3.0 Expense Codes

Internal invoicing is used to account for parts, labor and miscellaneous items for specific internal needs of a company.  One department performs a service for another department.  There is an expense for this service that needs to be tracked appropriately.  The Expense Code replaces the entry to Accounts Receivable in customer invoicing.  You will need to set up different expense codes for the specific branch and departments.  

For example:  Internal service billing for rental maintenance can occur on the Road, in the Shop, or even Planned Maintenance.  These departments are set up separately yet there is usually only one expense account for Rental Maintenance in the Chart of Accounts.  

When a work order is opened using an internal type of sale code, the expense information then becomes necessary to populate appropriately based on which department is responsible for the expense.  So if it is for maintenance on a rental unit you would select the appropriate Branch, then the expense Department would be rental, then the Type Of Expense would be the expense you had set up for maintenance on your rental fleet. 

The result of using this example would be that at the time of invoicing rather than hitting Accounts Receivable like a normal customer billing would do, it would instead be expensed on the GL to the appropriate department and the appropriate expense accounts.  

Some other expense codes to think about:  

• Service invoicing for equipment asset accounts

• Service rework, lost time, vacation, and warranty for each major vendor

• Service van maintenance

• Service building maintenance (you could then allocate a percentage to each department expense account through a journal for each month)

• Parts handling

• Make Ready (prep equipment for customer sale)

• Demo Expense

• Loaner Expense

• Build Part

Fields:  

Branch # - Select the appropriate Branch

Department # - Select the appropriate Department responsible for the expense

Expense Code - Select or create the Expense Code 

Expense Account - Enter the appropriate Expense account that you want the expense to be recoded to

Description - Enter a description for the expense code (this will be visible in the drop down field in the invoicing window under expense information section, ‘Type of Expense’)

Internal Customer # - Enter the appropriate internal customer account to be used when invoicing the expense

Taxable - If the expense item is taxable check this box, this would be for internal billing so if you need to record use tax the flag should be marked 

Over Ride Invoice to COG - if this flag is marked the expense will go to inventory regardless.  Normally if it is NOT checked, if you are invoicing an internal work order for sales where exp code goes to the inventory account, If the equipment hasn’t been sold yet it would go to the inventory account, but if the equipment had been sold at the time you are invoicing your internal work order it would want to go to the cost account that was used for the sale of that unit.  If this checkbox is marked it will go to inventory no matter what, it will not be rerouted to the cost of goods account