Managing Accounts Receivable
Accounts Receivable are amounts owed by customers for goods or services. The Accounts Receivables transactions and report in Deacom allow users to track and manage open balances, and perform functions related to billing, invoicing, collections, credit, and reporting.
Configuration
In order to process Payments on Account, Pre-Payments, and Regular Payments, the following options must be configured:
- In Accounting > Options > Accounts Receivable tab
- Enter the appropriate account to which "Payment on Acct" and "SO Pre-Payments” payment types should be mapped.
- Select a non-stock Part in the "Pre-Payment Part" field, which will be used for pre-payments. This part must have an Order Type of "Normal", all Unit of Measure fields set to "Each", the "Stocked" flag is not checked, and the "Saleable" flag is checked.
- Define Print To defaults, which are the system defaults for the "Print Invoice to" and "Print statement to" fields are set in Inventory Options. This will set the default that populates when a new Bill-to Company is added. Once populated on the Company record, these fields may be overridden on the General tab. These options are referenced when printing customer invoices and statements as described below. For more information on customer setup and maintenance, refer to Managing Customers.
- In Sales > Options > Shipping tab
- Set auto invoicing defaults via the "Invoice at Shipment" field. This functionality is used to generate and send invoices automatically when the Sales Order is shipped. Companies may choose to automatically invoice all orders at time of shipment by selecting "All", only orders for zero dollars by selecting "Zero Dollar", or neither by selecting “None”.
If using the short/over payment functionality to automatically write off, or re-bill differences between amounts owed and applied, the “Short/Over Payment Part” field on Bill-To record, General tab must be configured using a non- stock Part number defined as follows:
- On the General 1 tab, select an Order Type of "Normal" and ensure all Unit of Measure fields are set to "Each".
- On the Properties tab, ensure the "Stocked" flag is not checked and the "Saleable" flag is checked.
- On the Accounts tab, select a "Revenue Account" to which the difference will be booked.
To process credit card payments, the company must first create an account with one of the payment processors that handle the processing of credit and/or debit card payments for products or services on behalf of merchants. For more information on this and for the processors supported by Deacom, refer to Preparing Deacom for Credit Card Transactions.
If Rebill Sales Orders will be created, the following should be completed on the General tab of the Bill-to Company record:
- Rebill Work Flow, that will automatically be assigned to the Rebill Sales Order upon creation. For more information on Work Flow configuration, refer to Configuring Work Flows.
- Check the "Create Rebilling SO" flag, which will be the default setting for the Bill-To company if using the Short/Over Pay form when processing cash receipts. When this box is checked in the Short/ Over pay form, the system will create and display a regular Sales Order for the short/overage amount.
Process
Configuring system defaults
What defaults should be set?
Print To defaults - The system defaults for the "Print Invoice To" and "Print Statement To" fields are set in Accounting > Options > Accounts Receivable tab. This will set the default that populates when a new Bill-to Company is added. Once populated on the Company record, these fields may be overridden on the General tab. These options come in to play when printing customer invoices and statements as described below. For more information on customer setup and maintenance, refer to Managing Customers.
Invoice at Shipment default - Companies may set orders to auto invoice by navigating to Sales > Options > Shipping tab and making a selection from the "Invoice at Shipment" pick list. This functionality is used to generate and send invoices automatically when the Sales Order is shipped and will result in timely invoicing. Companies may choose to automatically invoice all orders at time of shipment (by selecting "All"), only orders for zero dollars (by selecting "Zero Dollar"), or neither.
Using Customer and Order configuration options
What additional options exist on the Customer level?
Assigning credit on a customer level - Bill-to and Ship-to Companies are used to set the Customer on Sales Orders. These selections indicate who will receive the invoice for the order and who the order will be shipped to. Credit Limits and other details are set first at the Bill-to level, and can then be overridden on the Ship-to level if desired, by using the "Use Ship-to Credit Limit" flag. Information for setting up and establishing credit checks for Bill-to and Ship-to Companies is detailed in the Managing Order Terms and Customer Credit page.
Assigning Remit to information - Remit to Information, used when invoicing customers, is defined using the "Remit To" and following address fields contained in System > Options > Company tab. The information contained in these fields will be included on the invoice sent to the customer so they know to who checks should be made payable and to where payments should be sent.
