Useful source files
MB Master - 
Unsupported Embed
MB Budget FY24 - Unsupported Embed
Key points to note in FlowRev / Xero
- A hard close of the previous year end is in Xero and in FlowRev. This means the following:
- Any changes in revenue recognition that need to be applied to a date prior to the hard close in FlowRev will automatically be included to post in Flowrev the day after the hard close date
- Where a journal tries to post from flowrev to Xero that is prior to the lock date in Xero, this will be raised as draft in Xero. This will need to be manually reviewed in Xero
- When manually accruing for a journal in Xero, need to manually remove this when the invoiced is received and then posted through flowrev. Otherwise will be double counted. This would be sorted if we implemented a hard close every month in flowrev, this this bring about other complications that we don’t want so this is not the preferred option. You will see for example that all previous accruals for AWS have been voided.
- For January 2024, there are two postings from FlowRev. One that relates to Dec 23 and one that relates to Jan 24. The entry for Dec 23 is because there is a lock close date in Xero so this flowrev journal has to be posted to Jan 24. Impact is cancelled off by reversing the previous month accrual
- Similarily to point 2), if accruing within flowrev, then the actual invoice is received, need to delete this accrual / reverse the accrual from flowrev. Otherwise will be double counted
This notion note details the process and responsibilities for the monthly financial close process, 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
VAT close process
Step 1
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 invoiceNB: This excludes any credit card transactions as we do not receive the statements until 4th of the month. These are not material month on month therefore no accrual is made.
Deadline: Working Day 5 after month end
Step 2
Jamie M to provide receipts for all transactions on the credit card for the previous month. This can then be reconciled vs Step 3. I am assuming that Jamie does not need the statement itself in order to do this.
Deadline: Working Day 5 after month end
Step 3
Process credit card transactions. The statement is available on the 15th of the month following month end
Deadline: Working day 15 after month end
Step 4
When credit cards have been processed, then confirm to Barnes Roffe that the accounting records are up to date so they can prepare the VAT return.
NB: Where pieces of information are o/s, including receipts to be provided by Jamie Mackinlay, then
Deadline: Working day 15 after month end
Step 5
Barnes Roffe provide the completed VAT return for review and the final submission
Deadline: Last day of the month following the VAT quarter end
Actions
- Send an email to Meriel categorically that Steps 1-X need to be done by end of UK Working Day 4 every month.
Monthly Financial Close process
Step | Area | Description | Responsibility | Deadline |
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 4th of the month. These are not material month on month therefore no accrual is made. | Meriel | WD 1 | |
Deferred Income | Process Period end Transactions:
On a monthly basis, a monthly cash flow meeting is held. The agenda includes the following items:
- Identify customers who need to be invoiced based on agreed contractual terms / dates
- Identify customers who are outside of payment terms.
Customers who have been invoiced, but not yet paid will be identified through running the aged debt report from Xero prior to the meeting | Various | NA | |
Deferred Income | Finance Manager to check and confirm that all contract dates raised on Xero are correct and consistent with the MASTER spreadsheet, which is maintained by [TBC responsible individual]. As part of this check, this will ensure that all invoices raised in Xero are listed as raised on the master spreadsheet. | Meriel | WD 2 | |
Deferred Income | Log into FlowRev >> Org >> Change/Update - Ensure that the correct legal entity is selected. Ensure that the status of all imports is updated as well to reflect the required period. This is actioned by clicking on the ‘Update selected’ when the correct legal entity is selected | Tern | WD 2 | |
Deferred Income | Log into FLowRev >> Org >> Accounts - Do not update the mapping accounts without prior agreement with TLL. This tab should not be updated at all unless it has been agreed | Tern | WD 2 | |
7 | 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 in the attached aligns to what is in FlowRev.
