Zero value invoice
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I write and run a billing application for our company.
We have a large customer with a lot of subsidiary sites. They want a single invoice, so our system bills all the child accounts up to a parent account, so the customer gets one invoice. The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
With me so far?
The contract specified a £1,500 monthly credit against all their charges, so we put a repeating monthly charge in the parent account.
Client is not happy, they said we did it wrong. The credit should have been in account X (one of the child accounts) not the parent account, and have been refusing to pay until this is fixed for last months invoice. We can't amend an issued invoice.
Much discussion on phone about absurdity of logic.. I gave up and did this:
- Raised a "debit" charge of £1500 on the parent to reverse the 'wrong' credit
- Re-run the credit on the child account X .. which then raises a £1500 credit on the parent of course.
- Generate an invoice on parent account. Total value = £0.
I was soooooo tempted to add an administration charge as well..
- Raised a "debit" charge of £1500 on the parent to reverse the 'wrong' credit
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This sounds like pretty typical work for a sales rep / accounting drone. Why did you get it wrong in the first place? Seriously, with their stated accounting for stuff, did you even ask them where they wanted the charge applied, or just say, "Fuck it?"
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@Quango said:
The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
There's your "absurd logic", right there. You've got a bunch of branches, you need to bill their charges to a central account, so what do you do? Why, instead of simply billing the charges to a central account, you transfer the charges to the parent, of course. I guess that's why you work on accounting software and I don't. Having said that, the company I work for built, and maintains, a billing application among other things. It's a pile of WTFs and no mistake. So I suppose I should put a sock in it and knock on wood, lest I am tasked with maintaining that...
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@toon said:
There's your "absurd logic", right there. You've got a bunch of branches, you need to bill their charges to a central account, so what do you do? Why, instead of simply billing the charges to a central account, you transfer the charges to the parent, of course.
It does sound odd, I know. By doing this we can give the customer logins for each child account, and the staff at each child site can see their own "bill" online. They have no access to the parent account or the other child accounts.
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I didn't create the original charge, the staff did. I got involved because there is no mechanism to do this change. I suspect the customer didn't specify where to locate it. But even so, there is only one invoice.
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Why can't you just have a "bill to" address for each account? We have "ship to" and "bill to" for every account.
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@Gazzonyx said:
Why can't you just have a "bill to" address for each account? We have "ship to" and "bill to" for every account.
What he said ^^^^^
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It's possible that I have a different interpretation of the story... Let me rephrase things to explain better.
Let's say you have a telecommunications package (Cell Phone, TV, Internet). Each of these is its own account, linked to your parent account (which is you). Most things get billed to the child accounts, but you get a single bill at the end of the month. (1 bill == 1 invoice)
Now, because you are conscientious, you set up a recurring bank transfer to auto-pay your accounts. However, when you get the bill, you notice that the credit was applied to your parent account, not split up between your Cell Phone, TV and Internet. Thus you get pissed off and refuse to pay (? or something?).
To appease you, some poor code monkey had to bill you an amount equal to your credit, and then add extra charges to your Cell Phone, TV and Internet which sum up to an amount equal to your credit and reissue your invoice (which is now $0).
At least, that's the way I read it...
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@toon said:
@Quango said:
The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
There's your "absurd logic", right there. You've got a bunch of branches, you need to bill their charges to a central account, so what do you do? Why, instead of simply billing the charges to a central account, you transfer the charges to the parent, of course. I guess that's why you work on accounting software and I don't. Having said that, the company I work for built, and maintains, a billing application among other things. It's a pile of WTFs and no mistake. So I suppose I should put a sock in it and knock on wood, lest I am tasked with maintaining that...
Accountants aren't so concerned for simplifying processes and having 100% correct data so much as ensuring that everything is properly accounted for. The parent account wasn't the account which generated the charge or the credit so it would be wrong to apply the charges and credits directly there. Similarly if a value comes in wrong, they don't want you to fix the value as if it was never wrong (especially if they've already booked that value, declaring it "the gospel truth" as far as they're concerned), they want you to find out what made it wrong and provide an adjustment which fixes the value (you don't fix "the gospel truth", but you can provide patches to it when declaring new "gospel truth" - booking next months numbers). That way they know where everything came from, and they don't have to go back and rebook numbers.
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@airdrik said:
@toon said:
@Quango said:
The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
There's your "absurd logic", right there. You've got a bunch of branches, you need to bill their charges to a central account, so what do you do? Why, instead of simply billing the charges to a central account, you transfer the charges to the parent, of course. I guess that's why you work on accounting software and I don't. Having said that, the company I work for built, and maintains, a billing application among other things. It's a pile of WTFs and no mistake. So I suppose I should put a sock in it and knock on wood, lest I am tasked with maintaining that...
