Handling Incoming and Outgoing Payments

By default, Cash Receipt Journals are used to post incoming payments from customers and Payment Journals are used to post outgoing payments to vendors.

Working with Cash Receipt Journals

  • Open the Cash Receipt Journals. Here you can see various journals created with balancing accounts.


  • Select one (BANK in this example) and Edit Journal. Here you can simply enter the payment, for example in this case you have received a bank statement on which you see that a customer has paid an invoice. Fill in the following details:
    • Posting Date
    • Document Type (which is Payment)
    • Document No.
    • Account Type (which is Customer)
    • Account No. (which is a Customer No.)


  • Click Apply Entries. The concept here is to link the payment entry to one of more open customer entries. When you click on the Apply Entries, the system will list down all the open entries for the customer. You can then make an application.


  • You can now make an application, for example, you can specify that the customer here paid the invoice number 00-11 and then click Set Applies-to ID action. Note that system will enter the Balance.


  • You can also change the Amount to Apply, which will be reflected in the Balance. So let us say in this case the customer paid an advance of 25,000. Click Ok.


  • You will see that the Amount is applied and now you can post the cash receipt journal.


What is the result?

The payment will create ledger entries. Open the Customer Ledger Entries (for which the cash receipt journal was posted) and note the following result:

  • Here you can see the payment of 25,000. The Remaining Amount depicts if the ledger entry is closed or not. In this case the remaining amount is 0.00, which means that it not open anymore. The Open field is also not selected and the entry is closed.
  • However, as you just saw that the customer has paid an advance to a specific invoice, which you can see here. So this was an invoice of 185,039.38 (Amount field) and based on the advanced payment of 25,000 (see point 1), there is a remaining amount of 160,039.38(Remaining Amount field). This of course means that the invoice is not closed completely. The Open field is still selected.

It is interesting to see how the system processes these entries. You can say that Ok, the previous remaining amount is REPLACED by the new one, but what you will see that the system will NEVER replace, it will just add entries. You can see the details in the Detailed Customer Ledger Entry. This is explained in the following picture:


  • A Customer can have multiple Customer Ledger Entries.
  • Each Customer Ledger Entry can have one or more Detailed Customer Ledger Entries. So you can see the detailed customer ledger entry as the history of the customer ledger entry.

Working with Payment Journals

  • If we have paid a vendor, we can open the payment journal and make the payment.
  • Fill in the details in the payment journal such as:
    • Posting Date
    • Document Type (which is Payment)
    • Document No.
    • Account Type (which is Vendor)
    • Account No. (which is Vendor No.)


  • Click Apply Entries. You can apply the payment to the invoices that you have paid, for example invoice 200 in this case, by using Set Applies-to ID action.


  • The system will calculate the balance. You can click OK. You will see that the amount is now added in the journal line.


  • You can go ahead and post the payment journal.

What is the result?

You can check the result in the Vendor Ledger Entries. Also you can use the Applied Entries action to see on what documents the payment was applied to.

About Paresh Sharma

https://au.linkedin.com/in/itspareshsharma

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