- You need to make sure you save at each stage of the process | Tern | WD 2 |
8 | 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. | Tern | WD 2 |
9 | 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. | Tern | WD 2 |
10 | Deferred Income | On a daily basis, FlowRev will automatically post the deferred income adjustment to Xero (e.g. Dr Revenue accounts and Cr deferred income) to ensure that the balances in Xero are correct. | Tern | N/A |
11 | 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. | Meriel | WD 2 |
13 | Processing of monthly numbers | Open ‘MB Master’ >>> Go onto the ‘Xero’ tab >>> Create a new column next to the previous month’s financial information. Copy and paste the values in Column A so that theses are included in the newly created column. Ensure you paste values though so these are not copying the formulas. Download the extract of the TB from Xero.
See steps in video below - https://www.loom.com/share/20f62e4579c04ab994b9cfb816cbea70?sid=a73efdc4-3f92-4f36-8ed5-ce33563bdf89 | Tern | WD 5 |
14 | Processing of monthly numbers | Log into Xero >>> Take an extract from Xero for the financial period in question >>> Ensure that the correct account GL code is entered into the correct field in MB Master. Ensure that the sum of the columns is equal.
See steps in the video - https://www.loom.com/share/b021c14a53a94fda9e61a79469e7d197?sid=c3418410-d0e7-4cbb-b1ef-83c2bf744e7f
NB: The accounting software in Xero will exclude a GL code for the period you have exported if it returns a nil value. Therefore it is sometimes helpful to extract the data by comparing to financial periods going back to at least 31 December 2022 to ensure these are not excluded.
NB: Ensure that the correct TB codes from the Xero report are aligned to the information input into MB master. This is not likely to be able to be imported in one go due to the point raised above. Ensure complete check at the end. | Tern | WD 5 |
15 | Processing of monthly numbers | Step 4: Refer to the ‘TB’ tab on MB Master. Column J includes the figures that have been extracted from Xero. A number of manual adjustments are then completed from column J onwards to arrive at the monthly numbers. These include:
Take no action for adjustments that are greyed out
-ADJ 3: CP Accrued Income
The expectation is that this adjustment should be nil so that is why it is greyed out on MB Master. This is because we very rarely have a scenario where we have billed a customer after the inception of their licence contract. However, this should be confirmed with Meriel to confirm that no adjustment is required.
- ADJ 4: CP Accrued liabilities - Ensure have accrued for the following:
AWS fees (CloudBridge ltd) - Take the latest invoice from Xero and accrue for that amount. Usually circa 18k
Ryze consultancy - This relates to Andy’s salary. Review the contractors TB on Xero and accrue for the month if one is missing. Usually circa 7.5k
MAD perspectives - This relates to Peggy’s salary. Review the contractors TB on Xero and accrue for the month if one is missing. Usually circa 5k
Monthly bonus - Accrue based on the MB budget.
- ADJ5: +CP Prepayments - Ensure the following adjustments are made
Quartlerly AWS fee (separate to the one noted in ADH 4) - Adjustment for 15k AWS bill which is paid quarterly in advance. Covers 1/1/24 - 31/3/24. BIlled quarterly
Sales and marketing prepayments - Refer to calculation in MB Master. Need to release one month each month
- ADJ 9 Insurance Prepayment - Relates to the annual insurance premium paid. Need to release one month of the expense each month. Total invoice from SR Insurance Solutions billed on 29th January 2024. Covers February 2024 - January 2025.
All adjustments have been made to the monthly numbers. | Tern | WD 5 |
16 | Processing of monthly numbers | Open MB Master >>> PL tab. Complete the following tasks: Update commentary. | Tern | WD 5 |
17 | Processing of monthly numbers | Open MB Master >>> F24 tab. This tabs shows the expected outturn for the year, which takes the total of actual months completed, plus the forecast for the remaining future months.
Complete the following tasks:
Update period end date in cell C4
Update commentary in column F to explain movements vs the original budgeted numbers. | Tern | WD 5 |
18 | Processing of monthly numbers | When the monthly adjustments referred to above have been reviewed and agreed with the Finance Director, the monthly journals need to be entered into Xero to ensure that the monthly Profit or Loss, Balance Sheet and Cash Flow can be generated from the system. Complete the following steps:
1) Follow the steps outlined in the guidance section below ‘How to reverse monthly journals on Xero’. Request the Finance Manager to complete this task and then request to ‘Save as Draft’. This step is needed to reverse the impact of the prior month manual adjustments. If the Finance Manager is not available, this can be completed by Luke.
