Finance AR
Accounts receivables are financial claims resulting from sales transactions. When a company sells goods
or services, it has a claim on the customer for payment. The Accounts Receivable module lets you create
debit/credit (DR/CR) memos, process payments, calculate finance charges, keep track of customer
balances, issue drafts, and send dunning letters regarding overdue accounts.
Set-ups to be made before starting any transactions:
1) AR Control File
Next Batch:
Batch numbers are used to identify a group of transactions that
were entered all at the same time.
Next Memo:
The next automatic memo number for system assigned numbers.
Next Journal:
The next number to use when a general ledger journal
transaction is created by the system.
AR Summarization level:
It determines the level of detail used by the system when AR
transactions are posted to the general ledger
Drafts Receivable Acct:
Used in Draft processing.
Exchange Tolerance:
Used in multi currency transactions. Where the spot currency
exchange rate, entered during a transaction, exceeds the rate set
up in the Currency Maintenance Module by this tolerance, the
user will be warned.
External Memo
If yes, manual DR/CR memo numbers are allowed. If no,
References Allowed:
only system assigned memo references are allowed; the Next
Memo number in the AR Control file is incremented.
2) AR Banks
Summarization Level
The AR Summarization Level field in Accounts Receivable Control determines the level of detail used by
the system when AR transactions are posted to the general ledger. Transactions can be created in three
ways:
Level 1 creates detailed AR transactions by entity, account, sub-account, cost center, and project
code, with one GL distribution line for each AR transaction.
Level 2 creates AR transactions summarized by batch, account, sub-account, cost center, and
project.
Level 3 creates detailed individual AR transactions with separate GL references for each
document.
Example:
Two DR/CR memos are processed in one batch using DR/CR Memo Maintenance (27.1). The document
numbers are Memo1 and Memo2. The GL accounts affected are 1200 and 3000. The following
transactions are created based on the summarization level in effect.
Level 1: Detailed
Account Document
1200
GL Reference Debit Credit
Ref1
200
3000
Memo1
Ref1
100
3000
Memo2
Ref1
100
Level 2: Summarized by Batch
Account Document
GL Reference Debit Credit
1200
Ref1
3000
Ref1
200
200
Level 3: Separate GL Entries for Each Document
Account Document
GL Reference Debit Credit
1200
Memo1
Ref1
3000
Memo1
Ref1
1200
Memo2
Ref2
3000
Memo2
Ref2
100
100
100
100
When you first implement MFG/PRO, create detailed journal entries by setting Summarization Level to
1. You can verify that each transaction is being processed correctly with the right account numbers and
identify any mistakes. Once you are confident that entries are being made correctly, change to level 2.
This method takes less space and is easier to handle in the GL.
DR/CR Memos
When invoices (created in 7.13.3/7.13.4) are posted to Accounts Receivable, they are treated as Debit or
Credit memos with a type of I. The terms and amount information are also passed on to the customer
balance file (27.13).
Some of the invoice information can be changed in DR/CR Memo Maintenance (27.1). The credit terms
or due date can be changed without affecting the accuracy of other modules. It is not recommended that
changes to the ship-to address, commission rates, or sales amount be changed in this function, since these
changes will not be reflected in the Sales Analysis reports. The system prevents any changes from being
made to the invoice account distribution; these types of changes should be made with an adjusting
invoice.
If the customer disagrees with the invoice amount or terms, the invoice can be flagged as contested using
this screen. Contested invoices are not included in finance charge calculations and may be deducted from
aging reports. Contested items do appear on statements, but noted as contested.
DR/CR Memo Maintenance can also be used to record miscellaneous charges or credits, write off bad
debt, or to make adjustments. These types of transactions are classified as a type M. Dr/Cr Memos will
not appear in Invoice History Reports but do appear on the Customer Account Inquiry and Dr/Cr Memo
Reports.
DR/CR Memo transactions are also created for the following through other screens:
F - Finance charges
P Payments
U - Unapplied payments
A - Applied unapplied payments
D - Drafts
Processing Payments
Use Payment Maintenance (27.6.4) to record customer payments and apply them to an open item, such as
an invoice, or to record miscellaneous cash receipts, such as tax refunds. There are three types of
payments:
Applied Payments (type = A)
Use this to record cash from a customer in payment of specific invoices, memos, or finance
charges.
Unapplied Payments (type = U)
Use this to record cash received from a customer that does not apply to specific invoices, memos,
or finance chargesfor example, a prepayment for a future invoice or an overpayment. Apply
unapplied payments to a specific invoice, memo, or finance charge using Unapplied Payment
Application (27.6.9). Specify the unapplied payment reference number (Unapplied Ref) and enter
the reference numbers of the items (Reference) to which it applies. The system creates an audit
trail by adding a DR/CR memo with a new reference number and the transaction type Applied.
The system also creates a GL transaction to record any currency gain/loss.
Non-AR Receipt (type = N)
Use this to record cash received that is not paying any invoice, memo, or finance chargefor
example, tax refunds or rebates.
Customer Credit Review/Update
When you are trying to collect overdue amounts, you may want to record comments for a specific memo,
invoice, or finance charge.
Example: A customer has disputed an amount, and you want to record the details of the dispute. Or a
customer is late in paying, and you want to record the reason. This information would then be available
the next time you contact the customer.
Use Customer Credit Review/Update (27.10) to enter comments. You can print these comments on aging
reports to assist you with collection activities. When the transaction is closed and deleted/archived, the
system also deletes the comments
Statements
Use Customer Account Statement Print (27.14) to print statements for a customer. However, before you
can do this, set Statement to Yes in Customer Maintenance (2.1.1). The statements list all open invoices,
memos, finance charges, and payments.
Calculating Finance Charges
Use Finance Charge Calculation (27.12) to calculate finance charges for customers with overdue amounts.
Effective Date:
The date the charges effect the GL
Grace Days:
Additional number of days added to the due days to give customers a
grace period
Interest Rate % per Annum:
The annual interest rate to be used
Include Previous Finance Chgs: Yes will specify that finance charges will be calculated based on balance
due including any overdue finance charges.
Closed AR Delete/Archive
The system keeps all of invoicing and accounts receivable information online for an unlimited amount of
time. There is no automatic purge at month or year end. To delete accounts receivable information, use
Closed AR Delete/Archive (27.23). The system only deletes AR transactions that are totally paid and
payments that are totally applied. It also deletes non-AR payments. The system does not delete unapplied
payments.
