Overview
Payment Mediums are used on the Cash Control document to determine how the General Ledger Entries should be created for each type of payment received. You can edit the names of the payment mediums but cannot create new payment mediums.
Payment Mediums
There are four available payment mediums:
- Check
- Wire
- Credit Card
- Cash - when Cash is selected an additional field displays to enter a document number
Creating General Ledger Entries
System Information table
The System Information table is used by the Cash Control and Payment Applications to create clearing account entries.
Check and Wire
Check and Wire create the same entries:
- Pay App creates entries to reduce the customer receivable and post an entry to the AR clearing account and object code defined in the System Information table.
- Cash Control creates entries to reverse the AR Clearing entry posted by the Pay App and post bank entries if bank offsets are turned on.
Cash
Cash payment medium is used when a deposit has been deposited into someone else's account, perhaps, they didn't know where it was supposed to go. When payment medium Cash is selected, a field is added to enter the document number that deposited the money. This will normally be a Cash Receipt or an Advance Deposit. This field validates that the document number exists, but does not validate that it is a Cash Receipt or Advance Deposit.
In Summary...
- The Payment Application creates entries to reduce the customer's AR and post entries to the AR Clearing Account defined in System Information for the Processing Organization.
- The Cash Control does not create any entries.
The story as told with general ledger entries...
Step 1: An invoice is created:
Customer Invoice
Debit Accounts Receivable
Credit Income
Step 2: A check is received and deposited into an unrelated account using a Cash Receipt
Cash Receipt
Debit Cash
Credit Income
NOTE: Cash Management Document creates Bank Offsets if Bank Offsets are turned on
Step 3: Someone realizes the payment received in step 2 should have been applied to the invoice created in step 1
Cash Control
Payment Medium=Cash
Document Number: Cash Receipt created above
Payment Application
Debit AR Clearing Account
Credit Customer AR
NOTE: Cash Control does not create any entries - normally the entries created by
the cash control will reverse the clearing entries created by the Pay App and
create bank offsets. However, because you need to move the deposit off the
incorrect account, the entries remain in the clearing account so you know you
still have something else to do.
Step 4: Create a correcting entry to move the deposit made to the incorrect account to the AR clearing account
General Ledger Transfer
Debit Income (from original Cash Receipt)
Credit AR Clearing Account (entry posted by Pay App)
Credit Card
Credit Card payment medium is used when payment is received via credit card.
NOTE: It is assumed that the credit card payment will be initially posted to the AR Clearing Account and Credit Card Object Code defined in the System Information table.
In Summary...
- The Payment Application creates entries to reduce the customer's AR and post entries to the AR Clearing Account and Object code defined in System Information for the Processing Organization.
- Cash Control creates entries to reverse the AR Clearing entry posted by the Pay App and post bank entries if bank offsets are turned on. NOTE: In order to create the correct bank offset entries, the Credit Card Object Code in System Information must match the Cash Object Code in Chart. We will be removing Credit Card Object Code from System Information in a future release.
The story as told with general ledger entries...
Step 1: An invoice is created:
Customer Invoice
Debit Accounts Receivable
Credit Income
Step 2: A credit card payment is received and deposited into the AR Clearing Account and Credit Card Object Code defined in the System Information table.
Credit Card Receipt document used to deposit the initial receipt
Debit Cash
Credit AR Clearing Account and Credit Card Receipt Object Code
NOTE: Credit Card Receipt creates Bank Offsets if Bank Offsets are turned on.
In order to create the correct bank offset entries, the Credit Card Object Code in
System Information must match the Cash Object Code in Chart. We will be removing
Credit Card Object Code from System Information in a future release.
Step 3: Cash Control and Pay App are created to apply the credit card payment
Cash Control
Payment Medium=Credit Card
Payment Application
Debit AR Clearing Account and AR Clearing Object Code
Credit Customer Accounts Receivable
Cash Control
Debit AR Clearing Account and Credit Card Object Code
Credit AR Clearing Account and AR Clearing Object Code
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