2) Request the Finance Manager to complete the batch journal template for the current month adjustments that need to be entered into Xero. When these have been reviewed, post these into Xero. If the Finance Manager is not available, this can be completed by Luke.
NB: The previous month manual journals need to be reversed by following the steps above prior to any new journals being posted. Speak to the Finance Director if there is any confusion.
When all completed, complete a reconciliation of the numbers generated from Xero vs the Ccube Master to ensure they are the same (e.g. that the manual journal adjustments have been posted correctly. | Tern | WD 6 |
19 | Processing of monthly numbers | Send to Finance Director for review | Tern | WD 6 |
20 | PAYE | Set up payment of PAYE on banking portal | Meriel | [TBC with Meriel] |
21 | PAYE | Approve PAYE on banking portal | Tom | [TBC with Meriel] |
22 | Payment run | Complete the payment run | Meriel | [TBC with Meriel] |
23 | Payment run | Approve payments on banking portal | Tom | [TBC with Meriel] |
Example of Invoices Details on FlowRev:
When all invoice entries have been updated, it is critical to ensure that all the ‘sync’ buttons are pressed so that they show as per the below screenshot. Otherwise, these will not be synced through to Xero.
To review a summary of the journal entries that have been entered into Xero, press on the View toggle button and select ‘Journals’ as per the below. These will be pushed to the account in Xero as per the account mapping.
Recognition definitions:
The invoice service start and end dates, in conjunction with the item recognition parameters set on the Items page, lets Flowrev identify and process the invoice line items that are to be deferred from the invoice date, and the date or duration over which each is to be recognized.
# | Recognition* | Description |
1 | ONCE | When the invoice date is different from its service start date the full amount of the invoice line item will be deferred on the invoice date, and recognized on the service start date. The service end date is not relevant, nor is the recognition computation type (Per Diem, ...). |
2 | MONTHLY | When the duration of an invoice spans across multiple months, the full amount of the invoice line item will be deferred on the invoice date and a recognition schedule created for the end of each month within the duration defined by the invoice service start and end dates. If the end date is prior to the last day of a month, then the recognition for that last month occurs on the service end date (and not on the last day of the month). |
3 | QUARTERLY | When the duration of an invoice spans across multiple fiscal quarters, the full amount of the invoice line item is deferred on the invoice date, and recognized at the end of each quarter (with the last recognition happening on the service end date if it is prior to the last day of the quarter). |
4 | YEARLY | When the duration of an invoice spans across multiple fiscal years, the full amount of the invoice line item is deferred on the invoice date, and recognized at the end date of each fiscal year within the invoice duration. |
5 | NONE | No recognition schedule is ever created for items / invoice / bill lines set to None. |
*NB: For NR invoices, ensure that the option ‘None’ is selected for the revenue recognition. This ensures that the recognition date is the date that the invoice was issued.
How to reverse monthly journals on Xero:
NB: It is not possible to delete a journal that has been posted to Xero. Therefore an additional journal will need to be posted following the steps below to reverse out a posted journal.
Accrued Liabilities
Step | Description |
1 | Accrued Liabilities to be posted directly to Xero and then sadjusted monthly based on manual adjustment provided to Joanna. |
2 |
*NB: For NR invoices, ensure that the option ‘None’ is selected for the revenue recognition. This ensures that the recognition date is the date that the invoice was issued.
Aged debt slide in Board pack
- 1) Renewal opportunities to be entered into Hubspot. Need to mark as a renewal in the system. Can set them up as a ‘recurring renewal’ so when you close the existing renewal it automatically sets up a new renewal. Assign all of them a ‘create’ sales stage. Then move to prove when closed out. When they are renewed, you would mark as ‘closed won’. Can then get a bespoke report for the purpose of the Board pack slide
- 2) Get a report from Xero which shows any aged debtors. All set up as 30 days payments terms.
