Red Highlights, Red Italics

Ledger Entries with Red Highlights Bold and Italic: What Do They Mean?

As a user of Nav for the past ten years one of the things I’ve appreciated has been those handy highlights in the customer ledger and vendor ledger entries telling me which imvoices are overdue.

When I was MD of a wholesale company, credit control was vitally important to us and I spent a good proportion of my time with my credit control manager, chasing up slow payers and discussing on-going credit limits.

Nav does and incredibly useful thing by presenting overdue invoices in bold and red.

So, that’s great and very handy but I clearly remember looking at those other red entries. The ones not in bold but in italics. Somehow, I never asked, and, as I had the overdue stuff that mattered to me highlighted, I never needed.

Fast forward ten years and I’m now a Business Central consultant. The meaning of those red italic entries ahs never cropped up in a customer conversation and so my shameful ignorance has never been exposed

Until now.

I point out the usefulness of the bold entries to a client. “What are the italic ones?” he asks, innocently.

And there it is. I don’t know. I’ve never known. I tell him and tell him that, over lunch I’ll find out. And I do!

Not to keep you in suspense, the entries in red italics are closed entries that were closed after the due date. For an invoice, for example, this means that the Customer paid but paid late. From a credit control point of view this is really useful. If a the majority of a customer’s ledger entries are in red italics then they have a history of late payment and are worthy of your particular attention.

How to prove it?

As you can see from the highlighted example, it was due  on 12/05/2021. When I look at the applied entries, the payment was posted on an earlier date. What gives? Surely that means that the invoice was paid in time?

But no! The date we need is the Closed At Date and, of course that’s not available to view on the Customer Ledger Entries.so where do you go to find it.

If yoiu highlight the entry you are interested in and click CTRL+ALT+F1. You’ll get the About This Page window which shows you every single field in the Customer Ledger Entry table and, because you highlighted the line, it will show you the contents of those fields for that line.

And there you have it. The entry was Closed At (i.e. Applied at) 19/05/2021 which was later than the due date. 

Deferral templates and how they work…

Deferral templates and how they work...

I was talking to a client the other day, all full of confidence, and she asked me a question about Deferral Templates that caught me out.

What she wanted to know was how deferrals work in NAV/BC if the invoice is posted in the middle of the month. Is there an element of pro rata or does the deferred amount just get posted back into the beginning of the month on a date earlier than the original invoice. 

My mind went blank. It’s a few years since I’d set up a deferral template and, whilst I knew that I knew, I simply couldn’t remember. 

I immediately fessed up and told her I’d go and brush up and get back to her (never try to bluff. It’s always best to confess and come back when you’ve found out the answer). so I did and I thought I’d share the result.

I did this in NAV 2019 but it’s pretty much unchanged in BC.

Deferral will take the amount of an invoice or journal and spread it across the current and following periods according to a set of rules. The rules are set in a Deferral Template. The Template looks like this:

It’s good practice to name your template in such a way as you don’t get mixed up. This one is for deferral across six months in a straight line and is using a sales G/L for the Deferral Account.

Deferral %: This determines the amount of the invoice that will be deferred. Here we’re deferring all of it. But if you were to set this to 80, it would post 20% of the invoice value directly and the defer the rest over the following months

Calc. Method and Start Date: These two fields tell NAV how you want to calculate the deferral. Specifically:

Straight Line: Defers by dividing the amount to be deferred by the number of periods specified depending upon the Start Date. Here, we’re using Posting Date so it will make seven deferral postings. The first and last are pro rata and the middle five will be equal and posted on the first day of the period. The last, pro rata’d posting will also be dated at the start of the final period.

It will do a similar Pro rata calc if you choose End Of Period as the start date in that it will calculate the amount left to the end of the period, defer that first, then five equal payments followed by a final pro rata payment to make up the remaining sum. Whereas Beginning of period and Beginning of Next Period will do exactly what they say they will.

