purchases
Just like the first example, this voucher will not be included as an open payable on the A/P aging report since we're not using accounts payable as the Payment Type.
Here are the G/L transactions that will be created (as of the Post To Date) when the voucher is posted. These will not all apply to every voucher (the debits and credits listed in italics are optional).
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Debit: Inventory Holding (liability) account that is assigned to the Vendor. This account was originally credited when the PO was received. The debit will close the Inventory Holding for the vouchered line item.
Credit: The G/L account associated with the Payment Type.
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Optional:
Debit: Any G/L accounts entered on the General Ledger tab.
Debit: If (Adj Cost + Freight + Other) > PO Cost, then there will be a debit to the Inventory (asset) account that is assigned to the Product Class. This will increase the value of the inventory.
Credit: If (Adj Cost + Freight + Other) < PO Cost, then there will be a credit to the Inventory (asset) account that is assigned to the Product Class. This will decrease the value of the inventory.
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In this example, assume that you have previously issued a PO and received the inventory. Now you need to record that you paid the vendor with the company credit card.
- Create a voucher for the vendor who the purchase order was issued to.
- The voucher amount is the amount charged to the credit card.
- Payment Type is associated with the company credit card.
- Appropriate PO Line Item(s) are cleared as usual.
Paying the credit card company
If you use either of the "AP" payment types, then this voucher will be included as an open payable on the A/P aging report. If you used an ACH or other alternate payment type, the voucher will be settled immediately.
Here are the G/L transactions that will be created (as of the Post To Date) when the voucher is posted:
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Debit: The liability account that is associated with the credit card Payment Type.
Credit: The credit will be either Accounts Payable (liability) if you used one of the "A/P" payment types OR if you used another alternate payment type, it will be the G/L account associated with the alternate payment type.
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It does not matter whether you pay the credit card company before or after reconciling the CC statement. The current month's credit card payment will always appear on the following month's CC statement since it is paid after the statement closing date. However, you may feel more comfortable entering & paying this voucher after you reconcile the CC statement and have verified all expenses were entered correctly.
Now that we have illustrated how you can record expenses & purchases made with the company credit card, you might still be asking "how do we pay the credit card company?"
When you get the statement from your credit card company, you will use a voucher to create a payable. The key here is that you will use the G/L liability account associated with the company credit card to offset the entry to A/P. We’re simply trading one liability for another. Previously recorded credits to the CC payable account will be offset by the debit to that same account entered via this voucher.
- Enter a Voucher for the credit card company.
- The voucher amount should match the credit card statement balance (even if you’re going to pay less!)
- Select the payment type:
- To put the payment in the queue with other payables, the payment type needs to be either AP, Open or AP, Marked to Pay.
- If you are paying the credit card bill via an alternate payment type (e.g. ACH) you can select that payment type here instead of AP.
- The G/L Account is the credit card liability account associated with the payment type that you used on the initial expense vouchers.
Reconciling the credit card statement
Did you know that you can use the G/L reconcile process for any G/L account? We’ll use it here for our credit card payable liability account.
In the example below:
- We have received our credit card statement for 1/15/2024.
- We owe $1,549.00, which we’ll pay when it’s due.
- The balance on the previous statement was $1,003.00
- We paid the previous balance in this period (and it appears on this month's statement)
- We had total new charges in this period of $1,549.00 (this includes both the inventory and non-inventory vouchers).
