Managing Invoices and Payments in Accounts Receivable

This document explains how you efficiently manage customer invoices and payments received in M3 Accounts Receivable.

When invoices are created in other areas of M3 Business Engine, they are automatically entered in M3 Accounts Receivable for easy monitoring. These invoices can be based on customer orders, service orders, project orders, fixed asset sales, internal invoicing between divisions, and so on.

Programs used for monitoring and inquiries are not included in this process.

Outcome

See the corresponding subordinate document for detailed information.

Before you start

The company must have well-defined routines for processing invoices and payments.

Follow these steps

  1. Processing Customer Payments

    M3 Accounts Receivable enables you to manage the many types of payment variants used in international trade, including electronic bank transfers, drafts with and without acceptance, checks and postdated checks, direct debiting and factoring.

    • Features of Manual Payments

      When you record manual payments, that is, payments that are already made and need to be entered in M3 Accounts Receivable, such as payment details from the bank, the following features are available:

      • Reconciliation against payer's open invoices, customer's open invoices, invoice number, group invoice number, first-in-first-out sequence
      • Fast allocation of cash receipt
      • Currency conversion: Local currency received for foreign currency payment, local currency received for local currency payment, foreign currency received for local currency payment, and foreign currency received for foreign currency payment
      • Automatic calculation and recording of currency gain or loss for all transactions in foreign currency
      • Entry of one-time bank fees or recurring bank fees that are recorded automatically in predefined accounting strings
      • At the invoice level, write-off of unresolved balances to user-defined accounts such as for bad debt
      • Recording of payments on account for payments without a specification of the invoices against which the payment is made
      • Cash discount processing: Automatic monitoring of cash discount periods, automatic recording of cash discounts offered, and tolerance limits for delayed payments
      • Debit note processing, including audit trail between invoices and debit notes
      • Bill-back processing with manual selection of the partially paid invoices, user-defined texts for different types of bill-back invoices
      • Credit memo processing
      • Netting of customer invoices against supplier invoices in the case where the customer also is a supplier
      • Easy reversal of a customer payment transaction to reopen the corresponding invoice.
    • Features of Automatic Payments
      • Automatic allocation of payments received via electronic batch file
      • Format: EDIFACT message CREMUL
      • Currency conversion
      • Automatic calculation and recording of currency gain or loss for all transactions in foreign currency
      • At the invoice level, write-off of unresolved balances to user-defined accounts such as for bad debt
      • Cash discount processing: Automatic monitoring of cash discount periods, automatic recording of cash discounts offered, and tolerance limits for delayed payments
      • Easy reversal of a customer payment transaction to reopen the corresponding invoice.

      Electronically received payments can also be processed in the Automatic Bank Statements module. See Automatic Processing of Bank Statements.

    • Features of Payment by Draft
      • Accepted drafts and drafts without acceptance supported
      • Collection on due date or beforehand (discounting)
      • Easy bank reconciliation
      • Automatic elimination of the risk for reversal of the draft after a user-defined number of days after collection
      • Automatic reopening of invoices at draft refusal.
    • Features of Payment by Check
      • Regular checks and postdated checks supported
      • Manual allocation of check to invoice directly at entry or as a separate step afterwards
      • Entry with or without bank remittance
  2. Managing Payments through Direct Debiting

    Through direct debiting you can automate the process of invoicing customers and recording payments for recurring items such as insurance premiums, rent or electricity bill payments. This saves time both for the customer and the company.

    Direct debiting agreements are registered in M3. Customer invoices are selected based on an extensive number of selection criteria and remitted to the bank. Any payments that could not be collected are manually removed from the bank remittance before reconciling all collected payments in the bank remittance through one mouse-click.

  3. Selling Receivables to Factoring Company

    M3 supports outsourcing of collection of the company's customer payments to a factoring company, either temporarily or on a permanent basis.

  4. Managing Payment Plans

    By using payment plans you can offer your customers the option of paying by installments already at the time they purchase. With a payment plan you can also improve your debt collection routine when the customer cannot pay the entire invoice amount on the due date.

  5. Managing Customer Disputes

    M3 provides you with the information you need to handle any customer claims and disputes in an efficient way. You can block any disputed invoices in 'Accounts Receivable. Display' (ARS200) while they are under investigation. If you accept the claim, you create a credit invoice in 'Customer Order. Open' (OIS100) or in 'Customer Invoice. Enter Manual' (ARS120).

    How to handle debit notes and bill back invoicing in M3 is explained in Processing Customer Payments.

  6. Grouping Customer Invoices

    You can replace several customer invoices sent to one customer with one group invoice. The customer can then pay against the group invoice instead of paying each invoice separately. Group invoices enable your customers to minimize the administrative work surrounding payments. When you receive a payment for a group invoice, the amount paid is automatically allocated to the invoices included in the group invoice.

    You can create group invoices by automatically selecting all invoices that match your own selection criteria or by manually selecting invoices to include. You can also group invoices for internal purposes in order to keep track of invoices and payments related to a certain operation or transaction.

  7. Manually Creating Invoices and Invoice Records

    You can create and print more simplified customer invoices manually, for example when you need to enter extraordinary sales or services not managed by other M3 applications. You do this in 'Customer Invoice. Enter Manual' (ARS120). The same program is used to create corrective invoices based on previous invoices issued via (ARS120), Fixed Assets or Time Accounting.

    To update accounts receivable with invoices from a legacy system, create invoice records in 'Customer Invoice. Enter' (ARS100) without printing any invoices. This can be the case when M3 is used for managing accounts receivable but not customer order invoicing or for loading balances.

    You can also create new invoice records by splitting an existing invoice in 'Accounts Receivable. Display' (ARS200). Each new invoice record can have a unique payment method and due date.

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