WIP Takeups - How to Offset

This function allows you to match off (offset) costs on a job against a WIP billing amount.

To use this function you must have created two different General Ledger Accounts for WIP postings in your DEFAULT GL POSTINGS ie a WIP ACCT and an ADVANCE BILLING ACCOUNT

Go to Accounting/General Ledger/General Ledger Accounts/POSTING GL Accounts and click on DEFAULT GL POSTINGS

Use Case

• In Month 1 we invoice a client $10,000 in advance for Supplier costs that will be incurred on the job in the future
• In Month 2 we receive Supplier Invoices totalling $4,000 – but we realise there is still $6,000 of further costs to come
• At this point our Aged WIP report would show a credit of $10,000 in month 1, and a debit of $4,000 on Month 2
• That’s correct – but we might want to ‘offset’ those $4,000 of costs against the $10,0000 invoice and just leave a $6,000 credit balance in Month 1.

Steps

• To do this go to Accounting/General Ledger/ WIP Takeups/New WIP Takeup
• ​Select the JOB NO. as usual, select the new OFFSET option, click NEXT
• Tick/check the costs/supplier invoices to be offset (e.g. the $4,000 of Supplier Invoices)
• Click NEXT 
• Tick/check the Production Invoice Amount those costs are to be offset against (e.g. the $10,000 invoiced amount)
• Click NEXT
• Then finish and approve the WIP Take-Up as usual.

Now when you print the Aged WIP report – the net balance of $6,000 will be displayed – in effect we have ‘offset’ the $4,000 debit against the $10,000 credit, leaving a $6,000 credit remaining. I

If you want to see the details of the “offsets’ in the Aged WIP report instead of just the net remaining balance, check the box ‘Display Offset History’ – the report will then display the original $10,000 credit and the $4,000 debit instead of just showing the remaining credit balance of $6,000

When more costs come in later, you can simply offset those costs against the remaining $6,000 balance