Service Agreement Reserve

The Service Agreement Reserve module allows you to send agreement income that has not yet been earned into a reserve account. The money is then transferred out of the reserve account using the Memorized Transactions feature and into an income account when the income can be recognized. Here’s a breakdown of how everything is configured and how the entire process works.

How it works:

Each time an invoice is created for an agreement and is tied to the department you use for service agreements, the income from that goes into the reserve account instead of the income account. Then once a week, month, etc. you can go into the Post Recurring Transactions screen and post the transactions that take the money out of the reserve and put it into an income account of your choice.

Setting up and configuring the accounts:

A service agreement reserve account (generally an Other Current Liability type) and agreement income account (only needed if you want to use an income other than the built-in income account) must be created on the Enter Chart of Accounts screen if they don't already exist. Once the account is set up you must go to the System Accounts section of the System Setup screen and select the agreement reserve account you wish to hold the money in and also the income account you want the money to go to when the memorized transaction occurs for the transfer. The last step in configuration is the departments so you’ll need to go to the Enter Departments screen. Choose the department you use for agreements and then change the income account to be the reserve account. If you do not wish to have all posted service agreement invoices to go to the agreement reserve account then you can create a billing code that goes to the agreement reserve account and leave the income account in the Enter Departments screen alone. If you choose this method then you’ll need to remember to use that billing code on the “Invoice” tab when creating the service agreements that are going to be set up to use the reserve feature.

Configuring the agreement:

Once all the account setup is complete you can move onto configuring an agreement for reserve transactions. Go to the Enter Service Agreements screen and bring up an agreement that needs to have a reserve set up. Click the Activities button on the top and then click Reserve. You’ll notice that the name of the memorized transaction is auto-populated with the customer number + location number + agreement number. The transaction is inactive by default because it’ll automatically become active when an invoice is posted for the agreement. Below that you can set when you want the transaction to occur and how much money is to be transferred from the reserve when it occurs. You’ll also notice that next to the “End when zero” field is the current balance in the reserve for that customer. This balance should match the Agreement Reserve Report for that customer.

Agreement reserve in action:

When you go to Post Monthly Invoices you’ll be creating the invoices that will be putting the dollar amount of the invoices into the reserve account that was specified in the Enter Departments screen. That money will stay in there until Post Recurring Transactions and create the transaction that moves the money from the agreement reserve account and into the income account.