Obligation Type Controls Everything

The previous section illustrated three important concepts:

The true financial impact of the three financial events - bills, payments, adjustments - is at the obligation level, not at the account level. This means that bills and payments are meaningless on their own. It's the obligations' bill segments, payment segments and adjustments that affect how much a taxpayer owes.

You control the financial effects of the various financial events using a single field on the obligation. This field is called the Obligation Type. In this section, we describe many of the tables that must be set up before you can create an obligation type.

Note:

An obligation type controls numerous aspects of an obligation's behavior in addition to its financial behavior. The non-financial aspects are discussed in later chapters. It's only after you have set up all of the control tables in this manual that you'll be able to finally define your obligation types. Refer to Setting Up Obligation Types for more information.

CAUTION:

Take the time to define how you will record the various financial events in your general ledger before you attempt to set up these control tables. If you have simple accounting needs, this setup process will be straightforward. However, if you sell many services and use sophisticated accounting, this setup process will require careful analysis.