Monthly Finance Close Process - Ccube / TSS

FlowRev login:

Username: tllewellyn-lloyd@terncapital.com

Password: TernCapital2023!

This notion note details the process and responsibilities for the monthly financial close process for Ccube and TSS, which includes the steps that need to be taken on FlowRev (add on to Xero). FlowRev is designed to simplify the monthly close process for calculation of deferred revenue / Cost of sale balances so that we can generate financial information without the need for Ccube / MB Master. Will also facilitate more timely financial reporting information.

All deferred income will be recorded correctly as deferred revenue is only based upon invoiced orders, which will be recorded in Xero

Useful source files

CCube Board Pack Master -

CCube Forecast FY24 - - Unsupported Embed

Ccube Budget FY24 (Original budget) - Unsupported Embed

TSS Forecast FY24 - Unsupported Embed

Ccube Master - - Note this is old and is no longer used as a live file

NB: The CCube Forecast FY24 and TSS Forecast FY24 file are live workings file that is updated based on latest view of expected cost. The budget files are static files which do not change from the point the budget is set.

Monthly manual journals that need to be posted to Xero - CCube

Costs

Monthly bonus accrual of £7K is setup as a REPEATING JOURNAL at the end of each month. This does NOT auto-reverse
Monthly accruals for Azure/Stuart Tern CTO are setup as REPEATING JOURNALS at the end of each month end and it auto-reverses on the 1st of the following month.

Azure/Proact accrual - £5.5K
Stuart/Tern CTO accrual - £1.5K

Need to ensure that the repeating journals above are posting correctly to Xero. If not, they may need to be manually accrued for.

Prepayments

HTN. This has been setup through Flowrev. Any new HTN invoices should be setup via Flowrev. Hence no manual adjustment is required
Insurance. This is currently not setup and it is not material. When we renew in Aug, we will setup via Flowrev. Hence no manual adjustment is required
COS - HW. This is done through Flowrev. Hence no manual adjustment is required

Exceptionals

NED and Tern Costs should be recorded under Exceptionals - TERN/NED
All other excepational items should be classified under the TB code non Tern Exceptionals cost

Recurring Revenue accruals

Accrued income - For customers where the contract period has started, but we have not yet invoiced the customer. This needs to be accrued for in FlowRev. This accrual in FlowRev needs to be deleted when the invoice is received. Otherwise, FlowRev will double count the entry
Deferred income - this should be directly posted from Flowrev based on setting the correct start and end dates.

Non-recurring accruals / deferrals - Manually posted using the information in Ccube Board Master

Accrued income - see journal on NRRR24 tab in CCube Board Pack Master
Deferred income - see journal on NRRR24 tab in CCube Board Pack Master

Need to ensure that the previous month journal is reversed on the 1st of the month.

Monthly manual journals that need to be posted to Xero - TSS

There are no manual journals that need to be posted. Carolyn to complete a handover session with Bromhead to understand how their FlowRev process works and then build out a process that works for us.

General Notes

Flowrev Accruals - how can I create a transaction to recognize revenue for a invoice to be raised in the future? : Flowrev Help Portal (freshdesk.com)
Review the revenue recognised report on FlowRev for recurring invoices to identify any discrepancies that might need further investigation. e.g. where monthly revenue recognised amounts on an individual customer have materially changed.

