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  3. How do I configure Zuora accounting codes to classify and group transactions into a GL account in my accounting system?
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How do I configure Zuora accounting codes to classify and group transactions into a GL account in my accounting system?

Modified 21:05, 10 Jan 2012 by melanie.dolgachev | Page History
  1. 1. Overview
  2. 2. Solution
      1. 2.1.1. Invoice Items
      2. 2.1.2. Invoice Item Adjustments
      3. 2.1.3. Invoice Adjustments
      4. 2.1.4. Payments
      5. 2.1.5. Credit Balance Payment
      6. 2.1.6. Payment Refunds
      7. 2.1.7. Credit Balance Refunds
      8. 2.1.8. Credit Balance Adjustment (Increase)
      9. 2.1.9. Credit Balance Adjustment (Decrease)
    2. 2.2. How Accounting Codes Are Derived and Defined in Zuora
    3. 2.3. Accounting System Documentation
    4. 2.4. Sample Steps for Accounting Systems
      1. 2.4.1. NetSuite
      2. 2.4.2. QuickBooks:
  3. 3. Related

Overview

In Zuora, an accounting code is used to group transactions that contain similar accounting attributes. The value of accounting codes is that you can group multiple transactions into a condensed number of accounting codes. For example, you can use the same accounting code for payments and refunds, and when you aggregrate both, you can get your net payment amount. This article discusses how to use and think about Zuora accounting codes to classify transactions in an accounting system.

Please note the Z-Suite product has a specific use for Zuora accounting codes and the Z-Suite documentation should be referenced to understand the best use of accounting codes for the integration.

Solution

In Zuora, you can use the AR Summary by Accounting Code report to aggregate Zuora transactions by their accounting code.  This report groups the following transactions: invoice items, invoice payments, payment refunds, invoice item adjustments (charge and credit), invoice adjustments (charge and credit), and credit balance adjustments (credit balance payment, credit balance applied, credit balance transferred, credit balance refund). You can also export individual Zuora transactions slice and dice that data for your reporting needs.  Let’s talk about how the accounting code is mapped across Zuora transactions:

Invoice Items

The accounting code maps to a income or revenue GL account in your accounting system.  If you were to create an invoice in your accounting system, you would add an item to the invoice for each component of the invoice (for example subscription fees, support fees and professional services fees).  The GL code that you would associate each item with would be the same accounting code that you would apply in Zuora at the product rate plan charge level.  In Zuora, the corresponding invoice item will use the accounting code from the product rate plan charge.  You would apply the same accounting code to product rate plan charges that have the same revenue attributes. For example, subscriptions that contain quarterly billing schedules may have the same accounting codes as subscriptions that contain annual billing schedules.

Invoice Item Adjustments

The accounting code maps to the same revenue GL account that was used for the invoice item. The accounting code on the invoice item adjustment is automatically applied based on the corresponding invoice item that is being adjusted.  The charge service period for the invoice item adjustment also corresponds to the underlying invoice item.  If using a direct integration with your accounting system, invoice item adjustments will also reduce your corresponding accounts receivable balance. An invoice item adjustment can increase or decrease the invoice balance as the invoice item adjustment can bring the balance of an invoice item to zero.

Invoice Adjustments

The accounting code is entered on the invoice adjustment and typically maps to a revenue GL account in your accounting system.

Payments

The accounting code in a payment typically maps to a bank account in your accounting system.

Credit Balance Payment

A credit balance payment is created from an overpayment. The accounting code for a credit balance payment is typically a cash on account in your accounting system and is generally presented as a liability in your financial statements.

Payment Refunds

The accounting code in a payment refund typically maps to a bank account in your accounting system. This will also re-create the accounts receivable in your GL.  You would then process an invoice item adjustment to the extent the accounts receivable needs to be removed from your financial statements.

Credit Balance Refunds

A credit balance refund occurs when you refund a credit balance payment. The accounting code for a credit balance refund is typically a bank account in your accounting system.

Credit Balance Adjustment (Increase)

The accounting code for a credit balance adjustment is typically used to record the impact to cash on account or accounts receivable in your accounting system. This transaction type is used when creating a credit balance from a negative invoice, which results in an increase to the credit balance amount on a customer account.

Credit Balance Adjustment (Decrease)

The accounting code for a credit balance adjustment is typically used to record the impact to cash on account or accounts receivable in your accounting system. This transaction type is used to transfer funds from the credit balance to a positive invoice, thus reducing the invoice balance.

How Accounting Codes Are Derived and Defined in Zuora

The following chart explains where accounting codes are derived and defined in Zuora:
 

Zuora Transaction Type Where the Accounting Code Is Derived From Where to Define the Accounting Code in Zuora
Invoice Item Rate Plan Charge Product Catalog Rate Plan Charge > Name > Accounting Code.
Payment Payment Method Settings > Z-Payments Settings > Payment Method > Payment Accounting Code.
Credit Balance Payment Z-Payments Settings: Manage Accounting Codes Settings > Z-Payments Settings > Configure Accounting Codes.
Refund Payment Method Settings > Z-Payments Settings > Payment Method > Refund Accounting Code.
Credit Balance Refund Z-Payments Settings: Manage Accounting Codes Settings > Z-Payments Settings > Configure Accounting Codes.
Credit Balance Adjustment Z-Payments Settings: Manage Accounting Codes Settings > Z-Payments Settings > Configure Accounting Codes.
Invoice Adjustment Invoice Adjustment Transaction When creating an Invoice Adjustment, go to Additional Fields > Accounting Code.
Invoice Item Adjustment Invoice Item: Rate Plan Charge Product Catalog Rate Plan Charge > Name > Accounting Code.

Accounting System Documentation

Please refer to the documentation for your specific accounting system when creating corresponding accounts in Zuora such as GL Accounts (Revenue, Accounts Receivable, Bank). For example, if you are using Z-Suite, you will not map over invoice adjustments from Zuora to NetSuite. Instead, you would only map over invoice item adjustments and configure your tenant to disallow the use of invoice adjustments.

Sample Steps for Accounting Systems

Here are some sample high level steps for two popular accounting systems:

NetSuite

Invoices:  Create the GL Account in the Chart of Accounts
Payments:  Create the Bank Account in Setup

QuickBooks:

Invoices:  Create the Item
Payments:  Create the GL Account for the Bank Account
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