Introduction

Circulation operates in two main areas: distribution and accounting. Distribution was discussed in the previous chapter; now it is time to leave the route and delivery truck behind and sit down at the accountant’s desk.

In the big picture, Accounting in Circulation moves in a five-step process:

1. Accounts (carrier/dealers) are rated and charged for the papers they deliver.

2. Office pay subscribers are rated for the subscriptions they receive (the papers are usually paid for in advance). Account and subscriber rating are usually done independently of one another—for example, if a subscriber gets a reduced rate, the carrier delivering that paper can still receive the same amount of credit for delivery. Carrier collect subscribers may or may not be rated, depending on Business Rules.

3. Additional charges (such as insurance and taxes) and adjustments are added to the account’s bill. Taxes are also added to the subscriber rates.

4. Accounts are billed and subscribers are sent renewal notices. Account and subscriber payments are then received. Most of this setup involves account billing.

5. The billing/payment process creates credits and debits in the general ledger. Circulation records what should be credited and debited to different general ledger accounts. This information can be transferred to the general ledger itself manually or via an interface.

These steps are discussed separately in the below sections.

Account Rating

Rating is done by linking an amount (a rate code) with a set of characteristics (rules) an account must meet in order to qualify for the rate. Account rating rules are given below.

Any rule item (such as Delivery Schedule) may be defined by a specific entity (such as “Mon-Fri”) or be entered as valid for all entities (all delivery schedules). An example of account rating would be if a rate code (such as 0.20 per copy) were linked with the following rules:

• Account Rule—Adult, 2 years, all account types, all account rate classes

• Product Rule—All products

• Delivery Rule—Mon-Sat, all distrib methods, all rate codes

• Route Rule—All districts, routes, route rate classes, AAM Zones, and draw types. Paper count of 40

Any account that met these conditions would receive these rates, except if the account met more selective conditions. For example, let’s say we have a rate with the same set of rules, but with a Product Rule of Tribune. A Tribune account might be eligible for both rates, but because Tribune is more selective than All products, the account would receive the Tribune rate.

When the rules involve numbers, Circulation selects the highest possible rule. For example, the paper count in the Route Rule above is 40. If there were another rate with the same conditions, but a paper count of 60, the rule above would match only carriers whose paper count was 40-59.

The procedure for setting up account rates is explained below (refer to the diagram):

1. The first step is to set up rules for all of your rating combinations (i.e., the product, delivery, route and account rules).

2. The next step is to set up rate codes, which specify amounts for your rates.

3. Finally, you must link the rules with the rate codes to create the rate.

As an alternative, you can define the rating rules “on the fly” as part of the Rule Rate Link process (thereby combining steps 1 and 3).

Subscriber Rating

Subscriber rating functions much like account rating: amounts are linked with a set of rules (given below). For subscribers, however, amounts are defined by payment lengths (for example, 25.00 for 13 weeks) to form rate terms. (Rate terms do not apply to account rating.) The rate terms are then linked with a rate code, and the rate code is linked with the rating rules to form the rate.

In some cases, a subscriber may be eligible for two rates, each with a “particular” rule. For example, let’s say a subscriber has a delivery type of “mail” and a dwelling type of “apartment”, and qualifies for two rates, as follows:

In these cases, Circulation defaults the rate by consulting a rule hierarchy. It first gives priority to promotional and reduced rates (as defined in the rate term). It then goes down the rules (and items within each rule) in hierarchical order, defaulting the rate with the highest “particular” item (for which the subscriber or account is eligible).

The rules and items are listed in the tables above in the correct hierarchy (Publication first, Subscription second, etc.). In our example, Delivery Type (in the Subscription Rule) is above Dwelling Type (in the Location Rule), and so Rate 1 would be assigned to this subscriber. This applies to account rates as well.

The hierarchy is used to default rates during starts, billing changes, and other transactions. The default can be overridden and another rate entered, even though the subscriber does not qualify for all of the rules. However, in order to qualify for the rate, the subscriber must have the same publication, delivery schedule and delivery method as the rate.

The procedure for setting up subscriber rates is explained below (refer to the diagram).

1. The first step is to set up rules for all of your rating combinations (i.e., the publication, subscription, occupant, payment and location rules).

2. The next step is to set up rate codes, which define certain attributes of rates (such as the renewal message).

3. The third step is to link the rules with the rate codes.

4. Finally, you must set up terms, which specify payment lengths and amounts for each rate code.

Additional Charges

Account rating calculates only the charges for the newspaper itself. Other charges, such as insurance, bonds, and taxes, can also be included on bills and invoices.

Recurring charges are account charges and credits that appear on a regular basis. For example, every billing period, accounts could be charged for insurance. Bonds (deposits carrier/dealers put down on the route, usually returnable) can also be a recurring charge. Recurring charges are set up in Charge/Credit Code and are assigned to accounts during account setup (see Specifics, Recurring Charges). Levies are similar to recurring charges, but are based on the carrier/dealer’s 1099 net income, rather than the entire balance.

