Processing Cash Check and Credit Card Receipts

This procedure is used to apply customer payments to open accounts receivable invoices.    Note: This section describes only basic payment processing.  Additional procedures that can be performed in the Payment Entry program, such as creating overpayments, prepayments, and debit memos, applying credit memos to open invoices, processing a Parent Company payment,  writing off an invoice balances during payment entry and applying invoices against each other without applying a payment are discussed in later sections of this document.

1.  Confirm that the Daily Startup procedure has been completed and that the system date, accounting year and accounting period are correctly set.  If any of these variables is set incorrectly, they should be modified before any payment transactions are processed.

2.  Total the Cash receipts (checks, credit card slips, etc.) from your customers using a calculator and retain the tape.    The tape total or totals will be used to ensure that all cash receipts transactions are properly posted into the system.  If you are posting cash receipts to multiple divisions or cash clearing accounts, or cash receipts in different currencies, then separate tape totals should be produced for each division, clearing account, and currency being used.

3.  Select the Cash Application program from the Accounts Receivable Operations menu.

4.  Confirm that the proper date is displayed in the Post Date field.  The post date field of the Payment Entry program is automatically loaded with the system date but it can be changed as required by the user.  The post date is used when displaying payment history and should be set so that it reflects the date that a customer payment is actually received.  The post date is not used in the daily closing procedure so modifying it in the payment entry program should not cause any problems when balancing your accounts receivable sub-leger to the GL.

5.  Verify or Enter the batch number to be used for the current transaction. 

•      If a batch number is not entered prior to Saving then the system will assign the next sequential batch number to the first transaction as it is saved.  The batch number will be retained by the program until the operator overrides it or exits the program. 

•      If the operator enters a batch number, the specified batch number is used until the operator overrides it or exits the program.

Note: If you are processing payments in more than one currency, then a separate batch must be used for each currency.  The Payment Entry program will not allow you to create AR check records with more than one currency in the same batch.  If you try to save a transaction with a batch number which contains check records in a different currency than that of the check being applied, the system will notify you and it will automatically increment the batch number.

6.  Select the customer record for the payment to be processed.  The Payment Entry program allows you to locate the customer for whom a payment is to be applied using several different methods. 

•      You may locate a customer using the customer name, account number, telephone number or zip code. 

•      You may also find the correct customer by finding one of the invoices that is being paid.  You may search for a particular invoice using the invoice number, customer name, customer PO number, or Reference number field.

The method you will be using to select the correct company is normally based on the information you have available during payment entry (i.e. what is provided to you on the remittance advice), and on the personal preference of the operator.  In some cases (Parent Company or Finance Company payments) the company making the payment may not have any open invoices and you will not be able to find the correct customer using the invoice information on the remittance advice.  Please see the section on Parent and Finance Company Payment processing for more information about handling these types of payments.

7.  Verify that the correct customer and currency are displayed by the program or change them as required, and input the check number and pay code to be used for the current transaction.  The Payment entry program will create an AR Check record for each payment that is applied in the program and the combination of the check number and customer name of each AR Check record must be unique.  If you are applying cash or another type of payment other than a check, you must make sure that you enter a unique number for the payment in the check number field.  If you are applying cash or another type of payment that does not have a unique check number, you may use the date that the payment is being applied as the check number.  Note:  If you enter the date in YYMMDD format, the payments for each customer will be listed in chronological order when viewed in the AR Check Inquiry program. If you are applying more than one non-check payment for a single customer in one day then you can add a dash and an additional number after the date to make the check record unique.

8.  Load the invoices which you wish to apply payments to into the Payment Entry program.  Once you have verified that the proper customer, check number and pay code are displayed by the program, you should enter the amount of the payment and press the ENTER key to move into the bottom section of the Payment Entry program.  At this point, the program may or may not display one or more open invoices for the selected customer (this is based on the way you located the customer record).    If you need to load additional invoices into the payment entry program for processing, you may do so using any of the methods listed below

•      You may press the Load All Invoices for Customer Button to load all open invoices for the company selected in the top section of the AR Payment Entry program.

•      You may press the INSERT key.  When the Insert key is pressed, the system activates the Invoice Selection List, which can be used to find and select the invoice you wish to load into the program.  As each invoice number is selected, the system will verify that the invoice is for the company selected in the top section of the program or that the company in the top section of the program is identified as a Factor or a Parent of the company whose invoice is selected.  The invoice will then be loaded into the program or an error message will be displayed.

