Invoice cost allocation
Summarize
Summarized using AI
This content was generated using new OpenAI-powered functionality. Results are provided on an as is basis and are not guaranteed to be accurate or complete.
Summary of Invoice cost allocation
Invoice cost allocation in ServiceNow's Zurich release enables Accounts Payable (AP) specialists to assign invoice line costs across multiple cost centers or ledger accounts. This process ensures accurate cost analysis and streamlined invoice processing by distributing costs appropriately within financial structures.
Show less
Key Features
- Cost Allocation Methods: Costs can be allocated at the purchase order (PO) level, where invoice lines matched to PO lines inherit cost allocations automatically. Alternatively, AP specialists may manually allocate costs at the invoice line level, splitting costs by quantity, quantity percentage, amount, or amount percentage.
- Invoice States for Allocation: Cost allocation records can only be created or modified when the invoice is in draft or exception found states.
- Validation: The total allocated quantity or amount must match the invoice line quantity or subtotal to avoid cost allocation exceptions.
- Approval Integration: Cost allocations are subject to approval workflows, routing invoices to cost center owners as configured by approval rules.
- Distribution Sets: Distribution sets consist of predefined rules and templates that automate cost allocation across cost centers or general ledger accounts. AP specialists can manually select these sets to enable bulk allocation based on established criteria, reducing manual entry and errors.
- Template Automation: Templates within distribution sets can automatically create cost allocation records even for invoice lines without amounts, after which AP specialists can adjust allocations as needed.
Benefits
- Minimizes risk of cost allocation errors through automation and validation.
- Accelerates invoice processing by reducing manual allocation efforts for AP specialists.
- Supports flexible allocation methods aligned with organizational financial structures.
Practical Application for ServiceNow Customers
ServiceNow customers can leverage invoice cost allocation to improve financial accuracy and operational efficiency in Accounts Payable. By using distribution sets, customers automate complex allocation rules, ensuring consistent and compliant cost distribution. Manual allocation options provide flexibility for unique cases. Integration with approval workflows ensures governance and accountability throughout the invoice lifecycle.
Cost allocation is a process of identifying and allocating the costs across different cost centers or ledger accounts. Accounts Payable specialists allocate invoice line cost across multiple cost centers or ledger accounts for accurate cost analysis and invoice processing.
Accounts Payable specialists can allocate invoice cost in the following ways:
- Cost allocated at purchase order level-
- When the invoice line is matched with the purchase order line and the invoice moves to PO matching completed status, then the cost allocation related to the purchase order line is copied to the invoice line. Any existing cost allocation record is overridden.
- When you change the invoice type from PO to non-PO invoice, you're prompted with a warning message to confirm that updating the invoice type restarts invoice processing, closes any open exceptions and deletes any cost allocations associated with the invoice. Upon confirmation, the cost allocation record is deleted.
- Manual cost allocation- add cost allocation at invoice line level. When cost is split across multiple cost centers, the cost center field on the invoice line becomes read-only and allows one type of allocation type in cost allocations For more information on manual cost allocation, see Create invoice cost allocation manually.
Accounts Payable specialists can allocate invoice line cost by:
- Quantity
- Quantity percentage
- Amount
- Amount percentage
- You can create invoice line record and cost allocation record only when the invoice is in draft state and exception found state.
- During cost allocation, you must confirm that the total allocated quantity or amount across different cost centers or ledger accounts must be equal to the invoice line quantity or subtotal, or else invoice cost allocation exception occurs.
- Approval rules are configured by the approval engine that directs the invoices to cost center owners for approvals. For more information on approvals, see Invoice approvals.
- Distribution set is added for cost allocation type. For more information on how distribution set is added for cost type, see Distribution set in Accounts Payable Operations.
- Distribution sets automate the creation of cost allocations for invoice lines by applying pre-defined rules or filters and distribution lines included during their setup.
- Manual Selection: AP specialists can manually select a distribution set while creating cost allocation records for an invoice line, enabling bulk automation as per defined distribution lines.
- For PO invoices, cost allocations can be copied from the PO. If invoice attributes meet the default rule or filter criteria in distribution set, distribution lines will also apply.
- The template feature in a distribution set automatically creates cost allocation records for invoice lines without amounts. AP specialists can then manually allocate costs across cost centers or general ledger accounts.
- Any over or under-allocation will be flagged during the exception stage.
BEnefits of distribution set in cost allocation records are:
- Reduces risk of cost allocation errors.
- Speeds up invoice processing by minimizing manual work for AP specialists.