• Billings
• Receivables
• Inter-Entity

Billings - Receivables

Billing Rules
The Billing rule categorizes the manner in which a grant is billed. It discerns the type of postings that are billed and affects the actual billing functionality. For example, rule RRB-LOC bills automatically, while role RRB-NON Loc must be manually released. There are seven billing rules: RRB-Letter of Credit, RRB - Non Loc, Direct Pay - Various Amounts, Direct Pay - Like Amounts, Manual Billing, Pre-Award and Scheduled Billing.

Cost Center
A cost center is an organizational unit responsible for budgetary monitoring and reporting that collects revenues and costs. Organizational divisions can be based on functional requirements, physical location and/or responsibility for costs. The cost center number indicates a university division or health system entity, department or functional unit and/ or sub-department or other sub-organization level. Every cost center in Controlling (CO) corresponds to a funds center in the FM module.

Credit Memos
Credit Memos are used to decrease the amount of an invoice. An example would be if the AAA Company is allowed to deduct $500.00 off a $1,000.00 invoice. A credit memo of $500.00 is issued to decrease the invoice amount.

Customer
A customer is defined as a business partner with whom a business relationship exists, involving the issue of goods or services. If the Orioles rent a room for a conference from Johns Hopkins, the Orioles are the customer. If the billing address is different you would add the bill to customer to the sales order, so that you will know where to mail the invoice.

There are 2 types of customers at Johns Hopkins: Sponsored and Non-sponsored.

1. A sponsor is an organization or other source that finances a project conducted by the Johns Hopkins personnel. The sponsor may be a government agency, company, foundation, or individual interested in a study or interest in a particular area and is entitled to receive some consideration or benefits. The agreement from the sponsor represents a contractual obligation for performance of the specific activity by the Johns Hopkins Enterprise. A sponsor is identified by a six digit numerical sequence beginning with 3 (300000).
2. A non-sponsored customer is an outside organization which is billed by Johns Hopkins Enterprise for goods, services or reimbursement of expenses that were provided to that third party by Johns Hopkins Enterprise. A non-sponsored customer is identified by a six digit numerical sequence beginning with 6 (600001).

Customer Correspondence
AR customer correspondence is the form Johns Hopkins Enterprise sends to communicate with their customers. Once a billing document has been created in SAP, an invoice is requested and printed out to be mailed or electronically transmitted to the customer. All evaluations and reports that are sent to business partners are considered correspondence.

Customer Master Records
Customer Master Records are a grouping of customer information that consists of General data, Company Code data and Sales Area data.

1. General Data consist of address, control data, contact information and payment transactions.
2. Company Code Data consist of account management, payment transactions and correspondence.
3. Sales Data consist of sales, billing document and partner functions.

Internal Order
An internal order is a Controlling (CO) object responsible for budgetary monitoring and reporting that collects revenues and expenses separately from a cost center. All internal orders are assigned a responsible cost center. There are two main classifications of internal orders, sponsored (Sponsored Program) and non-sponsored (for costs and revenues not directly related to a Sponsored Project.) There are several types within each. The non-sponsored internal order has a one-to-one link with the funded program in the Funds Management (FM) module and the numbering is the same. Similarly, sponsored internal orders are linked one-to-one with the sponsored program in Grants Management (GM). The system automatically assigns a unique 8 digit number for the internal order. The first digit indicates the type of order: Non-sponsored (8), Sponsored (9) and IPA Agreements (1). The remaining digits are based on the next available value in the range for the type of order.

Invoice
A request is created to the sponsor or non-sponsored customer for the reimbursement of expenses that contains, among other things, the following information:

Expenditure Categories
Allowable Budget Amount
Total of Expenditures

Invoices are sent to the sponsor or customer after expenditures for a specific time period have been accumulated.

LockBox
A lockbox is an arrangement with a bank under which payments are mailed to a strategically located post office box, which is serviced by the bank. The bank picks up the payments from the post office several times a day and accelerates the processing of the checks to make funds available to the customer (the university). Lockboxes enhance the security and control of funds and can reduce workloads in customer offices. Offices that have a significant volume of receipts that cannot be converted to electronic funds transfer and for which the university’s central lockbox is not appropriate should contact Kaliopi Provencher, Director of Treasury Operations (443) 997-8120 to conduct an analysis of the costs and benefits of a lockbox arrangement.

Maintain Billing Due List Report
The Maintain Billing Due List is a report that is run by a billing specialist to determine which customer is to be invoiced. Once the list has been compiled and the customer identified an invoice is mailed.

Master Data Defined vs. Transactional Data
Master Data consists of those values which the system will use to classify, categorize and store transactional data. Transactional data consists only of the data that is specific to the individual business transaction (amount and debit or credit indicator). Each of the operational modules within the system contains master data that is specific to that area. When documents are posted in the SAP system the master data from the various modules is entered or derived on the document line items and therefore shared throughout the system.

