Cash Application – Applying one check to invoices for multiple companies
In some situations you may create an invoice for a customer and then receive payment for the invoice from another customer. Examples of this situation would be
• You deal with a company that has multiple locations which order from you and which are invoiced separately, but all invoices for all locations are paid by headquarters. A good example of this might be a department store or jewelry store chain with multiple branch locations. In this example we would refer to the headquarters company as a "Parent Company”. In this situation there is a defined relationship between the company being invoiced and the company that is making the payment for the invoice. The Parent Company payment processing option can be used to define the relationship between the companies the invoice is issued to and the company the payment is received from. Once this relationship has been defined, you may apply payments from the Parent Company to invoices for any of the child companies.
• Your customers purchase from you using their own credit lines on some occassions and using their credit line at a finance company on other occassions. When your customer purchases from you using their credit line at a finance company you invoice the individual customer,, but you receive payments from the finance company that are for multiple invoices issued to multiple customers. This is an example of a Finance Company situation. In this situation, the customers whose invoices are being paid are not related, and the invoices for the different companies are just being paid by the finance company. The Finance Company option allows you to set up special terms records that are used when your customer buys from you using their credit line at the finance company. When the special terms are used for an order, the system actually assigns the invoice to the finance company as it is saved. The original customer is moved to a Sale Company field in the invoice, and the Finance Company is moved into the Billto field for the invoice. This allows the AR Aging to show the actual company the payment will be received from. When a payment is received from the finance company, it can be applied to any of the invoices for the finance company (these invoices may be from multiple un-related companies).
• You receive payments for multiple invoices for different customers from a Factor or another entity who has taken over some or all of your receivables. In this case, the individual invoices were issued to different un-related companies and they have different Billto information, but you receive one check from the Factor. The Cash Application program allows you to handle this situation by assigning a special customer type to the Factor company in the Customer Manager. If the Type field for a company is set to “F” in the customer record, the system will allow checks from the customer to be applied to any open invoice for any other customer. This Factor Payment Processing option does not require special terms or a parent child relationship to exist between the invoice and payment company and the invoice company, and the option needs to be used carefully to ensure that the proper invoices are paid with each check.
In all of the above situations, payments for invoices from multiple different customers are received on one check and the check amount needs to be applied to the invoices for multiple companies. StreamV allows you to handle these situations during accounts receivable payment entry using the Parent Company option, the Finance Company or Invoice Assignment option, and the Factor Payment Processing options. These options are all used during payment entry to validate and control which invoices can be paid by checks from a specific company.
When Invoice Assignment is used, the system actually changes the company listed on the invoice to the company the payment will be received from. When the Parent Company or Factor Payment Processing option is used, the system simply allows payments from one company to be applied to invoices from another company in a controlled fashion.
The main differences between the Parent Company, Finance Company and Factor Payment processing options is the relationship between the company being invoiced and the company making the payment for the invoice.
In a Parent Company situation, there is a defined hierarchy or structure linking the parent or Headquarters Company and the children or branch companies.
In the Finance company example there is not a defined relationship between the invoice companies other than the fact the invoices are being paid by the finance company (due to the terms used for the shipment). When the Factor Payment Processing option is used, there is also not a defined relationship between the invoice companies other than the fact the invoices are being paid by the Factor Company.
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Parent Company Payment Processing