Accountants aren't so concerned for simplifying processes and having 100% correct data so much as ensuring that everything is properly accounted for. The parent account wasn't the account which generated the charge or the credit so it would be wrong to apply the charges and credits directly there. Similarly if a value comes in wrong, they don't want you to fix the value as if it was never wrong (especially if they've already booked that value, declaring it "the gospel truth" as far as they're concerned), they want you to find out what made it wrong and provide an adjustment which fixes the value (you don't fix "the gospel truth", but you can provide patches to it when declaring new "gospel truth" - booking next months numbers). That way they know where everything came from, and they don't have to go back and rebook numbers.
Auditability is a common requirement for all sorts of software. It's obviously the correct way to do accounting, too; you don't up and edit (or delete) old records, you add corrections so that there is an audit trail..
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@morbiuswilters said:
@airdrik said:
@toon said:
@Quango said:
The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
There's your "absurd logic", right there. You've got a bunch of branches, you need to bill their charges to a central account, so what do you do? Why, instead of simply billing the charges to a central account, you transfer the charges to the parent, of course. I guess that's why you work on accounting software and I don't. Having said that, the company I work for built, and maintains, a billing application among other things. It's a pile of WTFs and no mistake. So I suppose I should put a sock in it and knock on wood, lest I am tasked with maintaining that...
Accountants aren't so concerned for simplifying processes and having 100% correct data so much as ensuring that everything is properly accounted for. The parent account wasn't the account which generated the charge or the credit so it would be wrong to apply the charges and credits directly there. Similarly if a value comes in wrong, they don't want you to fix the value as if it was never wrong (especially if they've already booked that value, declaring it "the gospel truth" as far as they're concerned), they want you to find out what made it wrong and provide an adjustment which fixes the value (you don't fix "the gospel truth", but you can provide patches to it when declaring new "gospel truth" - booking next months numbers). That way they know where everything came from, and they don't have to go back and rebook numbers.
Auditability is a common requirement for all sorts of software. It's obviously the correct way to do accounting, too; you don't up and edit (or delete) old records, you add corrections so that there is an audit trail..
Well, sure. I guess I understand how accountants think: they're bookkeepers. Mistakes can happen (we're all human), and they're OK as long as they're written up in the books properly. That way, when an auditor comes along and they say: "hey what's this deduction and then addition mean," then if they've got their stuff together they can show the paperwork for it and the auditor will say "all right, this is now declared Properly Booked" which is what every accountant wants (among other things).
But all of this makes the OP's story less of a WTF, since now it boils down to the fact that the customer asked them to make a perfectly sensible booking correction. But I guess I'm not the first one to make that point. More importantly, the OP makes the point that they were asked to bill to the central customer; so why not just bill the charges to them? Why go through the hoops of distributing charges before invoicing? (keep in mind, this isn't an accounting forum!) It doesn't make sense to me.
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@toon said:
More importantly, the OP makes the point that they were asked to bill to the central customer; so why not just bill the charges to them? Why go through the hoops of distributing charges before invoicing? (keep in mind, this isn't an accounting forum!) It doesn't make sense to me.
I'm guessing that the various "child" accounts have account numbers that correlate to something in their internal accounting system. Each of the children no doubt has their own budget, etc, so it's important to them to have everything correct. The parent may be a totally different entity (organizationally, accounting wise, etc), and so it might not make any sense to bill things to their actual account.
Either way, the managers in charge of the various accounts would probably raise hell if they saw something charged to them that they weren't really responsible for, so this may be one way the people in payables keep the peace. Also, you just gave a customer an excuse to delay payment, which improves their cash flow at your expense.
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@toon said:
@morbiuswilters said:
@airdrik said:
@toon said:
@Quango said:
The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
There's your "absurd logic", right there. You've got a bunch of branches, you need to bill their charges to a central account, so what do you do? Why, instead of simply billing the charges to a central account, you transfer the charges to the parent, of course. I guess that's why you work on accounting software and I don't. Having said that, the company I work for built, and maintains, a billing application among other things. It's a pile of WTFs and no mistake. So I suppose I should put a sock in it and knock on wood, lest I am tasked with maintaining that...
Accountants aren't so concerned for simplifying processes and having 100% correct data so much as ensuring that everything is properly accounted for. The parent account wasn't the account which generated the charge or the credit so it would be wrong to apply the charges and credits directly there. Similarly if a value comes in wrong, they don't want you to fix the value as if it was never wrong (especially if they've already booked that value, declaring it "the gospel truth" as far as they're concerned), they want you to find out what made it wrong and provide an adjustment which fixes the value (you don't fix "the gospel truth", but you can provide patches to it when declaring new "gospel truth" - booking next months numbers). That way they know where everything came from, and they don't have to go back and rebook numbers.