Using Billing Groups - Billing Groups are used to group Bill-to Customer records together for the purpose of credit analysis and to allow for credit checking to be performed at the group level as opposed to just individual Bill-to records. Information for setting up and establishing credit checks for Billing Groups is detailed in the Managing Order Terms and Customer Credit page.
What additional options exist on the Sales Orders level?
Using the Invoice/Pre-pay function - When entering Sales Orders, the "Invoice/Pre-pay" flag may be checked so that, upon saving the order, either the acceptance of a pre-payment without shipping, or the immediate shipping, invoicing, and possible receipt of payment will be prompted. This is especially useful if customers are required to pay for goods prior to receipt or if the invoice that will be sent to the customer will not differ in price or quantity from what was ordered. Refer to the Invoice/Pre-Payment form section of the Order Entry page for information on the form and fields available when using this feature.
Managing Discounts, Adjustments, and Credit
How are discounts applied?
Adding Discounts - Discounts may be taken if the customer has certain Terms (i.e. 2% 10 Net 30) assigned to the Sales Order. During payment receipt on Sales Orders, any applicable Terms discount may be respected or ignored using the available Discount field/flag.
How are adjustments applied?
Adding Adjustments to an order or invoice - The Order Adjustment transaction allows authorized users to add non-stock parts or modify existing non-stock parts on shipped, but not invoiced Sales Orders. These features are particularly useful in situations where additional freight or custom charges need to be added to orders.
What credit options exist?
Using Credit Holds and the Accept Order Days function - Credit Limits and Credit Holds are used to perform credit checks during certain steps of the Sales process. The Accept Order Days option is used to establish a number of days that a user will have to override an existing credit hold. For more on these features, refer to the Managing Order Terms and Customer Credit page.
Configuring payment methods and invoicing options
What are the common Payment Types used?
Checks, ACH, Cash, Credit Card - Managed via Accounting > Maintenance > Payment Types. Payment Types define the acceptable methods by which payment will be received during the invoicing process (or when issuing checks to Vendors). Deacom allows Payment Types to be capped at a certain amount via the "Maximum" field. For information on using the different Payment Types, refer to Receiving Payment for Sales Orders and Processing Sales Orders with Credit Cards.
What methods can be used to invoice customers?
Using the Print Invoices function - Once orders are entered and shipped, the next step is to invoice. Invoices are easily generated in Deacom and can be printed or emailed to the Bill-to Company associated with the Sales Order. After invoice generation, payments will be posted. Generating invoices will debit Accounts Receivable and credit Revenue. The alternative to this standard process is to mark the Sales Order as "Invoice/Pre-pay", described above.
Using Progress Billing Orders - Progress Billing Orders are a series of Sales Orders linked to a Progress Billing item that has specified payments, with billing amounts and due dates different than the shipments. The intent is to manage the cash receipts and billing separate from the shipments and to avoid timing issues for accounting by recognizing the costs and revenues in the same period.
Using the different payment posting methods
What options exist for posting payment?
- Regular Payments - Posting payment to single or multiple invoices based on the information provided with payment such as Customer or Sales Order number.
- Payments on Account - If the company’s Accounts Receivable policies clearly state that checks without specific remittance advice will be applied to the oldest outstanding invoices, then these checks are handled in the same manner as those in the previous category, by selecting the Bill-to Company and/or Ship-to Company indicated by the check. If this is not the company’s policy, then the check can be entered "on account", to be applied to specific outstanding invoices at a later time.
- Pre-Payments - If the company requires a partial or full amount of the Sales Order to be paid before material is shipped, entering a pre-payment to one or more invoices is the best option.
- Short Paying Invoices - Used to enter payments less than the sales invoiced amount. The reasons why customers short pay invoices vary. For example, a customer could send a single payment covering multiple invoices with a deduction off the payment for $1,000 in advertising allowances. If the payment details do not specify which of the invoices the deduction applies to, then using the short pay feature to deduct the money from the entire account may be more beneficial then taking a deduction against a random invoice for the $1,000 advertising allowance.