Master Data includes General Data, Company Code Data and Sales Data. General Data consists of an address, control data, contact information and payment transactions. Company Code Data consists of account management, payment transactions and correspondence. Sales Data consists of sales, billing documents and partner functions.

Material Number
At Johns Hopkins each expenditure category is given a material number. The material number pulls the expenses associated with the expenditure categories. The amount is then placed on the invoice form.

Open Item
An open item in Accounts Receivable is an invoice or debit memo generated by Johns Hopkins requesting payment from a customer. Open items can be tracked by age, customer number, or balance due using Business Warehouse (BW) reports. Closing an open item is triggered by payment from the customer. A credit memo is an open item on the customer's account which indicates an overpayment.

Release Sales Orders
A debit memo request is created based on the expenses. These requests are held until reviewed in another transaction. Once the debit memo is reviewed and released the invoice is created, which creates the finance document or open item at the same time.

Revenue Recognition
In SAP revenue is posted to the grant at the time of invoicing. Currently, Johns Hopkins recognizes revenue on grants at the time the expense incurs. The difference in timing in SAP is due to utilizing a program that posts the amount of the unbilled amount at the end of the month as an accrual. This accrual will reverse at the beginning of the following month.

Sales Order
Sales Orders are requests from Sponsors or non-sponsored customers for services. Sales Orders are created to facilitate billing. At Hopkins there are two types of such requests; cost based billings and fixed price billings. Cost based billing is when a sales order is set up and linked to a grant or internal order to drive the resource related billing. Fixed price billing is when sales orders are set up and billing schedules are created based on the requirements of the customer.

Sales Organization
Sales organization is an organizational unit responsible for distributing products and/or services and negotiating sales conditions. The sales organization unit will always be Johns Hopkins Enterprise.

Sponsor
A sponsor is an organization or other source that finances a project conducted by Johns Hopkins personnel. The sponsor may be a government agency, company, foundation, or individual interested in a study or interest in a particular area and is entitled to receive some consideration or benefits. The agreement from the sponsor represents a contractual obligation for performance of the specific activity by the Johns Hopkins Enterprise. A sponsor is identified by a six digit numerical sequence beginning with 3 (300000).

A customer is equal to a sponsor so there will be a one-to-one relationship in SAP.  A sponsor is created in the SAP Grants Management Module which uses the Business Partner functionality and automatically creates a customer master record.

Inter-Entity

Allocation
An allocation is a generic term referring to movement of dollar amounts from one cost collector to one or more cost collectors. Johns Hopkins uses several different types of allocations, including Assessments, Distributions, Manual Allocations, Internal Order Settlement and Activity Allocations. For every allocation, there is at least one sender cost object and at least one receiver cost object. Both sender and receiver amount transferred is posted to the same Secondary Cost Element. The sender gets the credit and the receiver gets the debit when costs are allocated. When revenue is allocated, the sender gets the debit and the receiver gets the credit.

Business Area
Business Areas are organizational units that represent a separate area of operations. It is generally, but not always, a separate legal entity. For Johns Hopkins, Business Area defines those organizations for which complete sets of financial statements, including balance sheets, are required or desired. For JHU units, Business Area generally refers to divisions or significant units within a division.

Controlling Module (CO)
SAP consists of separate integrated modules, each with its own ledger. One of the benefits of this architecture is that multiple basis of accounting (i.e. accrual vs cash) are maintained simultaneously. The CO module exists to segregate activity by cost collectors: Cost Center, Internal Order or WBS element. The CO module contains tools to move costs between cost collectors. The various SAP modules are integrated and transactions posted to other modules will appear in CO reports. The debit and credit sides of a CO allocation always post to the SAME cost element.

Allocations may post to cost collectors across the Johns Hopkins Enterprise. These transactions post to due to/ due from accounts and cash settlements between entities occur throughout the month.

Cost Collector
A cost collector is a generic term used to describe a Cost Center, an Internal Order or a Work Breakdown Structure (WBS) element.

Cost Element
A cost element in CO corresponds to a revenue or expense general ledger account in the chart of accounts. There are Primary and Secondary Cost Elements.

• Primary Cost Elements - correlate one for one to general ledger expense or revenue accounts.
• Secondary Cost Elements are used for revenue and cost allocations across the Hopkins Enterprise within the Controlling Module. Secondary Cost Elements, which begin with “9” and have six digits, do not have one-to-one counterparts in the GL Chart of Accounts.

Cost element groups are used to group together revenues and expenses with similar characteristics. Examples of similar characteristics: Salaries and wages, fringe benefits, travel, student aid, interest, depreciation, etc.

Cost Object
A Cost Object could also be called a Cost Collector. Cost Centers, Internal Orders and WBS are all considered Cost Objects.

