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Create charges codes

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This article explains how to configure charges codes for both Accounts payable and Accounts receivable. If your organization requires that sales amounts or purchase amounts be tracked in addition to line items on a sales order or purchase order, you can use charges codes for this purpose. For example, you pay freight and insurance on a purchase order, and these amounts are itemized separately on the purchase order. In this case, you can specify whether the amounts are posted to expense accounts or added to the cost of the items.

Set up charges codes for Accounts receivable

To create charges codes for Accounts receivable, follow these steps.

  1. Go to Accounts receivable > Charges setup > Charges code.
  2. Select New.
  3. In the Charges code field, enter a code for the charge.
  4. In the Description field, enter a description of the charge.
  5. Optional: In the Item sales tax group field, select a sales tax group.
  6. On the Posting FastTab, specify how the charge should be automatically debited and credited.
  7. If you selected Ledger account as the debit type or credit type, specify a posting type in the Posting fields, and specify the main account in the Account fields.

Example

Your customer pays the charge. Therefore, it's added to the sales order totals. You set up the following posting information:

  • In the Type field in the Debit section, select Customer/Vendor to add the invoice charge to the customer's account.
  • In the Type field in the Credit section, select Ledger account. Then, in the Account field, select the main account for revenue from invoice charges.

Note

If the debit type or credit type for the selected code is either Ledger account or Item, you can enter a different currency for the charge transaction.

You can print the text for charges in the language that is assigned to the customer. To specify the text for the charges code in other languages, select Translations.

Set up charges codes for Accounts payable

To create charges codes for Accounts payable, follow these steps.

  1. Follow one of these steps:

    • Go to Accounts payable > Charges setup > Charges code.
    • Go to Procurement and sourcing > Setup > Charges > Charges code.

  2. Select New.

  3. In the Charges code field, enter a code for the charge.

  4. In the Description field, enter a description of the charge.

  5. Optional: In the Item sales tax group field, select a sales tax group.

  6. Optional: In the Maximum amount field, enter the maximum amount that is allowed for the charges code.

    This field is used to validate charges for vendor invoices. To enable the validation of charges, select the Enable invoice matching validation checkbox on the Invoice validation tab of the Accounts payable parameters page.

    Important

    To validate charges for invoices, you must also create an instance of a policy rule type that is based on charges for the specific vendor invoice policy.

  7. On the Posting FastTab, specify how the charge should be automatically debited and credited.

  8. If you selected Ledger account as the debit type or credit type, specify a posting type in the Debit posting and Credit posting fields, and specify the main account in the Debit account and Credit account fields.

  9. To enable the comparison of charge values for an invoice that contains the charges from the corresponding purchase order header or lines, select the Compare purchase order and invoice values checkbox.

Example

You can record the charge as an expense, as part of the total for the purchase order or vendor invoice. Follow these steps to set up posting information.

  • In the Type field in the Credit section, select Customer/Vendor to add the invoice charge to the vendor's account.
  • In the Type field in the Debit section, select Ledger account. Then, in the Account field, select the main account for expenses from invoice charges.

Follow these steps to set up posting information so that the unit charge is added to the item cost.

  • In the Type field in the Credit section, select Customer/Vendor to add the invoice charge to the vendor's account.
  • In the Type field in the Debit section, select Item to add the charge to the item cost.

Note

You might want to use a currency that differs from the currency that is specified on the purchase order or invoice. You can enter a different currency if the debit type or credit type for the selected code is either Ledger account or Item.

You can print the text for charges in the language that is assigned to the customer. To specify the text for the charges code in other languages, select Translations.