For information on using these payment methods, refer to Receiving Payment for Sales Orders and Processing Sales Orders with Credit Cards.
Reporting on Accounts Receivable
At what point will an invoice show as past due?
An invoice's past due date depends on its due date (l_duedate for use on the Invoice Report Layout), which is determined by the "Invoiced" date on the Sales Order Dates tab and several factors from the Terms assigned to the order, including:
- Billing Type - Can be used to make aging start either on the Sales Order "Invoiced" date or the Terms "Statement Cut-Off" date.
- Due Type - Indicates if the payment is due on a certain day of the month, certain day of the year, or within a certain number of days.
- Payment Due - Defines the day of the month or the number of days within which payment is due, depending on the "Due Type" selection.
Examples of the two available Billing Types are below:
- Terms with a "Billing Type" of "Invoice" are generally used when a company requires payments a certain number of days after the Sales Order is invoiced, such as Net 30, Net 45, and Net 60 terms. This option allows companies to invoice orders any day of the month and make the invoices due 30, 45, or 60 days out, respectively. In the Net 30 case, the Terms "Due Type" would be set to "Number Of Days" and "Payment Due" would be 30. The due date for an invoice with Net 30 Terms is calculated as the "Invoiced" date (to_invdate) plus the Terms "Payment Due" (te_dueday) value. Aging for this invoice would begin on the Invoiced date and the invoice would be considered past due on the 31st day after the Invoiced date. For example, assume a Sales Order is created with Net 30 Terms and invoiced on 6/30. Payment for the invoice would be due on 7/30 and, if unpaid, the invoice would be considered past due on 7/31.
- Terms with a "Billing Type" of "Statement" are generally used when a company requires payments that are due on the same day of the month every month. An example of this would be a company that bills on the 1st of the month and requires payments be submitted by the 20th of the month, which could be referred to as Bill 1st, Pay 20th. In this case, the Terms "Statement Cut-Off" would be set to 1, "Due Type" would be "Day Of Month", and "Payment Due" would be 20. The due date for an invoice with Bill 1st, Pay 20th Terms is simply the 20th of the month. Aging for this invoice would begin on the 1st of the month and the invoice would be considered past due on the 21st of the month. For example, assume a Sales Order is created with Bill 1st, Pay 20th Terms and invoiced on 7/1. Payment for the invoice would be due on 7/20 and, if unpaid, the invoice would be considered past due on 7/21.
How is aging by order or Customer easily reviewed?
Using the Accounting Reporting "Receivables Detail" and "Receivables Summary" reports - These sub-ledger reports display aging details by order or Customer, respectively, according to the selected pre-filter criteria.
- Generating a "Receivables Detail" report will display one row for each invoiced order with an open balance and include data such as the invoice's due date, a collection date if specified, the number of days the invoice is past due and the total number of days since the invoice was created, and the invoiced and balance amounts. On this report, the "History" button can be used to view the order and aging history for the selected customer, which is also visible on the Customer's Credit tab, and the "Edit Data" button can be used to modify the Anticipated Cash and Collection Dates.
- Generating a "Receivables Summary" report will display one row for each Bill-to or Ship-to, depending on the pre-filter selection, and include data such as the total due for all invoices for that customer, that same amount spread across various aging buckets including Current and Future due amounts, 1-30 days past due, 31-60 days past due, 61-90 days past due, etc., and the total amount past due for all invoices for that customer. On this report, the "View Detail" button can be used to drill into all orders that comprise those numbers, by generating a "Receivables Detail" report for the selected customer, and the "History" button can be used to view the order and aging history for the selected customer, which is also visible on the Customer's Credit tab.
The default layout of these reports is generally sufficient for a company's receivables analytical needs, however they may be modified if desired. Information on configuring these reports to best suit the report needs of the business can be found in Accounting and Finance Reporting.
Note:
What other major reporting options exist?