Inter-Entity Transactions
The Johns Hopkins Enterprise (SAP client base) is divided into two major components: Johns Hopkins University and Johns Hopkins Health System. Johns Hopkins University (JHU) divisions are set up in Business Areas within the 100-299 range and Johns Hopkins Health System (JHHS) companies are set up in Business Areas within the 400-999 range. Transactions that cross-over into different ranges represent Inter-Entity Transactions. For example, a CO allocation between Johns Hopkins Hospital (BA 480) and the School of Medicine (JHU- BA 170) is an Inter-Entity transaction.

Transactions between JHU and JHHS are considered Inter-Entity and processed as CO allocations. CO Allocations post only to revenue and expense statements. Additional offsetting balance sheet entries are posted automatically, by SAP, to record Inter-Entity Due-To/Due-From Clearing accounts balance.

Inter-Entity transactions are reviewed by and released through the Inter-Entity Transaction Group within the Accounts Receivable Shared Service Center.

Intra-Entity Transactions
Each major component of the Johns Hopkins enterprise is divided into Business Areas. Johns Hopkins University (JHU) divisions are set up in Business Areas ranging from 100-299 and Johns Hopkins Health System (JHHS) companies are set up in Business Areas ranging from 400-999.

Transactions within the same business area range are considered Intra-Entity transactions for the purposes of CO allocations. Transactions between the health system companies are also considered Intra-Entity transactions for the purposes of CO allocations.

For example, a “billing” between Bayview Medical Center (BA 400) and Johns Hopkins Health System Corporation (BA 450) is posted as an Intra-Entity CO allocation.

Approved Intra-Entity transactions may be posted by authorized users throughout the Johns Hopkins enterprise.

Internal Order
An internal order is a Controlling (CO) object responsible for budgetary monitoring and reporting that collects revenues and expenses separately from a cost center. All internal orders are assigned a responsible cost center. There are two main classifications of internal orders, sponsored (Sponsored Program) and non-sponsored (for costs and revenues not directly related to a Sponsored Project.) There are several types within each. The non-sponsored internal order has a one-to-one link with the funded program in the Funds Management (FM) module and the numbering is the same. Similarly, sponsored internal orders are linked one-to-one with the sponsored program in Grants Management (GM). The system automatically assigns a unique 8 digit number for the internal order. The first digit indicates the type of order: Non-sponsored (8), Sponsored (9) and IPA Agreements (1). The remaining digits are based on the next available value in the range for the type of order.

Internal Service Providers (Service Centers)
Some Service Providers have decided to use a custom transaction developed in SAP to carry out internal procurement within Johns Hopkins Entities. Customers can go online to select a product or services from a catalog. The Services Provider will be able to access the order through SAP and fill the order. Customers may purchase across legal entities. The resulting transaction will be an Inter-Entity allocation. When the Service Provider fills the order, the charge will be posted to the customer’s cost collector. The issuer fulfills orders and flags them as fulfilled, at which time a manual cost transfer (KB15N) is triggered to post the charge to the purchaser and credit to the seller. The purchaser will be able to order goods from service centers when mapped to the SRM Requisitioner role.

Journal Transfers (also called Non Payroll Cost Transfer)
The Journal Transfer (Non Payroll Cost Transfer) is a customer transaction in SAP used for the initiation and approval of Intra-Entity manual allocations and error corrections to revenues and expenses. Original allocations that were executed in error should be reversed, corrected and reprocessed. Since the resulting transaction is a KB15 (Manual Cost Allocation), only secondary cost elements may be used. The Journal Transfer does not currently allow Inter-Entity allocations that cross between JHU and JHHS. Johns Hopkins Enterprise anticipates future development of this feature. The Non Payroll Cost Transfer Approver Role triggers the posting of a KB15N.

Receiver
A Receiver is an SAP concept to describe the cost collector to which amounts are transferred. In a CO allocation, there are often many Receivers of amounts coming from a single Sender. Most allocations are expense allocations; therefore the Receiver cost objects will get DEBIT (expense) postings at the time of the allocation. It is also possible to allocate revenue or funding source credits. In that case, the Receiver will get the credit posting to the Secondary Cost Element.

Secondary Cost Element
The debit and the credit on a CO allocation always posts to the same Secondary Cost Element. When CO allocations cross Business Area and/or Fund, an automatic balancing entry occurs on the balance sheet (a Due to/Due From Receivable or Payable). For GAAP financial statement purposes, Secondary Cost Element transactions are summarized and posted to a special series of General Ledger Accounts Numbers.

Sender
A Sender is an SAP concept to describe the cost collector that initiates the allocation. In a CO allocation, costs or revenues are typically posted to a cost collector, and subsequently moved to other cost collectors. Most allocations are expense allocations and therefore, the Sender’s cost object will get a CREDIT posting at the time of the allocation. It is also possible to allocate revenue. In that case, the Sender would get a debit posting at the time of the allocation.