In order to update your location to use the Advanced Allocation Dating Behavior please reach out to your Molo support representative or send us an email at support@getmolo.com.
Overview:
The purpose of this article is to explain the new optional setting to change allocation dating behavior for advanced accounting users of Molo. This behavior applies to all dating of all allocations of Payments (aka Payments on Account), Prepayments (aka Deposits) and Security Deposits, but is of particular material importance to the behavior of 2) prepayments and 3) security deposits specifically on the Molo GL report. The rest of this article will refer to prepayments and security deposits as 'deposits' since the logic applies to both in the same manner.
The Advanced Allocation Dating Behavior logic is available as of July 2024 and changes the behavior of the allocation effective date (the date the allocation is considered for accounting and GL implications).
Types of allocation dating behavior in Molo:
- Default Allocation Dating Behavior (historical method of allocation): The allocation effective date is the same date as the allocation is performed.
- Advanced Allocation Dating Behavior (optionally available as of July 2024): The allocation effective date is the invoice date or payment date, whichever is greater OR lock date +1 if both invoice and payment are in a locked period.
Guidance for Enabling Advanced Allocation Dating Behavior:
Enabling Advanced Allocation Dating Behavior is a go-forward change, meaning it will only update allocations made after the update and is not retroactive. In order to update an allocation that was already made before the change, you could remove the allocation and re-allocate once the advanced logic is enabled, however this may be difficult to do in the case of locked periods where the revenue has already been reported.
Enabling Advanced Allocation Dating Behavior can be done at any time, and it will affect allocation dating behavior moving forward. You may optionally decide to update this logic on the evening prior to a new month in order to use the same allocation dating behavior across a full monthly accounting period.
Background:
The Molo Accounts Receivable (AR) report was built before the Molo GL module, and therefore looks at different fields in the Molo dataset than the General Ledger (GL) report when calculating AR for deposit allocations. The detailed logic for the AR report is detailed in this article, but can be summarized by the following:
When running the report with no boxes checked:
The AR report then finds all deposit allocations where the deposit transaction date is on or before the AR Date and the target of that allocation (receivable invoice) has an Invoice Date on or before the AR Date.
Prior to building the Advanced Allocation Dating Behavior detailed in this article, allocations of deposits were dated as of the allocation performed date. If you compare the logic of the AR report (pasted above) to the Default Allocation Dating Behavior which affects the AR when calculated from the GL report, you can see that this will result in different behavior when it comes to recording the AR values attributed to deposits.
The attached excel file illustrates this difference in AR you will notice between the AR and GL reports when using the Default Allocation Dating Behavior, and how updating to the Advanced Allocation Dating Behavior will correct this variance going forward.