Faster GL Coding with Allocation Templates

Companies make informed decisions based on financial statements, and the reliability of the statements depends on accurate account balances. Your accounting staff may post hundreds or thousands of general ledger (GL) transactions each month, and many of those transactions involve expense accounts. 

Many companies use an ERP for accounting tasks, but posting invoice data into GL remains a largely manual process. Using accounts payable (AP) automation will reduce the time required to post transactions, and decrease the risk of error.

Why Expense Coding is Important

For many businesses, expenses represent the largest group of accounts in the chart of accounts, because there are so many different expenses. Without automation, coding invoices is a huge task that eats up the AP staff’s time, increases the risk of error, and can lead to inaccurate financial statements. As this podcast episode explains, proper planning can help you save time and reduce error rates in your accounting system.

Here’s an example: Seaside Gifts operates five store locations and posts thousands of GL entries each month. Seaside uses a manual process to code invoices, and expense accounts are organized by store location. For example, office supplies for the downtown location are posted to account #7100-10, and the west county location uses account #7100-20.

Assume that two percent of expense entries are not posted to the correct store location account. As a result, some store locations are allocated too much expense, while other locations are assigned too little. 

Seaside can’t accurately determine the profitability of each store location, and the expense errors distort the financial results. Managers can’t make informed decisions with inaccurate data.

Managing an invoice that impacts multiple GL accounts is a particularly time-consuming process.                                                                                                                                                                                                                 

Allocating Invoice Costs to Multiple GL Accounts

Your company may receive a recurring invoice from the same vendor each month, and the expense is allocated to multiple GL accounts. 

To illustrate the coding process, assume that Outdoor Equipment manufactures sporting goods. Outdoor has three production facilities: East Coast, Central, and West Coast, and a home office location. The company allocates expenses based on location, department, or by customer.

Two expense allocation methods

Outdoor pays commercial insurance premiums based on company locations, and the cost is allocated based on the percentage of total square footage. Each location is assigned a code, and when the invoice is received each month, Outdoor uses this allocation for GL accounts:

#5200 Commercial Insurance Expense

If the monthly premiums totaled $5,000, $250 (5%) of the cost is posted to account #5200-10, commercial insurance expense- home office.

Since more computer users generate higher tech costs, IT service costs are allocated based on the number of employees in each department. The operations department has the largest number of workers, and is allocated 40% of the cost, as you’ll see below:

#7110 IT Services

If the invoice total is $8,000, $3,200 (40%) is posted to #7110-35, IT services- operations department.

Posting GL expenses manually is time consuming, and the risk of error is much higher.

Manually entering expense data

Here is the current process for receiving invoices and coding GL data:

• The insurance and IT service invoices are received by email or by regular mail, and printed in the AP department. 

• The AP staff maintains a spreadsheet that lists each of the expense allocations. The total invoice amount is manually entered into the applicable spreadsheet, in order to compute the allocations. 

• An AP employee posts amounts to GL, based on the spreadsheet calculations.  

The manual process includes several risks that slow down the invoice coding process, and may lead to errors:

• The printed invoice may get lost, given the amount of paperwork processed in AP.

• The allocations listed in the spreadsheet can be outdated, and a spreadsheet may contain formula errors that result in incorrect allocations.

• Manually entering expense data increases the risk of a typing error.

Stampli’s end-to-end platform gives you full control and visibility over all your corporate spending, from cards to invoices to payments – all in one place. Using a Stampli allocation template saves your staff time, and increases invoice coding accuracy.

Use Allocation Templates for Faster Coding

Stampli offers the ability to use allocation templates for specific vendors to make invoice coding faster and easier. Templates can be used to automatically populate multiple lines for GL accounts. This feature automates the expense allocation process and reduces coding time.

There are two ways to create a template:

1. Upload a file with the template values using the CSV template provided within Stampli. 

2. Use the Stampli UI to enter the details for each line.

Templates are available in drop down menus when GL accounts are coded. You can add, delete, or update line items directly on the invoice page. Stampli also provides built-in auto-calculators that adjust based on each line item, removing the need to manually compute expense allocations.

Stampli’s AP automation platform can quickly process both recurring and non-recurring invoices.

Managing recurring invoices

Create an allocation schedule to populate a GL table based on the previous discussion. Each time a new invoice is received, the template will allocate the correct amounts to each GL account.

Non-recurring invoices

No table template is created. Billy the Bot, Stampli’s AI tool, learns commonly used GL accounts from prior invoices, and provides the first GL line item for a particular invoice.

Use Stampli to sharply reduce the time needed to code invoices, and get the correct amounts posted to GL with far fewer errors.

Take Full Control of Your AP Process

Use AP automation to create a smooth GL coding process, avoid losing documents, reduce spreadsheet errors, and eliminate manual coding mistakes. Stampli’s AP automation software will help you generate accurate financial statements in less time. Don’t just manage your spend, control it with Stampli.