Recording Customer Payments Received as Draft or Definite Postdated Check

This document explains how to record a customer payment received as a draft, that is, a bill of exchange. You can also use this instruction to record definite postdated checks (postdated check of type 2), since these are processed as draft payments.

There are three types of recorded drafts:

For more information, see Draft Management in M3.

Outcome

Payments by draft or postdated check are recorded in the first step in the payment process and are now ready to be allocated to invoice.

Allocate the draft to one or more customer invoices in 'Payment Received. Record' (ARS110/F) before remitting them to the bank for collection.

Remit drafts without acceptance directly to the bank in 'Bank Remittance. Open' (ARS300).

For activities 1 and 2 below, transactions are created in the FCR040 work file. However, accounts receivable and the general ledger are not updated until the payments are allocated to invoice and (ARS110) is exited.

For drafts without acceptance in activity 3, see Update the Financial System with Account Entries for Drafts without Acceptance.

Before you start

Follow These Steps

Outline
  1. Record Customer Draft Directly in 'Payment Received. Record' (ARS110)

    Record accepted drafts or drafts without acceptance in the overall payment program, (ARS110). You do this by selecting a FAM function detail record matching the type of draft and then entering information on the payment.

    The advantage with using this activity for draft entry is that you can record any bank fees on predefined accounting strings at the same time.

  2. Record Draft via the Payment Document Master

    Record accepted drafts or drafts without acceptance in 'Payment Document. Enter' (ARS105). This is a program especially slimmed for entry of checks and drafts. After selecting a matching FAM function detail record and entering payment data, (ARS110) is automatically activated for the allocation to invoice.

    Any bank fees you record separately in 'Journal Voucher. Open' (GSL100).

  3. Create Drafts without Acceptance Based on Invoices

    Your company may have an agreement with your customer that drafts do not have to be accepted by the customer before they are sent to the bank for collection (like a reversed self-billing). The fastest way to manage such drafts is to use the original invoice records as a basis for creating account entries corresponding to payments by drafts without acceptance in 'Draft without Acceptance. Open Payment' (ARS370). This means that you do not have to manually enter these drafts in 'Payment Received. Record' (ARS110).

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