Applying Customer Payments

The first step in AR Payment processing is Cash Application.  

The Cash Application program is used to record each customer payment being made and to identify the invoices and amounts that each payment is being applied to.  The invoices and amounts being paid with each customer payment can be indentified manually or they can be specified automatically using an input file provided by the customer.

The Cash Application program uses batch numbers to allow multiple operators to apply customer payments at the same time.  A batch for each sesssion can be specified by the operator or it can be defaulted automatically by the system.  The batch number is used to group the checks or other payments being applied in each session, and the batch number assigned to each payment can be changed if required.

The Cash Application process consists of entering a payment transaction for each customer payment.  Information about the whole payment such as the customer making the payment, the check number and date, and the payment total are entered in the top section of the Cash Application  program.

The payment amount is then applied against the open invoices for the customer until the entire amount has been applied.

During Cash Application, the program also allows you to

      Write off invoice balances to selected GL accounts.

      Create invoice documents to track under or overapplied payment amounts

      Add AR or collections comments or comments and images to the invoices and customer check records being processed.

Once the total amount of each customer payment has been applied and the to apply amount in the Cash Application program is 0, the payment transaction can be saved.  As each transaction is saved, the system;

      Creates an Accounts Receivable Check or payment record to record the customer payment information.  The check record lists the customer from whom the payment was received, the payment type, the payment amount, and the payment currency.  The AR Check record also stores a deposit number field which is left blank when the record is created.

      Closes out the invoice amounts that are being paid.

      Creates a journal entry.  The journal entry updates the cash clearing account being used (for the total amount of the payment) and it writes an individual journal entry line for each invoice amount being paid or created by the transaction.  The Journal Entry created by the program can be used to view the payment details for each invoice or for each AR Check record.

      Updates the customer open AR balance to reflect the payment transaction.

      Assigns a permanent number to any overpayment, prepayment or debit memo invoices created during the transaction.