This chapter provides an overview of financial transfer setup and processing.
Video - Financial Transfer Overview
Financial Transfer Screenshot Series
DBA includes its own general ledger
DBA includes its own general ledger with a chart of accounts, accounting periods, account assignments, batch posting, financial cutoff date, and reports. All transactions within the manufacturing system, including sales and cost of goods sold, are posted to the general ledger.
Inventory transactions are handled exclusively in DBA
Inventory, Sales Orders, Invoices, Jobs, Purchase Orders, and PO Invoices are all handled exclusively in DBA. You will not be tracking inventory items or quantities in your outside financial system. Only summary values (AR, AP, and GL) are needed to update your Financial Accounting system. DBA is a completely self-contained inventory control system where data flows in one direction. This greatly reduces the complexity of attempting to fully integrate differing systems and makes the DBA Financial Transfer a pragmatic approach to use with any outside financial accounting system.
DBA is a WIP accounting system
DBA is a WIP accounting system in which the value of work in process is tracked at the overall shop and individual job level. Material, labor, subcontract service, and manufacturing overhead costs are absorbed into the inventory cost of finished manufactured items to provide accurate inventory value and cost of goods sold.
DBA includes a standard chart of accounts
DBA includes a standard chart of accounts that is structured and optimized for a manufacturing company. Even though it is a complete chart of accounts for reference purposes, only 23 accounts are actively used for manufacturing activities.
Common accounts are cross-referenced
The 23 accounts that are actively used for manufacturing activities must exist in both systems. Several of those accounts already exist in your accounting system and those that do not will be added as needed. Each DBA account will be cross-referenced with its corresponding account number in your main general ledger.
Sales and COGS accounts can be added as needed
Sales orders are included in DBA because of their interaction with MRP, shop control, and inventory. A default sales account and COGS account is provided, but for additional breakdown you can add accounts in the DBA general ledger to correspond with user-defined item categories. Any such accounts added in DBA will be cross-referenced with corresponding accounts in your main general ledger.
Invoice details and Taxes are handled exclusively in DBA
Your sales order invoices and purchase order invoices will include item transactions with detailed tax information. The AR and AP voucher value will be a single value that includes tax. You do not enter tax codes or tax detail in your financial accounting system.
Only three financial transfers are required
Only three financial transfers are required – AR Voucher Transfer, AP Voucher Transfer, and GL Summary Transfer – to fully update your accounting system to reflect the activities of the manufacturing system.
AR Voucher Transfer
Customer invoices are generated in DBA from shipments. On a daily basis the AR Voucher Transfer screen is used to convert detailed invoices into voucher style invoices that are transferred to your accounting system for receivables processing. The voucher style invoice contains header detail and a single line item (AR Invoice Transfer Item ID) for the invoice total amount.
NOTE: Only a total invoice amount is needed for AR processing. Line item detail has no functional purpose in the financial accounting system and is not transferred to avoid unnecessary data synchronization and double-posting issues.
You will create invoices using a special AR Invoice Transfer Item ID. This item ID will book a credit to the AR Invoice Transfer clearing account, instead of a sales account. The balancing debit to the AR invoice Transfer account was created in the DBA Invoice process and will be transferred to your outside accounting system in the GL Summary transfer. The net effect is that the AR Invoice Transfer account zeroes out and you are left with Accounts Receivable in your financial accounting system.
AP Voucher Transfer
PO-related supplier invoices are entered and matched with POs in DBA. On a daily basis the AP Voucher Transfer screen converts supplier invoices into one-line voucher style invoices that are transferred to your accounting system for payables processing. The voucher style invoice contains header detail and one line for the invoice total amount.
NOTE: Only a total invoice amount is needed for AP processing. Line item detail has no functional purpose in the financial accounting system and is not transferred to avoid unnecessary data synchronization and double-posting issues.
You will enter supplier bills in your financial accounting system to the AP Invoice Transfer clearing account (debit). The balancing credit entry to the AP Invoice Transfer clearing account was created during the PO Invoice process in DBA and transferred to your outside accounting system in the GL Summary Transfer. The net effect is that the AP Invoice Transfer account zeroes out and you are left with Accounts Payable in your financial accounting system.
GL Summary Transfer
On a daily basis, or period end, the GL Summary Transfer screen is used to summarize DBA account transactions into single debit and credit amounts that are transferred to the general ledger in your accounting system.
One-way data transfer is the basis of the financial transfer design
One-way data transfer -- from DBA to your financial accounting system – is the basis of the financial transfer design, for these reasons:
•One-way data transfer enables DBA to be a fully self-contained system that does not rely on an outside system for any of its functionality.
•One-way data transfer enables DBA to work with any accounting system without connectivity or version synchronization issues.
•One-way data transfer eliminates the data synchronization and connectivity issues and duplicate processes that are so problematic with systems that mix and match functions with other accounting systems.
Transfers are made by CSV file import or manual entry
Financial transfers are made through CSV file import or manual entry, depending on what import utilities are available with your accounting system. The one-line voucher format for customer and PO-related supplier invoice transfers and the summarized journal entry for GL transfers make manual entry a practical alternative when data import is not available.
You will manage your business using two accounting systems
With the financial transfer you will manage your business using two accounting systems.
•DBA’s accounting system will be used to manage the manufacturing side of your business and will account for all transactions related to inventory, purchasing, jobs, and sales orders.
•Your financial accounting system will continue to be used to manage the selling and administrative side of your business and accounts for all transactions related to banking, receivables, payables, selling, general, and administrative expenses, and payroll.
