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Feedback Request: Additional Invoice Charges

2 Feb '18

Hi everyone,

In the Acquisitions Small Group, we have been discussing added charges on invoices. These are not the charges for materials themselves, but rather the other types of charges that may appear on an invoice. Some examples include:
Service fee
Hosting fee

We’re interested in feedback on how your library handles these additional charges.

  1. Do you pay these charges from the same or a different fund from the materials? Does it vary depending on the type of additional charge?

  2. Do you pay these charges as a single line, at the beginning/end of the invoice, or do you pro rate the charges to the individual material line items? Does it vary depending on the type of additional charge or the type of material?

  3. If you prorate the charges, do you prorate based on 1) the number of line items, 2) number of units, or 3) based on the line item’s percentage of the overall invoice cost. For example: There is an invoice with 2 line items: 1 for 2 copies of a set costing $1000 total ($500 apiece) and 1 for a book costing $50. There is also a $20 shipping fee that you want to prorate among the line items. Do you divide the $20 by 2 (# line items), and charge $10 to each line item? Divide the $20 by 3 (# units) and charge $13.33 to the first line item and $6.67 to the second line item? Or do you prorate based on the line item’s overall cost? If that’s the case, then the first line item (costing $1000) would include $19.05 in shipping charges and the second (costing $50) would include $0.95 in shipping charges.

  4. And if you prorate the charges, does the proration method vary for different types of charges, e.g. divide the shipping charges by the number of line items, but divide the tax based on the line item’s percentage of the overall invoice cost?

  5. Do you expect your materials vendor to send the charges in the invoice the way that you want them prorated, or do you expect your ILS to break out the proration from single shipping and/or tax line on the invoice?

Thank you for any advice and examples you can provide.


5 Feb '18

I shared this post with my colleague who handles invoicing in our department. Here are her comments:

We use Overhead Amount for bank charges, service charges, wire fees (other charges). The amount in this field is spread over the line items depending on cost. For example we have 25 line items with varying dollar amounts. Aleph determines the amount to put in each line item based on the net amount. The service charge, etc is usually on the same budget. Shipping has a separate line in Aleph and works the same way.

We do not prorate charges as Aleph does the math for us. Hopefully it will be the same in FOLIO.

5 Feb '18

Thanks very much for getting the conversation started, Virginia. This is really helpful. Just to clarify, when I used “pro rate” in my original post, I wasn’t intending that library staff would have to do calculations, but rather that FOLIO would. We just need to better understand how these charges are handled to work out the various necessary options and calculation requirements for FOLIO.

One clarification: when you say that shipping works the same way as overhead amount, that means you’re spreading the shipping charges over the line items depending on cost - correct?

5 Feb '18

At Cornell - if we are processing a single line invoice - it has been the practice to add the shipping or service charge to the single line item.

For multiple line invoices we are using the other charges section - to process the shipping, service and any other charge there may be and central material funds. We general do not pro-rate these fees across the line items on the invoice.

Adjusting for foreign currency conversion would be pro-rated across the line items of the invoices, and this is prorated based on the line items percentage on the invoice

Hosting fee’s have been processed as a regular line item here.

5 Feb '18

For Texas A&M University in College Station – If it is a single line invoice we add the shipping charge to the single line item.

For multiple line invoices, it depends on how the vendor bills it. Sometimes an invoice from the publ will list each title with the price, shipping charge and the total for that title in one line. When it is like this, we will enter one line with the total for the title on the invoice. (Not separating out the shipping charge)

If the invoice is multiple titles and only one shipping charge at the bottom, Voyager has an ‘add/edit adjustment’ box that lets us add a shipping charge as a flat rate. The same adjustment box allows us to account for multiple types of fees. Usually the fund for the additional fee is assigned to the same fund the material is coming from. However, if there are multiple funds on the invoice then the shipping fee will be assigned to which ever fund has the greater dollar amount represented on the invoice.

