Bill Adjustments Overview & Options

Problem:  The vendor has revised a prior utility bill and has included the adjustments in the current month's bill.  What’s the best way to handle this in EnergyCAP?

Solution:  There is no single method; the best way to revise prior bills depends upon several factors.  Three methods are discussed below.

1. Edit the original bill:

The quickest and simplest way to revise a prior bill is just to edit it.  When doing so, you can:

1. Add a one line bill message (yellow icon at upper left).
2. Add an explanation using the account memo (white icon at top of bill entry screen).
3. Create an explanatory issue tracker record (yellow icon at upper center).
   
   

Advantage of editing the original bill:  

The revision is made in the proper month, so bill history is accurate and therefore there will be no adverse impact on the accuracy of future forecasting, budgeting, audits or cost avoidance – all of these functions use bill history as a basis for ‘expected’ consumption and cost.

Disadvantages of editing the original bill:  

1. Reports that you have already prepared and distributed will be out-of-date. 
2. If you interface EnergyCAP with accounts payable, the edited bill no longer reflects what was actually sent to A/P at the time (hence the need for a memo as discussed above). More importantly, the bill that will flow from EnergyCAP to A/P today has to reflect the net amount due to the vendor today.  For example, if today’s bill is for a net of $10,000 ($15,000 of electricity consumed this month and a $5,000 credit for a prior month) you want to pass a $10,000 transaction to A/P, not a $15,000 transaction.  The vendor has “trued up” your account on today’s bill so you have to do likewise.

2. Make the correcting entry in the current bill.  

Leave the original bill (last month) untouched; true up the account by making an adjustment in the current bill. A good way to do this is to build a cost and usage adjustment line item in each template.  The adjustment may be recorded using this line item whenever you receive a cancel/rebill or other vendor adjustment.

Advantages of correcting the current bill:  

The correct transaction will flow to A/P and EnergyCAP will be ‘synchronized’ with vendor records.  Year-to-date energy use and cost will be correct.

Disadvantages of correcting the current bill: 

Individual monthly energy use and cost will not be correct.  (Example:  Last month shows values that are too high due to vendor overcharge; this month shows values that are too low due to correction.)  Future forecasts, budgets, audits and cost avoidance reports that use this data will be skewed although year-to-date values will normally be accurate.

3. Create an adjustment bill.  

Instead of showing the adjustment on today’s bill, enter today’s bill as the gross amount (the actual cost and consumption not including the adjustment) and then create a second bill that includes just the adjusted cost and consumption.  If a credit, these values will be negative.  This adjustment bill can use the dates and billing period of today’s bill (if you want to track the adjustment this month) or you can use prior dates and billing periods in order to reflect the adjustment in the proper month.  Click here for How to do Bill Adjustments.

Advantages of an adjustment bill:  

1. Good audit trail
2. Flexibility as to which billing period will reflect the adjustment
3. If you interface with A/P, both bills will flow to A/P and the net amount due to the vendor will be correct. However,be sure your A/P system can handle two transactions for the same vendor and create payment for the net amount.

Disadvantages of an adjustment bill:  

A bit trickier to do since two bills will be created.