Within 3 working days of each month end:
- Update Hubspot for recurring and NR opportunities
- Reconcile cash in Xero
- PL to date, Outturn and 52 week forecast to stay in Ccube master. All else to come from Xero and Hubspot
ISSUES TO RESOLVE
- Invoices that are raised subsequent to the contract commencement date (e.g. accrued income). These invoices will need to be raised manually in FlowRev as the policy is to only record transactions in Xero when they are invoiced. NEED TO MAKE SURE THESE TRANSACTIONS ARE PUSHED INTO XERO FOR REVENUE RECOGNITION PURPOSES
- Expenses that need to be accrued will need to be raised in FlowREV and then imported into Xero.
SOLUTIONS
- On a monthly basis, reconcile Xero / FLow Rev vs the master renewals spreadsheet (maintained by X) to ensure that all late invoices have been accured for correctly
Tom’s original process notes
Step | Area | Description | Responsibility | Deadline |
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 4th of the month. These are not material month on month therefore no accrual is made. | Meriel | WD 1 | |
Deferred Income | Process Period end Transactions:
On a monthly basis, a monthly cash flow meeting is held. The agenda includes the following items:
- Identify customers who need to be invoiced based on agreed contractual terms / dates
- Identify customers who are outside of payment terms.
Customers who have been invoiced, but not yet paid will be identified through running the aged debt report from Xero prior to the meeting | Various | NA | |
Deferred Income | Finance Manager to check and confirm that all contract dates raised on Xero are correct and consistent with the MASTER spreadsheet, which is maintained by [TBC responsible individual]. As part of this check, this will ensure that all invoices raised in Xero are listed as raised on the master spreadsheet. | Meriel | WD 2 | |
Deferred Income | Log into FlowRev >> Org >> Change/Update - Ensure that the correct legal entity is selected. Ensure that the status of all imports is updated as well to reflect the required period. This is actioned by clicking on the ‘Update selected’ when the correct legal entity is selected | Meriel | WD 2 | |
Deferred Income | Log into FLowRev >> Org >> Accounts - Do not update the mapping accounts without prior agreement with TLL. This tab should not be updated at all unless it has been agreed | Meriel | WD 2 | |
7 | 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 in the attached aligns to what is in FlowRev.
- You need to make sure you save at each stage of the process | Meriel | WD 2 |
8 | 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. | Meriel | WD 2 |
9 | 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. | Meriel | WD 2 |
10 | Deferred Income | On a daily basis, FlowRev will automatically post the deferred income adjustment to Xero (e.g. Dr Revenue accounts and Cr deferred income) to ensure that the balances in Xero are correct. | Meriel | N/A |
11 | 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. | Meriel | WD 2 |
12 | Processing of monthly numbers | Complete the Monthly Finance Close Process as per the above. Request this to be completed by Meriel.
This must be completed and not subject to change prior to continuing with the rest of the process. Otherwise the information in Xero will not be correct | Luke | WD 3 |
13 | Processing of monthly numbers | Open ‘MB Master’ >>> Go onto the ‘Xero’ tab >>> Create a new column next to the previous month’s financial information. Copy and paste the values in Column A so that theses are included in the newly created column. Ensure you paste values though so these are not copying the formulas. Download the extract of the TB from Xero.
See steps in video below - https://www.loom.com/share/20f62e4579c04ab994b9cfb816cbea70?sid=a73efdc4-3f92-4f36-8ed5-ce33563bdf89 | Luke | WD 5 |
14 | Processing of monthly numbers | Log into Xero >>> Take an extract from Xero for the financial period in question >>> Ensure that the correct account GL code is entered into the correct field in MB Master. Ensure that the sum of the columns is equal.
See steps in the video - https://www.loom.com/share/b021c14a53a94fda9e61a79469e7d197?sid=c3418410-d0e7-4cbb-b1ef-83c2bf744e7f
NB: The accounting software in Xero will exclude a GL code for the period you have exported if it returns a nil value. Therefore it is sometimes helpful to extract the data by comparing to financial periods going back to at least 31 December 2022 to ensure these are not excluded.