- Customer Statements - Available via Print Outs > Customer Statements. The default layout for this report is managed in Report Layouts. This report option provides the ability to print statements, with or without detail, for all customers, a select group, or an individual customer based on the pre-filter selections. Printing or emailing statements is useful to ensure customers are aware of open orders and unpaid invoices. Customer Statements, similar to credit card statements, can be sent on a regular (i.e. monthly) basis or generated and kept internal for reference. Note that Bill-to Companies with the "Print Statement to" option set to Email will have their statements emailed instead of printed. To print statements that exceed a specified minimum balance due, set "Balance" to "Minimum". To print statements where a customer owes a balance, set "Balance" to "Non-Zero". When customer statements are printed, the system will write a record to the "Credit Notes" memo field on the Bill-to customer containing the data and time the statement was printed as well as the first and last name of the user who printed the statement.
- Credit - Available via Sales > Order Reporting. The Credit report is used to return a list of all non-shipped orders that failed a credit check. This includes Sales Orders that fail a credit check, Credit Hold Sales Orders that still fail credit check, and Credit Hold Sales Orders that no longer fail credit check. This report is useful in situations where customers want to see their credit status before processing orders via the Sales > Ship transaction, where performing the credit check at time of shipment is not timely enough to rectify credit issues.
- Collections - Available via Accounting > Accounting Reporting, this report displays Sales Orders that are past due for collections. Only records that have a Collection Date and are Past Due will be displayed on this report. For additional information, refer to the Accounting and Finance Reporting Best Practice page.
- AR Reconciliation - Helpful if the AR sub-ledger and GL are out of balance. The report will help identify what date the out of balance occurs to aid in reconciliation. Additional information on the AR Reconciliation report is available via the Completing a Month End Close page.
FAQ & Diagnostic Tips
Tip: You will not be able to create a PDF Customer Statement if the Customer’s name contains a forward slash. PDF files do not allow a forward slash in their file names. You are able to create a PDF statement via Accounting > Accounting Reporting > "Receivables Detail" > View > Print > Assign the file a name that does not contain a slash.
How do I clear two invoices that offset each other out without receiving a check from the customer?
Process a regular Cash Receipt, select both invoices. Total Gross and Total Cash will be zero. Click "Apply", enter a Reference, and process as normal.
How do I apply Accounts Receivable Invoices against Accounts Payable Invoices?
This is accomplished with a two-step process (AP amount is > than the AR amount in this example).
Step 1
- Navigate to Accounting > Cash Receipts (formerly Sales Order Payments). Select the appropriate Customer, move the selected invoices and click "Modify Amount" (Do not change the account on this form!).
- From the Account pick list, select a cash account to "wash" the invoice adjustment(s) through.
- Fill in the Invoice Adjustment amount in the "Debit Amount" field with the amount of the AR invoice.
- Tab to the "Description" field and enter a description to identify/explain the reason for the "wash" of the AR invoice amount.
- Click the "Add Line" box on the lower right corner of the form. Then save, exit, and apply.
This clears the A/R invoice(s) amounts and moves the money into the account chosen. There is no cash effect.
Step 2
- Navigate to Accounting > Manual Checks. Select the appropriate Vendor, move the selected Vendor invoice(s), and click "Modify Amount".
- From the Account pick list, select the same Cash account used earlier to "wash" the invoice adjustment(s) through.
- Fill in the total invoice adjustment amount in the "Credit Amount" field with the amount of the AR invoice(s) from above completed invoice adjustment(s).
- Tab to the "Description" field and enter the same description as used on the AR side to identify/explain the reason for the "wash" of the AR invoice amount.
- Click the "Add Line" box on the lower right corner of the form. Then save, exit, and apply.
The check printed will now reflect the AP vendor invoice amount minus the AR invoice(s) deduction amount. Note, the check stub and check display only the total amount paid – there is no display/reference to the "washed/adjusted" AR invoices. The chosen "wash" account will now be $0. Clicking on the "View Detail" button will display the description entered.
When trying to do a payment on account, the following message is appearing: "A required field has been left empty in 'dttord'". What is the problem?
This transaction requires the "Facility" field to be entered. Process the transaction again with a Facility.
How can I post a cash receipt that is not related to AR?
Either enter a Sales Order for a non-stocked item, and process the receipt in the regular method, or enter the receipt with a Journal Entry.
Is credit card payment processing available when creating a payment on account?
Yes, when creating a payment on account and using a credit card payment the system will prompt for credit card information. For more information on Credit Cards, see Processing Orders with Credit Cards.