Equal Per Period: This is pretty self-explanatory. The amount to be deferred is split equally by period but again it pro rata’s if the posting date is in the middle of the period

Days Per Period: Will divide up the deferral by the number of days and allocate the amount according to the number of days in each accounting period. So if you are using calendar months it will calculate a different amount for February and March. Similarly if you use a 5-4-4 pattern to each quarter it will calculate a higher amount in the five week period.

No. of Periods: This is simply the number of periods over which you wish to calculate the deferral. Bear in mind that, as shown above, some combinations of Calc Method and Start Date will pro rata the first and last months of the deferral giving you an extra month.

Period Desc: This allows for you to provide a dynamic posting description for your deferral entries as seen in the G/L entries above. The text in the template here is “Sales Deferred for %4 %6”.

  • %4 returns the Month name of the period in which the entry is posted
  • %6 returns the fiscal year of the posting date

Other codes are

  • %1 = Day number
  • %2 = Week number
  • %5 = Accounting period name (from the account period table)

Fixed Assets

I set up Fixed Assets in Business Central like a man walking barefoot across a floor full of Lego. There’re so many things to remember I nearly always painfully trip up.

Having said that, the first time I did it, it took me nearly a week. This time it was less than a day. There’s something to be said for repeating a task until you can’t get it wrong.

Here are the big bits of Lego that you might want to avoid.

There are sooo many things to set up before you can do anything fun like load the assets and transactional data. Posting Groups are always the obvious thing so start there. Lots of companies will have separate GL codes for different types of FA. I’ve always set up a Posting Group per FA Subclass Code meaning the two codes will be the same. Like all Posting Setups the FA one looks complicated but (depending on your client’s Chart of Accounts) it can be pretty straightforward

You could waltz off now and load the Assets but don’t. Finish off setting stuff up otherwise you’ll end up stumbling around going back and forth. Your check list looks like this:

  • Depreciation Book
  • No. Series
  • FA GL Journal
  • FA Journal
  • FA Journal Setup

Deprecation Books let you establish different methods of depreciation. Should you need to you can have more than one per each Asset. I’ve never encountered a situation where it was necessary, so I normally set up a single one called COMPANY. There’s a ton of stuff that you could use for fine tuning here and it’s worth spending some time checking it all out. My go-to settings are

Default Final Rounding Amount is the amount you’re prepared to allow BC to scoop into the final depreciation so as not to leave small amounts left to be depreciated in the final depreciation of the Asset. With these settings I’ll leave anything over £10 to be depreciated next time. However, my current client owns a lot of expensive plant and so I’d set theirs much higher as the sums involved monthly are much higher.

You’ll notice that all the GL Integration settings are off. This is crucial when loading all of the opening balances. If you’re intending for all of your FA postings to simultaneously post to the GL you’ll switch these back on before you post your first depreciation. Similarly, the Allow Changes in Depr. Fields is switched on. It’s almost a nailed on certainty that there will some issues with the dates supplied by your client and you’ll need to be able to change things.

You’ll need a No. Series for Fixed Assets and for FA Journals. If you’re using the original FA’s numbers from the legacy system set the number series to Manual Nos. and uncheck the Default Nos. (but switch back afterwards)

The two Journal templates will need to be set up but don’t panic this is just the same as setting up other journal templates. However…there’s one other thing you’ll need to do if you want to avoid this message:

This weird little blighter is hidden deep. Don’t use the Tell Me box to search for it. That’s exactly what they’re expecting you to do. No, you have to go and look here

You have to say which journal templates you’re going to use where. If you don’t do this, literally nothing you try to do that involves posting a journal will work and it’ll be horribly frustrating.

OK. You can load stuff now. You’re going to need two Configuration Worksheets:

  • Fixed Assets 5600
  • FA Depreciation Book 5612

The first is nice and easy. You’re just loading the basic details of the Fixed Assets, Number, Description. You can add dimensions here too. And don’t forget the Posting Group. If you’ve followed my advice from earlier this’ll be the same as the FA Subclass.