Auditability is a common requirement for all sorts of software. It's obviously the correct way to do accounting, too; you don't up and edit (or delete) old records, you add corrections so that there is an audit trail..
Well, sure. I guess I understand how accountants think: they're bookkeepers. Mistakes can happen (we're all human), and they're OK as long as they're written up in the books properly. That way, when an auditor comes along and they say: "hey what's this deduction and then addition mean," then if they've got their stuff together they can show the paperwork for it and the auditor will say "all right, this is now declared Properly Booked" which is what every accountant wants (among other things).
But all of this makes the OP's story less of a WTF, since now it boils down to the fact that the customer asked them to make a perfectly sensible booking correction. But I guess I'm not the first one to make that point. More importantly, the OP makes the point that they were asked to bill to the central customer; so why not just bill the charges to them? Why go through the hoops of distributing charges before invoicing? (keep in mind, this isn't an accounting forum!) It doesn't make sense to me.
What are you talking about? I never said anything regarding the OP. My response was to airdrak who has apparently never heard of audit trails since he found bizarre the idea of entering a correction rather than simply going back and editing the official record.
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<font size="3" face="Times New Roman">
</font>[quote
user="boomzilla"]I'm guessing that the various "child"
accounts have account numbers that correlate to something in their internal
accounting system. Each of the children no doubt has their own budget, etc, so
it's important to them to have everything correct. The parent may be a totally
different entity (organizationally, accounting wise, etc), and so it might not
make any sense to bill things to their actual account. [/quote]Exactly, say a
university with multiple colleges/departments each with a budget (based on
budget allocations from the university, independent income (grants, IP
licensing, targeted donations), direct tuition/fees, charging other
departments, etc). That department's goal at the end of the year is to be
budget neutral (at least in .US public .EDUs., whose budget process complete with annual "emergency spending" is its own WTF
and one of the reasons I no longer work in academia)The
University's bill from [CellCo] (the sole cellular phone provider for official
phones) was suspiciously like the OP's situation -- the cell phones in each
department were billed to a sub-account which was all billed on a master
invoice. IT billed the departments based on the sub-account activity, then made
a single payment to [CellCo]. The net result each month was $0.Had a random
credit appeared on the master account -- an account to which no charges
independently accrued -- accounting hell would have broken loose as at the end of
the month the amount paid to [CellCo] wouldn't have equaled the amount billed
to each department, our budget center would have had unexplained/unearned
income and just everyone would have been confused -- and departments would be
pissed because their budgets were taking a bigger-than-expected hit and IT
would be making an unfair "profit".<font size="3"><font face="Times New Roman">This is the same environment where departments charge each other for labor
in 1/2 hour increments -- they're essentially independent enterprises sharing
some common administrative services.</font></font>
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@Quango said:
I write and run a billing application for our company.
We have a large customer with a lot of subsidiary sites. They want a single invoice, so our system bills all the child accounts up to a parent account, so the customer gets one invoice. The sites have what I call "Bill to parent" which shows totals up their own charges, but transfers the value to the parent so it gets invoiced there.
That's quite normal for any company that has divisions. Accounting must be done per-division, because the purpose of accounting, in addition to making sure correct amount is paid, is to keep track of which business activity generated what costs and incomes. So they absolutely need the accounting be done by the subaccounts. And logically want to get just one summary invoice, so you send fewer papers and they get to archive fewer papers. No WTF so far. @Quango said:
The contract specified a £1,500 monthly credit against all their charges, so we put a repeating monthly charge in the parent account.
Client is not happy, they said we did it wrong. The credit should have been in account X (one of the child accounts) not the parent account, and have been refusing to pay until this is fixed for last months invoice. We can't amend an issued invoice.
That's key rule of accounting. Issued invoices can't be amended. They can only be either cancelled by sending invoice with negative amount followed by the correct invoice or sending invoice for the difference. For one thing the error and it's fix must be traceable and for another there are already other calculations based on the erroneous invoice and redoing them might not be viable and definitely was not viable before computers, so you just include the correction in the next round. No WTF here. @Quango said:
Much discussion on phone about absurdity of logic.. I gave up and did this:
- Raised a "debit" charge of £1500 on the parent to reverse the 'wrong' credit
- Re-run the credit on the child account X .. which then raises a £1500 credit on the parent of course.
- Generate an invoice on parent account. Total value = £0.
That's the correct and only way an invoice can be fixed. Not a WTF. @Quango said:
I was soooooo tempted to add an administration charge as well..
Here is the WTF. It was YOUR mistake. You were obliged to fix it.
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Noo... The total of the two invoices are still £ 1500, you just moved it. What's the WTF?
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@Quango said:
By doing this we can give the customer logins for each child account, and the staff at each child site can see their own "bill" online. They have no access to the parent account or the other child accounts.
I think you just answered your own question on why it was important to apply the credit to the child and not parent account.