Monthly Financial Close process

Step	Legal Entity	System	Area	Description	Responsibility	Deadline
1	Ccube / TSS	Xero	Process monthly transactions	Ensure that all transactions have been entered into the accounting system. All transactions include the following: - Customer invoices - A valid invoice and PO - Supplier invoices - A valid invoice NB: This excludes any credit card transactions as we do not receive the statements until later in the month. These are not material month on month therefore no accrual is made.	Head of Finance	WD 1
2	Ccube / TSS	Xero	Approve monthly transactions	Approve transactions on Xero	Tern	WD 1
3	Ccube / TSS	Excel Spreadsheet	Deferred Income	Review the Non recurring tracker and ensure that the following is up to date for the previous month: 1) All live implementation projects are included 2) For each implementation project, include the time completed to date 3) For each implementation project, include the time estimated to complete NB: It is the responsibility of the Head of Finance to ensure that this is completed by Andrew Phelps	Head of Implementation	WD 1
4	Ccube / TSS	Excel Spreadsheet	Deferred Income	Review the Non recurring tracker and confirm that the invoicing status per the spreadsheet is correct and aligned to what has been invoiced in Xero for the month. Note the following: - Where an invoice has been raised as draft in Xero, this should be treated as not invoiced - Where an invoice has been raised after the period end, this should be treated as not invoiced When complete, enter the journals into Xero per the steps below	Head of Finance	WD 2
5	Ccube	FlowRev	Deferred Income	Log into FlowRev >> Org >> Change/Update - Ensure that the correct legal entity is selected. Ensure that the status of all imports is updates as well to reflect the required period When selected the correct legal entity, make sure that press the button, ‘Update selected’. This will ensure that the latest transactions are pulled through from Xero.	Head of Finance	WD 3
6	Ccube	FlowRev	Deferred Income	Log into FlowRev >> Org >> Accounts - Do not update the mapping accounts without prior agreement with Tern. This tab should not be updated at all unless it has been agreed	Head of Finance	WD 3
7	Ccube	FlowRev	Deferred Income	Log into FlowRev >> Invoices - This includes a breakdown of all invoices that have been imported from Xero. Select the data to identify the accounting period for which you need. e.g. FY 2023 or FY 2022. You can click on the individual INV numbers on this page to see the breakdown of each invoice and which revenue accounts the invoice has been mapped to, along with the contract recognition dates. Refer to example screen shot below - ‘Example of Invoices Details on FlowRev’ The definitions for the recognition criteria are included below. Refer to ‘Recognition definitions’ below. IT IS CRITICAL THAT THESE ARE COMPLETED ACCURATELY TO ENSURE THE RECOGNITION RULES ARE APPLIED CORRECTLY. By default, the following process should be followed when entering the invoice information: - Make sure the 'recognition' box is correct. For all that the 'Account' states it is 'RR', this should be selected as 'Monthly' and 'per diem'. For all others (NR) this should be selected as 'None'. Selecting ‘None’ will ensure that the invoice is recognised on the same date as the invoice date. - Ensure that for each invoice, the contract start date per the invoice aligns to what is in FlowRev. When complete, select the button ‘Update Service dates’. Ensure accrue for any customers where the contract period has started, but we have not yet invoiced the customer	Head of Finance	WD 3
8	Ccube	FlowRev	Deferred Income	Log into FlowRev >> Invoices - Where a credit note has been issued to reverse a previously issued invoice, ensure that the recognition profile is identical to the invoice that it is reversing. This is to ensure that the credit note reverses correctly.	Head of Finance	WD 3
9	Ccube	FlowRev	Deferred Income	Reconciliation step: Ensure that there is no change in the deferred income balance to the previous periods as a result of the updates made on a monthly basis. If there is a change, this needs to be 100% explainable.	Head of Finance	WD 3
10	Ccube	FlowRev	Revenue recognition	Log into FlowRev >> Revenue - This details the revenue recognition based on the recognition rules that have been entered on the invoices tab. When all invoice dates have been updated per step 8 above, select ‘generate revenue schedule’. This will ensure that the revenue journal postings are posted to Xero. Ensure that there is no balances that are shown as unsynced. Refer to guidance section below for how to check this. Revenue - This shows the total revenue recognised for the month Sales - Total of invoices raised in the month. Schedule Defer - The total amount to be deferred (for the month only) based on the invoices entered for the month Schedule Recognise - The deferred income to be released for the month based on the recognition rules applied on invoices to date. Hence the Revenue line is calculated as Sales - Schedule Defer + Schedule recognise To view what invoices are included on each line, you can click on the individual balances	Head of Finance	WD 3
