I have client who has 3 - 5 people who work for him on a regular basis. The company are putting their accounts onto Sage... my job!
At the moment the SE workers are submitting invoices with their hours worked combined (added to) the amount of 'out-laid' expenses totalled together. The receipts are attached so the company may claim back the VAT. Upon the SE worker submitting their invoice they are paid by cheque.
I have found this problematic as Sage has different nominal codes etc for Professional fees/expenses etc and that the company have not detailed on their cheque stubs what has actually been paid... a 'system' is needed!
One idea is to have an 'expense sheet' to pin the receipts to, so that the expenses remain seperate from the SE person's invoice for hours worked.
Any ideas on the best way forward would be appreciated as the company would like to monitor costs via the different nominal codes eg, fuel, accomodation and prof fees... the reason for going onto Sage.
You can change the nominal codes list in Sage to whatever you want (with a few exceptions which seem to be reserved by Sage). The point, though, is to fit Sage to your system rather than alter your system to fit with Sage.
Then you say, "the company would like to monitor costs via the different nominal codes", which is fine, but that process should be Sage-independent, i.e. you can use whatever bookkeeping system you want, you still have to work out which accounts you want to use.
So I suggest you and the management work out the system that you want to put in place *first*, try it for a few months to check that they are getting the information that they want and to let the staff get used to it, then worry about how to put that system into Sage. It would be a pain to put everything into Sage and find the requirements on the system are still not being met, and so then have to change it all over.
As for past data, if the information to separate out what they want is not there, there's not alot you can do. I'd suggest the monitoring has to be from now, and make the full change over at the financial year end to simplify the whole process. In the meantime you can use Sage to put in the current system's data if you really want to.
I was working in expenses for a company that used SAP and their expense system was as Rob suggests, independent from the accounts. In that system they had a number of expense types that were chosen and monitored, which were then linked to the g/l codes, thus eventually posting that way. Reports were then all drawn from the separate expense system.
I guess there will be many expense packages that profess to link with your accounting system, so a little research on that front may pay dividends. But I'm sure that with a drafted expense form and a simple spreadsheet system you could monitor whatever you want with expenses from there, trusting that the eventual posting of the overall s/e worker expense is in prof fees etc.
(novice question time) If you wanted to definitely have it in Sage, is it possible to draw a report on the nominals to total only items posted where the double entry is in a certain creditor account/range? Or what about doubling up on the required expense nominals and appending them Travel "contractors", Carriage "contractors" etc?
Finally though; the company I worked for did not allow s/e workers to use the expense system. They either claimed through their agency if appropriate, or added the amounts to their time invoices. I would imagine this led to them being posted directly to the nominals without a separate way of monitoring, other than the standard project manager agreeing a budget up front. Only actual employees were using the true expense system.
Lesley - I would agree with Shaun that 'expenses' are normally only related to employees. Extra costs that sub-contractors incur should be invoiced in the same way as their time. How the business records these costs in the GL and how much analysis needs to be done is then up to them.
PS - it may be more appropriate to record subcontractor expenses as a cost-of-sale rather than an overhead (depends what they do for you).
They are Self Employed engineers who each put invoices in for their time and also attach fuel receipts and accomodation receipts which they have paid out for themselves. The company then writes a cheque to each engineer for the total amount of the invoice. This cheque is then settling the invoice AND re-imbursing them.
The company is thinking of devising an 'expense' form for the engineers to attach their receipts to so that their 'fees and 'costs' if you like are kept seperate. The thinking behind this is because in some cases the engineers haven't provided VAT receipts... and what we've found too is that the invoice they're submitting has their professional fees detailed on the invoice as well as the amount totals of the receipts for fuel/accomodation receipts being attached too.
As far as the VAT goes then... there's the invoice fees (zero rated) including the amounts of the receipts (standard rate) ... breaking down the VAT and nominal codes for entry into Sage is where I'm where I'm confused in what to do. I like your idea of recording a subcontractor expense as a cost-of-sale...
I feel like I'm making something which is probably very straight forward more difficult than it needs to be!
Can I please ask you to tell me what you'd do if presented with an Invoice for professional fees with the receipts for out-laid expense receipts please?
When you are entering the purchase invoice, create one line for each nominal that you want to assign costs to - each line would have the same references.
Having an expense sheet does make sense - they can use this to itemise their expenses and attach to the invoice. They can then just put a total on the invoice.
With regards VAT, you need to be happy that the costs are yours and not the subcontractors before you reclaim them. The treatment of e.g. accommodation costs for an employee and subcontractor can be different.
