Expense Clearing Reconciliation

The Expense Clearing Reconciliation will show you all activity to the Expense Clearing account by class (well). When expenses are entered into the Disbursement & JIB Manager, they are debited to the Expense Clearing account by well, and detailed by vendor. All positive expense amounts are debited to Expense Clearing, and all negative amounts of expense (credits, etc) are credited to the Expense Clearing account.

If you are netting your Working Interest owners’ expenses from their revenue, you can use the Revenue/Expense Detail report from the Disbursement & JIB Manager to compare to your Expense Clearing Reconciliation report in QuickBooks. Run the Revenue/Expense Detail report by run number so that you can check the amounts in your clearing account based on run closings. All positive expense in the Net Total column should show as debits on the Expense Clearing Reconciliation report for that well. All negative amounts in the Net Total column should show as credits on the Expense Clearing Reconciliation report for that well. ***Important*** Make sure that all net entries on the Revenue/Expense Detail report appear on the Expense Clearing Reconciliation report. If not all entries appear, find out why it’s not posted to the Expense Clearing account, and then correct the entry to make sure it’s being posted to the Expense Clearing account.

If you are ‘JIB’ing your Working Interest owners’ expenses, which means that you are billing them for their share of expense on an invoice, aside from the disbursement check they receive, then you should use the JIB Expense Detail Report from the Disbursement & JIB Manager instead of the previously mentioned Revenue/Expense Detail report to check against your Expense Clearing Reconciliation report in QuickBooks. The JIB Expense Detail report will show the total amount of expense to be billed to JIB owners in the Net Total column. The Revenue/Expense Detail report will show the total amount of expense to be billed to Net owners in the Net Total Column.

If you have some Working Interest owners who are Net and some who are JIB, then you should use both reports to check against the Expense Clearing Reconciliation report, recognizing that the Net and JIB expense will not be separated in QuickBooks. The amounts debited to Expense Clearing will be a sum of the Net and JIB owner expenses as reported in the Disbursement & JIB Manager.

If you are using the Allocation File to hold expense until you are ready to process it on a Revenue Run closing or JIB Run closing, then you should also use the Unallocated Revenue and Expense report from the Disbursement & JIB Manager to make sure that all expense in your allocation file is posted to the Expense Clearing account in QuickBooks. If not all entries appear, find out why it’s not posted to the Expense Clearing account, and then correct the entry to make sure it’s being posted to the Expense Clearing account.

The balance of your Expense Clearing account should be the total of expense that has not been closed on a Revenue Run, or a JIB Run in the Disbursement & JIB Manager. This will include Total Net Expense in the New Run, and any expense being held in the Allocation File. If all expenses that have been entered into the Disbursement & JIB Manager have been processed on a Revenue Run, or JIB Run closing and netted or billed out, then the balance of your Expense Clearing account should be zero.

If your Working Interest owners are Net, then you will see the Expense Clearing account credited when you Post the Revenue Run to QuickBooks from the Tasks menu. The Expense Clearing account will be credited for the amount of expense for that well netted from each owner’s disbursement check.
If your Working Interest owners are JIB, then you will see the Expense Clearing account credited when you close the JIB Run, and the JIB invoices are created. The Expense Clearing account will be credited for the amount of expense billed to each owner for that well, and will debit the JIB Receivable account.

Get in the habit of reviewing your Revenue Clearing Reconciliation and Expense Clearing Reconciliation reports each month and compare them with the reports available in the Disbursement & JIB Manager to ensure that your account balances are correct. It is much easier to track and correct an account imbalance during the same month it occurs, than to have to correct it six months later. Contact SherWare Support if you have other questions about how to compare our reports with reports available in QuickBooks.