Miscellaneous charges are charges and credits applied to accounts on an ad hoc basis. A carrier/dealer might be charged for a complaint, or a supply of poly bags or rubber bands. Miscellaneous charges are also set up in Charge/Credit Code, but they are entered in Misc Charge (see the User Manual).

Finance charges can be applied to carrier/dealer accounts which are past due, while accounts can be charged minimum daily draw charges if they are under a minimum draw amount (defined for each account in account setup).

Taxes can be applied to both subscribers and accounts. Taxes are set up under a tax authority (which represents a geographical area). Tax authorities are then linked to countries, states, counties and cities. A carrier/dealer or subscriber who lives in the area of the tax authority will then be taxed. In order for taxes to be applied, the publication the carrier delivers or subscriber receives must also be linked to a tax authority.

Subscriber taxes are typically collected when a payment, auto renew, or other transaction that impacts taxing is processed. However, in some states, taxes are due when the papers are delivered (rather than when the tax is collected). In this case, taxes must be “earned”. In this scenario, grace owed transactions are also taxed (because the papers have been delivered), and the tax is written off if the grace is written off. If you earn taxes, you may also be able to exclude the cost of delivering the paper (transportation cost). See Tax Authority Publ for more information about earned taxes and transportation exclusion.

All additional charges and credits must have a charge/credit code defined for them. This code is used to identify the charge or credit, and determines whether it updates accounts receivable, among other things. Draw charges and credits (and returns) must also have charge/credit codes set up for them. If a charge or credit is taxed, it must be linked to a tax charge code and tax authority.

Billing

You may want to bill your accounts at different times—for example, bill your home delivery carriers monthly and bill your dealers every two weeks. For this reason, Circulation has bill sources. An account is assigned a bill source during account setup, and this bill source determines what billing date should be used on the statement calendar to bill the account.

When the bill goes out, it will contain draw charges and perhaps recurring charges; it is important to understand, however, that all recurring charges do not have to appear on every bill. That is because recurring charges are linked to one or more bill periods. You can define as many bill periods as you wish. When you begin your billing run, you specify the bill period (as well as the bill source) to use, and all recurring charges linked to that bill period will be added to the bill of accounts linked to those recurring charges.

Another period used in billing is the aging period. Aging periods can be defined for varying lengths of time and apply to carrier/dealer accounts that are overdue for payment. For example, you could set up three aging periods, each of 30 days. Account payments that are 30 days overdue would fall into aging period 1; after 60 days if the payment has still not arrived the account will go into period 2, and so on. Finance charges can be applied according to aging period (set up in Business Rules) and collection messages are also aging period driven.

General Ledger (GL)

All Circulation accounting-related transactions (such as payments) influence the general ledger, and so some GL setup will need to be done in Circulation. The map below shows the Circulation transactions that affect the GL, and what GL accounts they will credit and debit to. GL accounts are set up in Chart of Accounts. The table below lists the options where GL accounts are assigned in Circulation.

General ledger information can be interfaced from Circulation to a General Ledger system, using an ASCII file. Business Rules determine whether the ASCII file should be created. If so, Circulation will append GL transactions to the file, which can then be imported into the GL (from the GL side). Note that the file is appended (not written over). This means that the file should be deleted after you import the information in to the general ledger.

GL flow for Fees

Note: The Fee Management feature is a licensed add-on. Contact Naviga Global Support to obtain a password.

1. feWhen a Start transaction is processed, a GL gets created for the Activation Fee.

   • Credit to the account defined in FeeCodeInfo.GLAccountID.

   • Debit to the subscription Accounts Receivable (AR) account.

2. When a Payment is processed that pays for an Activation Fee:

   • Credit to the subscription AR account.

   • Debit the cash.

3. When an Activation Fee is Waived at the time of entering the Start, the fee is still created but marked as waived. No GL is created.

4. When an Activation Fee is Written-Off after the Start has been processed, reversing GL entries (from the GL entries that were created when the Start processed) are created.

   • Credit to the subscription AR account.

   • Debit to the account defined in FeeCodeInfo.GLAccountID.

5. When Renewal Notices are run and a Printed Bill fee is generated:

   • Credit to the account defined in FeeCodeInfo.GLAccountID.

   • Debit to the subscription AR account.

6. When Undo Renewal Notices are run for an invoice/renewal that has generated a Printed Bill fee:

   • Credit to the subscription AR account.

   • Debit to the account defined in FeeCodeInfo.GLAccountID.

Summary

The relationship between rating, charges, billing, and the GL is outlined in the diagram below. Most of the setup work in these areas will be done on the Accounting menu.