11	Ccube	FlowRev	Bills and Costs	Log into FlowRev >> Bills Review Cost of Sale bills and add recognition dates where applicable. Note - recognition rules only need to be applied where the service is paid for a period of more than 1 month. When complete, select ‘update service dates’.	Head of Finance	WD 3
12	Ccube	FlowRev	Bills and Costs	Log into FlowRev >> Costs - This details the cost recognition based on the recognition rules that have been entered on the invoices tab. When all invoice dates have been updated per step 11 above, select ‘generate cost schedule’. This will ensure that the cost journal postings are posted to Xero. Ensure that there is no balances that are shown as unsynced. Refer to guidance section below for how to check this.	Head of Finance	WD 3
13	Ccube	Excel Spreadsheet	Bank reconciliation	Bank reconciliation On a monthly basis, the Finance Manager will complete a reconciliation of the bank balance per the Natwest bank accounts to the bank balance per Xero. This will be completed by doing a the way reconciliation between 1) the bank statements balance per bankline 2) the bank statement balance per Xero (fed in by automated feed) and 3) the account transactions balance per Xero The supporting workings will be maintained on the Ccube Sharepoint in folder ‘10 - Finance and Admin’ and under the document called - ‘Bank Reconciliations’.	Head of Finance	WD 3
14	Ccube	Xero	Processing of monthly numbers	As detailed above, the following manual journals need to be entered into Xero / FlowRev: - Adjustment 1: NR Revenue: The way Xero is designed, the system will assume that an invoice is fully recognised at the point of invoicing unless recognition criteria are applied to that invoice within FlowRev. Refer to the deferred income calculation in Ccube Board pack master on the NR tab. The journal posted is Cr Deferred Income and Dr Revenue - Adjustment 2: NR accrued income Refer to the accrued income calculation in Ccube Board pack master on the NR tab. The journal posted is Dr Accrued Income Cr Revenue - Adjustment 3: Accrued income (RR) - Follow this process Refer to notes above. This should be posted through FlowRev. NB: There is a legacy issue for NHS E&I, whereby 53k of income needs to be accrued in Xero. You will see this value in the prior month manual accrual. This total needs to be accrued for on a monthly basis. - Adjustment 4: CP Accrued liabilities - Ensure have accrued for the following: ProAct IT cost - Take the latest invoice from Xero and accrue for that amount. Usually circa 5k Stuart costs - Take the latest invoice from Xero and accrue for that amount. Usually circa 1.5k The journal will be posted as a Dr to the expense account and a Cr to Accrued liabilities Review the budgeted costs for the month on the ‘C’ tab of the document ‘Ccube Budget FY24’ (refer to reference above) and consider if there are any large expected costs that have not been incurred? For example in the month of February, we accrued for Andrew Silva costs.NB: Note that Prepayments (e.g. for Atalasoft) are processed through FlowRev and therefore no manual adjustment is required.NB: The Tern Management fee should be £16.6k per month. Check that the exceptionals line totals roughly for this amount. Otherwise one will need to be accrued for. Adjustment 5: All prepayments through FlowRev Adjustment 6: Bonus accrual - Ensure that the total amount for the month should be equal to the following: Refer to ‘C’ tab in ‘Ccube Budget FY24’. Take the total for the total number of months on row 106. Circa 8k per month as a sense check	Head of Finance	WD 5
15		NA	Processing of monthly numbers	Confirm to Tern that all actions above have been completed and the monthly close process is largely complete. Note: This excludes the Board pack preparation steps. https://www.notion.so/terncapital/Board-pack-preparation-Ccube-721c4051292e459ca256d9240ad6592b	Head of Finance	WD 6
16	Ccube / TSS	Bankline	PAYE	Set up payment of PAYE on bankline	Head of Finance	To be completed within 2 days of receipt of the information from payroll provider
17	Ccube / TSS	Bankline	PAYE	Approve PAYE on bankline	Tern	To be completed within 2 days of receipt of the information from payroll provider + 1WD
18	Ccube / TSS	Bankline	Payment run	Complete the payment run - Employees and Suppliers Ccube: Bankline TSS: Tellarroo Where TSS payments cannot be settled through Tellarroo, to be discussed with Head of Finance and Tern	Head of Finance	Tuesday prior to the last Thursday of the month
19	Ccube / TSS	Bankline	Payment run	Approve payments - Employees and Suppliers Ccube: Bankline TSS: Tellarroo Where TSS payments cannot be settled through Tellarroo, to be discussed with Head of Finance and Tern	Tern	Wednesday prior to the last Thursday of the month
20	Ccube / TSS	Scottish Widows / NEST	Pension Contributions	Pension Contributions Ensure that pension has been paid to the pension provider for the month Ccube: Scottish Widows TSS: NEST Payments are taken by DD. Need to ensure that the payment reconciles to the monthly payroll report. All differences should be investigated	Head of Finance	DD date TBC

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