Beginning July 1, Accounts Payable has changed the way lease invoices are processed. Previously, invoices for the entire fiscal year were entered at the beginning of the fiscal year. These invoices immediately debited expense accounts and released the encumbrance even though the expense was not paid immediately (it is paid out over the lease period by fiscal year).
Payments will be now be “future dated” in order to charge the lease payments to your accounts using proper accounting methods (i.e. monthly or quarterly based on lease terms). As Accounts Payable enters the invoices into the system, they will be dated to charge your account(s) in the month that they are due, as opposed to all at once in the beginning of the fiscal year. The encumbrance balance on the lease purchase order will still be released at the time the invoices are entered (at the beginning of the year) but the expense will post to your account in the appropriate accounting period.
For example, if you have a monthly lease payment of $100 over the course of the entire fiscal year, the creation of your purchase order will encumber $1,200. Accounts Payable will enter the lease payments for the entire fiscal year in July. This will release the entire $1,200 encumbrance.
When you look at your July reports, you will see only one payment of $100. August reports will include the second payment for $100, and so on until the last payment of $100 is made in June. This will bring your total fiscal year expense amount to $1,200.
This change will allow accurate reporting of the correct amount of lease payments in the correct accounting period. As always, departments are still responsible for notifying Accounts Payable if a lease is terminated at some point during the fiscal year, to avoid overpayment of the lease.
If you have questions about lease payments, please contact Sue Jago, Director of Payments, at andersos@ohio.edu .