NB: Ensure that the correct TB codes from the Xero report are aligned to the information input into MB master. This is not likely to be able to be imported in one go due to the point raised above. Ensure complete check at the end. | Luke | WD 5 |
15 | Processing of monthly numbers | Step 4: Refer to the ‘TB’ tab on MB Master. Column J includes the figures that have been extracted from Xero. A number of manual adjustments are then completed from column J onwards to arrive at the monthly numbers. These include:
Take no action for adjustments that are greyed out
-ADJ 3: CP Accrued Income
The expectation is that this adjustment should be nil so that is why it is greyed out on MB Master. This is because we very rarely have a scenario where we have billed a customer after the inception of their licence contract. However, this should be confirmed with Meriel to confirm that no adjustment is required.
- ADJ 4: CP Accrued liabilities - Ensure have accrued for the following:
AWS fees (CloudBridge ltd) - Take the latest invoice from Xero and accrue for that amount. Usually circa 18k
Ryze consultancy - This relates to Andy’s salary. Review the contractors TB on Xero and accrue for the month if one is missing. Usually circa 7.5k
MAD perspectives - This relates to Peggy’s salary. Review the contractors TB on Xero and accrue for the month if one is missing. Usually circa 5k
Monthly bonus - Accrue based on the MB budget.
- ADJ5: +CP Prepayments - Ensure the following adjustments are made
Quartlerly AWS fee (seperate to the one noted in ADH 4) - Adjustment for 15k AWS bill which is paid quarterly in advance. Covers 1/1/24 - 31/3/24. BIlled quarterly
Sales and marketing prepayments - Refer to calculation in MB Master. Need to release one month each month
- ADJ 9 Insurance Prepayment - Relates to the annual insurance premium paid. Need to release one month of the expense each month. Total invoice from SR Insurance Solutions billed on 29th January 2024. Covers February 2024 - January 2025.
All adjustments have been made to the monthly numbers. | Luke | WD 5 |
16 | Processing of monthly numbers | Open MB Master >>> PL tab. Complete the following tasks: Update commentary. | Luke | WD 5 |
17 | Processing of monthly numbers | Open MB Master >>> F24 tab. This tabs shows the expected outturn for the year, which takes the total of actual months completed, plus the forecast for the remaining future months.
Complete the following tasks:
Update period end date in cell C4
Update commentary in column F to explain movements vs the original budgeted numbers. | Luke | WD 5 |
18 | Processing of monthly numbers | When the monthly adjustments referred to above have been reviewed and agreed with the Finance Director, the monthly journals need to be entered into Xero to ensure that the monthly Profit or Loss, Balance Sheet and Cash Flow can be generated from the system. Complete the following steps:
1) Follow the steps outlined in the guidance section below ‘How to reverse monthly journals on Xero’. Request the Finance Manager to complete this task and then request to ‘Save as Draft’. This step is needed to reverse the impact of the prior month manual adjustments. If the Finance Manager is not available, this can be completed by Luke.
2) Request the Finance Manager to complete the batch journal template for the current month adjustments that need to be entered into Xero. When these have been reviewed, post these into Xero. If the Finance Manager is not available, this can be completed by Luke.
NB: The previous month manual journals need to be reversed by following the steps above prior to any new journals being posted. Speak to the Finance Director if there is any confusion.
When all completed, complete a reconciliation of the numbers generated from Xero vs the Ccube Master to ensure they are the same (e.g. that the manual journal adjustments have been posted correctly. | Luke | WD 6 |
19 | Processing of monthly numbers | Send to Finance Director for review | Luke | WD 6 |
20 | PAYE | Set up payment of PAYE on banking portal | Meriel | [TBC with Meriel] |
21 | PAYE | Approve PAYE on banking portal | Tom | [TBC with Meriel] |
22 | Payment run | Complete the payment run | Meriel | [TBC with Meriel] |
23 | Payment run | Approve payments on banking portal | Tom | [TBC with Meriel] |
Notes to Meriel
All Tern and Polbrock costs going forward should be tagged as follows to Exceptionals - Tern/NED
All IMDB costs ($15K per quarter; $1,083 per month - called “empty shell costs” should be posted to “Other Direct Costs”, not to hosting.
Tom questions
- What are the prepayment adjustments outside of Insurance?
