Draft Management in M3

This document explains how you manage drafts (bills of exchange) in M3 Accounts Receivable and M3 Accounts Payable.

This includes:

Note: Definite postdated checks (type 1) are managed as drafts in M3.


Customer drafts and supplier drafts are processed correctly. For information about transactions created and change of statuses, see the respective process and related instructions in Processing Customer Payments.

Draft management overview

A draft is a bill of exchange, a payment document indicating that the customer will pay a certain amount at a certain date (the due date) and from a certain bank. Accepted drafts have the same legal value as checks and are also in several ways managed like checks. In fact, an accepted draft is like a check with a due date. That is why definite postdated checks (type 1) are managed like drafts and recorded as payment 4 class documents in M3. In some countries, drafts are preferred as the payment method when the number of days between invoice date and due date is large, often between 60 and 180 days.

Description of Draft

Steps included in Accounts Receivable

The model below illustrates the steps included in managing drafts in accounts receivable.

  1. Programs Used for Draft Management in Accounts Receivable

    • Configure the processing of drafts for payment methods belonging to payment class 4 in 'AR Payment Method. Open' (CRS076). The payment method determines whether the draft must be accepted by the customer before processing, whether a drawee reference number is mandatory and/or unique, when in the process the actual draft is printed (see below), whether the draft amount is to be printed in text form (see below) and whether it is possible to change the customer's bank account for the draft in 'Accounts Receivable. Display' (ARS200) after the draft is registered.
    • Create one or more customer invoices in an M3 invoicing program.
    • Create a draft based on a group invoice in 'Customer Invoice. Group' (ARS190).
    • Record customer payments received in the form of drafts in 'Payment Document. Enter' (ARS105) or 'Payment Received. Record' (ARS110).
    • Create an interest invoice automatically when recording a draft with a due date later than the invoice due date. When recording such a draft, 'Customer Invoice. Enter Manual' (ARS120) is automatically displayed with proposed values for the interest invoice. (This provides that a detail record with panel layout 30 under FAM function AR20 is connected to a payment method. This payment method must then be connected to the FAM function detail record selected for the entry.)
    • Define a general interest for such an interest invoice in 'Settings – General Interest Rate Drafts' (CRS475) or a customer-specific one in 'Customer. Open' (CRS610/K).
    • Create a group invoice by matching several draft records by selecting option 22 in 'Accounts Receivable. Display' (ARS200).
    • Match a draft record against a credit note with the same amount by selecting function key F20 in (ARS200).
    • Manually print or reprint a draft by selecting function key F20 in (ARS200) or by selecting option 23='Print draft' in 'Customer Invoice. Display in Number Sequence' (ARS205).
    • Change the bank in (ARS200) for a draft already remitted to bank. Whether this is possible depends on the national legislation and the payment method used.
    • Select function key F21 in (ARS200) to open 'Customer Draft. Display' (ARS280) to display drafts for the payer selected in (ARS200).
    • Identify which drawee reference number relates to which draft number by selecting sorting order 8 in (ARS200/B). This sorting order lists all "regular" customer invoices by invoice number and all drafts by drawee reference number. For the latter category the corresponding draft number is specified as well.
    • Create account entries for invoices recorded with a payment method for drafts without acceptance in 'Draft without Acceptance. Open Payment' (ARS370). This way you do not have to enter the draft payments manually in 'Payment Received. Record' (ARS110).
    • Post non-remitted drafts to an account for doubtful debts in 'Customer Invoice. Process Doubtful' (ARS360).
    • Create remittance statements, that is, orders for remitting the drafts to one or more banks, in 'Bank Remittance. Open' (ARS300).
    • Use the bank statement returned to report all collected drafts in 'Bank Remittance. Reconcile Payment' (ARS350).
    • Eliminate the customer risk in 'Customer Risk Cancellation. Create' (ARS330).
    • Report drafts rejected before or after collection in 'Draft/Check. Open Unpaid or Rejected' (ARS340). There you define how to proceed with the matter, whether the original invoice should be reopened or a new draft be created.
    • Print a list of all drafts creating a balance at a certain general ledger account (for example, Drafts not remitted) in 'AR Portfolio. Print Specification' (ARS560).
  2. Printout of Drafts

    In accounts receivable, the value selected for the payment method in the 'Print draft document' field determines when a draft is printed:

    0 No printouts.
    1 When you create a group invoice in 'Customer Invoice. Group' (ARS190). The draft is printed in the footer of the invoice.
    2 When you confirm a draft in 'Draft without Acceptance. Open Payment' (ARS370).
    3 When you confirm a bank remittance proposal in 'Bank Remittance. Open' (ARS300).
    4 When you print a draft manually in 'Accounts Receivable. Display' (ARS200) and in 'Customer Invoice. Display in Number Sequence' (ARS205).
  3. Printing Amounts and Currency Names as Text

    When you print a draft, the amount is also printed in text form. The 'Printout of amounts' field for the payment method in 'AR Payment Method. Open' (CRS076/E) determines what syntax to apply.

    The amounts written as text are retrieved from 'Check. Write Amount as Text' (CRS180). The names of the currency and coin are retrieved from 'Currency. Write as Text per Language' (CRS182). For details, see Convert Document Amounts and Currency Names to Text.

Steps Included in Accounts Payable

The following workflows are available to processi drafts in accounts payable.

Programs Used for Draft Management in Accounts Payable

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