Sage 100

New Implementation of Sage 100 4.50. Customer told us long ago they were cash basis, so we sold them the AP/AR cash basis accounting solutions. Now we are getting to the first month financials and they want to do them with a combination of cash/accrual (wants to know what they actually billed their customers for the month vs the cash outlay for expenses for the month). Can you say creative accounting? Anybody have any idea how to handle this? I suggested journal entries for the month but they didn't like that idea and it's no longer a cash basis then.

It isn't cash basis if they want to recognize what they billed. If I recall correctly you could easily see via reports what was outstanding for billings. Maybe it was the AR aging?

While anything could be done with custom programming, but whatever you do you may wish to get written acknowledgement from the client that what they are requesting does not appear to follow Generally Accepted Accounting Principles. Think Enron/Arthur Anderson.

We have customers that run their books on an accrual basis and then convert them to cash basis for the tax return. We just built a report using MAS Intelligence to convert from accual basis to cash basis. The report calculates for each month so they have monthly cash basis and monthly accrual basis. Using Excel this is fairly simple.

Most of these type situations that I've been involved with they make adjusting entries (and reversals) to recognize any accruals. Which, of course, begs the question of why they wanted a cash basis enhancement in the first place.

I think some of these must be just old habits dying hard (where's Bruce when you need him ...) Basically, ""we've always done it this way."" Before things get too complicated, be sure to show them how to use the various standard reporting available for cash flow, cash received-checks written, PO commitments, etc.

I work with a fairly large client, about 40 million, who has this exact situation. How they handle the AP is by not entering the invoice in AP unless it's being paid on the upcoming check run. On the AR side they recoginize all revenue on the P&L. Even anything in WIP gets moved to the income statements since they are mostly a time and materials billing group, which for them means they have paid their employees for the work up thru the end of the month. They claim they have always done their books this way.