Understand Expenses

Expenses in Maxio allows you to manage any expense that needs to be capitalized and amortized, then recognized over a defined term. You can use Expenses to create, manage, and accurately report on capitalized expenses, accrued expenses, and expense recognition for each reporting period.

Expenses must be amortized

Just like revenue, expenses often cannot be recognized immediately. They must be capitalized and amortized over the service period. For example, when you pay for a software Subscription upfront, you must amortize it over the term of the agreement if it exceeds your capitalization threshold. Fixed assets follow a similar pattern.

Expense Recognition uses the same calculation engine as the Revenue module. Select an expense item, choose the amortization method, and let Maxio take care of the rest.

Commissions

ASC 606 increased the complexity of commission accounting. While you used to be able to expense commissions when paid, now commission recognition can be as complex as revenue recognition. Managing your capitalized balance and recognition waterfall is no small task.

In addition, many companies defer commission payments, which introduces another accounting challenge, accrued expenses. Effectively managing all of this in a spreadsheet can feel impossible.

Maxio Expenses is designed with commissions in mind. You can automate all of your commission accounting needs, view commissions earned versus paid, and see summaries of commissions paid by sales rep or by contract.

Journal entries

Keeping track of capitalized balances and recording monthly expense recognition entries can be complex. Just like with revenue, the Expenses module provides a single consolidated journal entry that you can use at month end to record the summary of all expense related activity.

Expenses objects and relationships

It is important to understand the main Expenses objects, what they are called, and how they relate to each other and to the Revenue objects.

• Vendor: The entity that you pay.
• Vendor Contract: A container for key Expense records. Typically, you'll only need one Vendor Contract per Vendor unless you use multi-currency.
• Expense Transaction: The granular elements of the Vendor Contract.
• Expense Entry: The schedule of when expenses are recognized on your income statement.
• Bill: A grouping of Bill Line Items.
• Bill Line Item: The individual components of a Bill.

Comparing expenses to revenue

The Expense Recognition advanced workflow is very similar to the Revenue module. The primary difference is where the activity appears on your income statement for reporting. The table below shows each Expense object, its Revenue counterpart, and how they are labeled in the system.

Closing date enforcement

The Expenses module enforces your account closing date setting to ensure data integrity. Any Expense Entries dated on or before the latest closing date are locked and cannot be modified. Similarly, any Vendor or Expense with activity in a closed period cannot be deleted. The Latest Closing Date is displayed in the expense form so that users are aware of the protected period.

Related information

A training course on this topic is available. See Maxio Academy.

To configure Expense Items and admin settings, see Configure Expenses.

To create vendors and record Expense Transactions, see Manage Expenses.