As a large organisation, revenue generated from storing, handling, and transporting product is often coded to specific General Ledger accounts, and likely categorised into specific Cost Centres, too.
For accounting packages such as Xero, this means revenue generated from different types of activity may flow through to different Sales Accounts. Furthermore, tracking categories may be used to further categorise revenue.
With an Enterprise subscription, Consignly offers you Revenue Accounts and Cost Centres: a feature set that allows you to do more with each transaction you raise.
Revenue Accounts can be found in the Organisation menu. You can create as many Revenue Accounts as you need. The accounts you create should line up with the Revenue Accounts you will be allocating your income lines to in your accounting package.
In Xero’s instance, these Revenue Accounts can be thought of as Xero Sales Accounts.
Cost Centres can also be found in the Organisation menu. Again, you may create as many Cost Centres as you need. You may not use Cost Centres in your business, but if you do then these will line up with your Cost Centres in your accounting package. In Xero, Tracking Categories are used to categorise revenue. You may have a tracking category that represents your warehouse, or perhaps you use Tracking Categories to categorise your revenue by the Division that generated it.
For our example, we’ll create Revenue Accounts that match our revenue streams in Consignly.
- 200-55: Activity
- 200-60: Packaging
- 200-65: Freight
- 200-70: Storage
For our Cost Centres, we’ll align our Cost Centres to our Warehouses in Consignly:
- Metro
- Rural
Setting up defaults
Consignly helps you pick the right Revenue Account and Cost Centre for your transactions, by allowing you to set defaults in different areas. Then when you set up rates, you can choose how your Revenue Accounts and Cost Centres are allocated when a charge is raised based on that rate.
Activity Charges
When managing Activity Charges, Consignly lets you set a Revenue Account that can be used by rates involving this Activity Charge.
For our example, for each of our Activity Charge Types, we’ll define a Revenue Account.
Warehouse Defaults
You can set a Revenue Account and Cost Centre as defaults on your warehouse. When setting up rates, you can choose to use the Revenue Account and/or Cost Centre from the warehouse that was involved in raising the charge.
For our example, we’ll set a Cost Centre on each warehouse that matches the Cost Centre we set up in Consignly.
We won’t allocate a Revenue Account default here, as in our example we’ll be taking our revenue account from the activity that was involved in generating the charge.
Partner defaults
You may also define a default Revenue Account and Cost Centre on the Partner. Again, this can be used in our rates as a source for picking the Revenue Account or Cost Centre at the time the charge is raised.
For our example, we won’t be defining defaults on the Client Partner.
Financial settings on a Client Partner
Before setting any defaults, think about how you are going to allocate your charges to Revenue Accounts and Cost Centres.
For example, are your revenue streams going to be based on the activity that is being performed, or are your revenue streams accounted for by Warehouse, or even by the type of Client Partner you have?
Are your Cost Centres aligned to your Warehouses, or Divisions within your company?
Answering these questions will help you figure out where your defaults need to be set.
Rates
Once we have set up the defaults, it is time to create the rates.
In our example, we’ll have Revenue Accounts configured for our type of charge, and our Cost Centres will align to the Warehouse that generated them.
When creating a rate, Consignly lets you choose where your Revenue Account for the charge is sourced from.
This is one of the most powerful parts of the Enterprise Accounting features.
Activity Rates
Revenue Account
When setting up an activity rate, Consignly lets you choose where your Revenue Account will be sourced from.
Options available are:
- Use Revenue Account From:
- Activity Charge Type
- Partner
- Warehouse
- Select a Revenue Account
If you choose to select a Revenue Account, then the Revenue Account you select will be used when any charges are raised based on this rate.
If you choose to use the Revenue Account from an Activity Charge Type, like we are going to in our example, then when a charge is raised it will find the Revenue Account selected on the Activity Charge Type, and set the Revenue Account on the charge appropriately.
Cost Centre
Cost Centre allocation works in a similar way. Consignly lets you pick where your Cost Centre will be sourced from when a charge based on this rate is raised.
Options available are:
- Use Cost Centre From:
- Partner
- Warehouse
- Select a Cost Centre
In our example, we want to use the Cost Centre from our Warehouse. This will mean that when a charge is raised, the Warehouse involved in raising the charge will have it’s Cost Centre allocated to the charge.
An example of the accounting section in our finished Activity Rate is shown below. You can see how the Revenue Account and Cost Centre are defined.
The accounting section of our finished Activity Rate
Storage and Freight Rates
Storage and Freight Charges can be configured similarly. For our example, we want all our storage charges to be allocated to the Storage Revenue Account, and we want the Cost Centre for these charges to be based on the Warehouse that generated the charge.
An example of our Storage Charge is shown below. Notice in this example, we’ve specifically chosen the Storage Revenue Account, whilst the Cost Centre Source is set to come from the Warehouse.
The accounting information on our storage rate
Schedules
Charges raised from these rates will capture the appropriate Revenue Account and Cost Centre based on the rate setup.
In our example, we have completed an outwards consignment where product was picked and transported to a consignee. This resulted in some activity charges being created, along with some freight charges.
We have also raised some charges for storage out of the two Warehouses within this Organisation.
When we create a schedule for the Client Partner, you can see that each of the transactions has a Revenue Account and Cost Centre allocated.
For our activity transaction, the Revenue Account came from the Activity Charge Type we used.
For our freight and storage transactions, the Revenue Account was set on the Rate.
Each transaction uses the Cost Centre allocated to the Warehouse that the charge was raised against.
Xero Configuration
In order to ensure Client Partner Schedules are pushed to Xero correctly, we need to make sure that the Xero Configuration is appropriately set up.
Consignly Revenue Accounts from Consignly should be mapped to Xero Sales accounts, and Consignly Cost Centres should be mapped to Xero Tracking Categories.
Map your Revenue Accounts by adding a Revenue Account, choosing the Consignly Revenue Account in the first column, and then selecting the appropriate Xero Sales Account in the next column.
Similarly for Cost Centres, map Consignly’s Cost Centres to Xero’s Tracking Categories if you have this set up.
Once all the configuration is complete and saved, you can push your Schedule to Xero and see that the appropriate invoice lines correspond to the correct Sales Accounts, and that revenue is accurately tracked with Xero Tracking Categories.