•      You may select an Invoice using the Find Invoice Button.  The Find Invoice Button activates the Invoices Lookup program, which allows you to select any open invoice in the system.  When each invoice number is selected, the system will verify that the invoice is for the company selected in the top section of the program or that the company in the top section of the program is identified as a Factor or a Parent of the company whose invoice is selected.  The invoice will then be loaded into the program or an error message will be displayed.

•      You may select another invoice for the current customer using the Find Invoice for Customer Button.  When the Find Invoice for Customer Button is pressed.

9.  Apply the payment to the appropriate invoices.  Once the cursor is positioned in the lower section of the Payment Entry screen you may apply the amount of the check being processed to the invoices which are being paid.  The following methods can be used to specify the payment amount to be applied to each invoice.

•      If you highlight an invoice in the lower section of the program and Double Click the left mouse button, the system will default the lower of the open invoice balance or the remaining check To Apply amount into the Payment field of the invoice.  If the invoice terms and the posting date indicate that the customer is entitled to a prompt payment discount on the invoice, the system will automatically calculate the amount of the discount and default the discount amount into the Disc 1 column of the Payment Entry screen.  It will also adjust the payment amount as required due to the discount.  The payment amount and the discount may also be manually entered if necessary.

•      If you highlight an invoice in the lower section of the program and press the Apply Line Button, the system will default the lower of the open invoice balance or the remaining check To Apply amount into the Payment field of the invoice.  If the invoice terms and the posting date indicate that the customer is entitled to a prompt payment discount on the invoice, the system will automatically calculate the amount of the discount and default the discount amount into the Disc 1 column of the Payment Entry screen.  It will also adjust the payment amount as required due to the discount.  The payment amount and the discount may also be manually entered if necessary.

•      The Apply to All Button can be used to automatically apply the payment amount to all of the open invoices shown in the program.  When the Apply to All Button is selected, the system applies the payment being processed to all of the open invoices showing in the program, using the same logic used by the Apply Line and the Double Click options.  The system will

•      To apply an amount different than the open invoice balance or the remaining balance of the check being applied, or to manually edit the prompt payment discount for each invoice, you may highlight the desired invoice and use the Zoom option to display the Paytemp Detail Panel.  The Paytemp Detail Panel allows you specify the amount of the payment to be applied to the invoice and it also allows you to specify the other adjustments to be made to the invoice balance, including the amount of the prompt payment discount being taken for each invoice. (this is discussed in the section on Writing off Invoice Balances during Payment Entry).

10. Verify that the entire check amount has been applied to the appropriate invoices and SAVE the transaction.   Once you have applied the entire check amount, the To Apply amount in the top section of the Cash Application program should display an amount of 0 (zero).  The Cash Application program will not allow you to save a transaction unless the check amount has been completely distributed.  If the To Apply amount is not set to zero you should do one of the following.

•      Recheck the invoices and amounts being applied and correct as necessary.         

•      Create an overpayment, prepayment, or debit memo invoice to track the un-applied or over applied check amount.  The Cash Application program allows the operator to create one or more new documents (invoices) to track any un-applied or over applied payment amounts.  Documents can be created by pressing the Create dm or pp Button.  When the Create dm or pp Button is pressed, the system activates the Create AR Doc Panel.  The Create AR Doc Panel is used to specify the type and invoice amount to be used for the new invoice (valid options are OP (overpayment) and PP (prepayment) for credit balances and DM (debit memo) for a debit or positive balances.  The Create AR Doc panel also allows you to enter a Comment for the new invoice to explain why it was created.  The Create AR Doc Panel defaults the new invoice amount to the unapplied payment amount in the Cash Application program, but this amount can be changed as required.

11. Print a Cash Receipts journal.  Select the Cash Receipts Journal from the menu and run a report of all receipts for the current date range.  You should select the cash clearing account that was used during payment processing and the proper batch number and other selections (i.e. AR Clerk, Collection Clerk) as appropriate.  The report will list and total all of the checks and other payments which were applied and which meet the selection criteria. 

12. Compare the total(s) from the cash receipts journal report to the adding machine tape totals of the checks and other payments that were prepared earlier in the payment processing procedure.  This step is used to verify the customer payments were all applied properly.  The tape total(s) and cash receipts journal total(s) should match.  If the amounts do not match, you should determine the reasons for the difference and correct as necessary.

13. Retain the verified adding machine totals and reports for future use.  The accounts receivable journal is one of the reports used during the Daily Balancing procedure.  

More:

Processing Prepayments, Overpayments and Debit Memos