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Suspense Account

It has been suggested to us that we use the Suspense Account in Clients and Profits to help us manage an ongoing problem -- media invoices being posted a month or two AFTER the client has been billed for the media placement. This causes our media job costs to lag behind the revenue by at least one month or more, which then makes our monthly financial statements inaccurate and difficult to project. Anyone using the Suspense Account in this way? Or have any other ideas to remedy this problem?

Thanks,

Curtis Fisher Jones Seel Huyett

Usually you want to use the Suspense account as a clear out account every month. For instance I use it when I am not sure where I want to post something to go back and figure out later.

A suggestion I have is to use it as a deposit. That way you don't count it as income until you have the cost that matches it. Or if you want to count it as income in the period billed, you can set up an accrued Liabilities account. You record the cost at the time of income. So the entry would be a debit to your cost account and a credit to Accrued liabilities. When the invoice comes in, you debit accrued liabilities and credit AP.

Hope this helps

Buffy Patterson Bookkeeper

We never bill our media to income. All of our media billing goes to an account for Media Deferred Revenue. The tasks we use to bill media all default to our Media Deferred Revenue G/L account. Then when a media cost comes in, we reconcile that media cost to income. This gives us the ability to charge a client $50,000 up front for a media campaign (great cash flow!) that may last 3-6 months without inflating our income. Basically, we never show the media income until we receive the vendor's cost which is usually in the same period the media was placed.

Tammy Lamb Controller Maring, Kanefield & Weissman, Inc.

If you have pre-billed for media placement, your system should be set up so that those costs sit in WIP when you enter the insertion order. Are you using the Retainer Billing function in A/R, or are you just using the Progress/Final Billing function?

Terry L. Jones, Jr.

If by "suspense account" you really mean "WIP" or "Advance Billing", then yeah, that's what you do.

Simply put: when you bill client for media BEFORE you get pub invoice, code to Advanced Billing (this is a current liability). Convert to revenue upon receipt of pub's invoice.

If you receive pub invoice BEFORE you bill client (this should never happen, right?) code it to WIP (current asset account). Then lickety-split get your invoice to the client, code it to revenue. Then convert the WIP cost to cost of sales.

Roxanne Cowan

I've set up an account called Media Accruals (liability). When media is billed, the following journal entry is done for the cost of the ad, etc. -- CR Media accruals, DR Media Expense. When the actual invoice is received, it's a DR to Media Accruals, CR to A/P or Cash. A schedule is done each month for Media Accruals so I can keep track which invoices have been accrued.

Hope this helps!

Sheryl Creech

Why don't you try booking them as payables at the insertion order stage?

Christopher Staples

We use advance billing. We do progress bill when the actual costs come in and apply the "invoice" to the advance bills.

Bob Arrieta

I was told to enter the media invoice as an expense during the month you bill your client. Then when the actual bill comes in, don't enter a GROSS amount for it. Only the NET amount. This way, it shows as an expense and is on the job ticket when you need it.

Rachel Gilboy AD/ventures Marketing Group

If you are using C&P pro version then read on.

We use "Automatic WIP accrual JEs for Media" feature of C&P which automatically posts the media costs to the cost account when you pre-bill your clients from an insertion order. You go in Setup - Preferences.... - Accounting to turn this feature on.

After the feature is turned-on, bring up the Insertion order you want to pre-bill and click on the $ sign icon to pre-bill that insertion order. Two entries are created when you pre-bill a purchase order this way.

1. Dr A/R Cr Media billing This entry is done when you pre-bill your clients.

2. Dr Media costs Cr Accrued liability This is the automatic entry that C&P does.

When you receive publishers' invoices and apply them to pre-billed media records, the following entries are posted.

1. Dr Media costs Cr A/P This entry is done when you enter your A/P. The Dr account is setup when setting up your vendor account and must be the account where you post your media costs when pre-billing clients.

2. Dr Accrued Liability Cr Media costs This is the automatic entry that C&P does.

I recommend you speak with Technical Support to get the ins and outs of this feature because it does require careful planning.

Johnson Paul Accounting & Systems Manager Campbell Michener & Lee Incorporated

We had the same kind of problem. The way that we are solving it is actually creating an auto reversing entry debiting job costs and crediting a liability account we called Accrued Job Costs. Then when we bill the client our expenses are in the same month as our invoicing. I wouldn't want to use the Suspense account because I always think of Suspense entries as errors. When we receive the actual bill we debit Accrued Job Costs and credit A/P.

Shanny R. Morgenstern, Chief Operating Officer Morningstar Communications Company
www.morningstarcomm.com

We accrue costs for all media pre-bills, in the month of billing.

Pamela A. Brosch, CPA Chief Financial Officer HSR Business to Business Inc.

I do the same thing as described below - a media accrual account. What is such a pain is when the vendor invoice comes in and it is short. Then I have to go to AR and process a media credit invoice to the client. I guess that is life when you bill before you get the cost.

Brian Woolard Chief Financial Officer O'Brien et al. Advertising