Hosting fees are tracked separately every time. A title with a hosting fee will have its own purchase order set up (separate from a purchase order for new content or one-time fee for the title) and paid from a fund set up for hosting fees.

If you’d like I can find examples and grab some screen shots.

5 Feb '18

Below are answers from Chicago (Scott and Renee) to your questions.

  1. We pay them from the same fund as the materials. It does not vary.

  2. Many invoices supplied via EDI already incorporate service or shipping charges into the line items. When not, we enter the charges as a single line item that is prorated across the individual line items. We always prorate any additional charges across the line items charging to the same funds as the line items.

  3. We prorate based on the line item’s percentage of the overall invoice cost. That said, I could imagine that we might want to prorate something such as a service charge or a percentage discount off the entire invoice based on the amount paid, but charges for shipping or a per item discount based on the quantity.

  4. It does not at this point in time. See my comments under number 3. It is really a technical issue with our current system.

  5. In general our materials vendors show additional charges as separate line items. We expect our ILS to break out the proration.

Like Cornell, for single line invoices, we incorporate all additional charges on the line item without entering them separately.

5 Feb '18

Thanks, everyone for the examples. So far I’m hearing:

  • would be good to be able to break out (prorate) different types of additional charges in different ways (percentage of invoice vs # line items)

  • would be good to be able to assign different additional charges to the same fund as the materials on the invoice, or to an entirely different fund. Each type of additional charge may potentially have a different fund.

  • for single title invoices, would be good to have an option to bundle additional charges with the line item

  • [and implied]: if a single invoice line is broken out into multiple charges by FOLIO, then those individual charges need to total to the exact amount that the original line was. Rounding on individual line items can cause pennies of difference, which FOLIO needs to account for.

  • if the invoice also involves foreign exchange, ensure the exchange rate is handled properly across both the line items and the additional charges, and that the invoice total(exchanged currency) aligns with the invoice total(original currency)

Any internationals or folks who have to deal with tax: would be good to hear from you as well.

6 Feb '18

I should add that Chicago, like Cornell and Texas A&M, tracks hosting/access fees separately. We set up a PO for the hosting fee, and pay against that PO, generally on the same subject fund as purchased the resource.

6 Feb '18

Yes, that is correct!

6 Feb '18

Hi Ann-Marie,
in Regensburg, there isn’t a big difference how we treat taxes in Germany and taxes inside the EU in our system: in both cases we add the taxes to the invoice amount and incorporate it as one amount in our system.
But there is a difference if we get printed materials from outside the EU:
The taxes that we have to pay in this case are added as a supplement to the already paid net invoice in our system (because we have to declare it to the customs office first before we can pay the taxes).
I hope this is helpful.

6 Feb '18
  1. In the GBV network libraries both variants are chosen. In case of taxes (VAT, income tax, import-turnover tax) the amount is charged on the same budget per invoice position. Other extra costs can be charged in the same way or on a different budget as well.
  2. In the GBV network libraries both variants are chosen. If extra costs are added as an extra line, then in general at the end of the invoice. If prorated to the individual invoice line, the costs are added to the amount in that line. The workflow doesn’t vary because of the type of additional charge or the type of material but because of the workflow a library follows. All ways are possible.
  3. The prorating is done on base of the retail price of an item (or items if there is more than one of the same). In the example descibed above, the shipping fee could either be put on the amount of the last item line or as an extra line (prefered). The divison by 2 and then prorate among the items is possible, too. I would suppose, the most prefered solution would be: add an extra invoice line for the shipping costs and add this to the total amount of the invoice.
  4. Yes. Shipping charges tend to be divided by the number of line items (or put in as an extra line). Taxes are added per line item – because of maybe different rates per material (e.g. 7% VAT on books, 19% VAT on e-material).
  5. The ILS needs to deal with the invoice how the vendor sends them. So, the last sentence would be valid.