The FA Depreciation book is a different matter. This is where you dictate how the Asset will be depreciated. You can decide on the depreciation method. I’m not going to lie: I’ve only ever used Straight-Line and Manual. Straight-Line does what it says: if you’ve got £1200 to depreciate over a year, it’ll depreciate at £100 a month. Manual, on the other hand, does what it says. It skips the depreciation and allows you to set the amount yourself. If you have assets that don’t need to be depreciated (Land is a common one), use Manual as the depreciation method.

You’ll also add the acquisition date (when the asset was bought), the Depreciation Starting Date and Ending Date. This is where the exercise can sometimes go awry when you’re doing this for a client using data from their legacy system. You need the Start and end date so that BC can calculate the number of depreciation months and years. Don’t be tempted to put these into your configuration worksheet: BC will ignore them and you’ll go mad loading and reloading the data to try to make them appear. Well…you do if you’re me anyway. My chronic inability to remember this is the reason for this blog post!

The trick is to do a bit of excel jiggery pokery to calculate the necessary end date. But watch out for leap years!

The Fixed Depr. Amount is there to save your bacon when the client’s dates and amounts don’t deliver the depreciation they are expecting. You can use this field to set the monthly depreciation to the required amount. You might have to go back and play with this after you’ve loaded everything and run your first depreciation.

Now it’s time to load the figures. You’re trying to get back to the NBV for each asset. You need to do this as three journals: Acquisition Costs, Depreciation to the last Year End, Depreciation YTD. If there’s been any Appreciation or Write-Downs it might be worth including them on a separate journal.

Once everything’s loaded and the NBV’s match the source data, run a test Calculate Depreciation to check everything’s in order. If it’s not check back – I bet it’s to do with dates. When those are fixed and you’re happy with the results remember to turn the GL Integrations back on and the Allow Changes in Depr. Fields OFF before posting your first round of Depreciation.

And there you have it. Fixed Assets for beginners (and me for the next time I do it)

Year End: Or…How to Close the Year and Close Income Statement

The process of Closing the Income Statement in Navision or Business Central (or Year End as most of us normal mortals call it) creates a journal which debits all the income and credits all the expenses in the P&L and creates a balancing entry in the Balance Sheet, usually the GL for P&L Brought Forward.

Year End can be run as many times as you like which enables you to run it both at your actual Year End and after posting adjustments following an audit. The screenshots here are all taken from NAV 2019 but the commands, menus and principles are all the same in Business Central.

Go to “Accounting Periods” and highlight the last month of the financial year you wish to close

  1. Click “Close Year”

  2. This locks the month end dates so that they cannot be altered

  1. Now go to “General Journals” and create a new template as shown

  2. In Chart of Accounts click on “Close Income Statement” and fill in the pop up as shown
  3. In the “Document No” field fill in a doc no that will distinguish your year end postings from your other General Ledger postings.
  4. In the “Retained Earnings Acc” field, click the dropdown and chose the General Ledger (GL) code you want to save your retained earnings to (usually P&L Brought Fwd)
  5. Under “Posting Description” number the field so that you can distinguish between journals if you need to run it more than once
  6. Populate the “Dimensions” field with your default dimensions again, to allow for ease of navigation later. It’s important to remember to do this as failure to do so can lead to reporting problems down the line.
  7. Click “OK” and this will create the journal.
  8. Check the journal and post.

The journal has now been posted and is dated with the year end date prefixed with a C

This denotes a date – in the example shown – between 24:00 on 29/10/17 and 00:00 on 30/10/17 and can be used in filters

Steps 1 – 4 only need to be performed once each year. If you come to do a second year end (say after audit adjustments have been posted) then you can start at step 5.

Note: it’s useful to make a note of the last G/L Entry number so you can easily identify entries that have been posted back into the year after this process has been run.