Remitting Customer Checks or Drafts to Bank for Collection

This document explains how to remit customer checks, postdated checks, or drafts to the bank to be cashed (collected).

You can divide the remittance between different bank accounts. You can also select the bank account or accounts to use for the remittance either manually or by applying user-defined bank quotas.

Note: The term 'discounted' is used in this process for drafts cashed before their respective due date.

Outcome

Customer checks or drafts are cashed by the bank.

These lists are printed:

  • Bank remittance proposal
  • Error report (always printed with the remittance proposal)
  • Bank remittance statement
  • Bank remittance validation list
  • Customer payment journal
  • Accounting journal

A bank report is returned that indicates the payment documents that have been cashed or rejected.

  • Based on the bank confirmation, reconcile cashed drafts in 'Bank Remittance. Reconcile Payments' (ARS350) or 'Bank Remitt. Reconcile Payt per Due Date' (ARS355).
  • Based on the bank confirmation, report drafts and checks rejected by the bank in 'Draft/Check. Open Unpaid or Rejected' (ARS340).
  • Display all account entries created for cashed drafts, from the bank remittance to the final risk cancellation, per remittance number in 'General Ledger. Display Additional Info' (GLS250).

The remittance proposal and statement are saved in these tables: FARREM (master table for bank remittance), FARRED (details), and FARREX (remittance numbers). The 'Payment remittance status' field (PYRS) is also updated in the accounts receivable table (FSLEDG), blocking the payment document from being included in another remittance statement.

Each confirmed bank remittance statement is assigned a remittance number. This number is saved as additional information on the invoices included in the remittance (additional information number 210 in accounts receivable). Each account entry for collected or discounted drafts is saved with additional information number 013 in the general ledger.

Depending on the definition of the payment type in 'AR Payment Type. Open' (CRS076), the customer risk is canceled for postdated checks (type 2) at remittance.

If cash register for payment receipts is used, the payment receipt document have received cash register status 20-'Remitted'. See Cash Register for Customer Payment Receipts for a detailed description.

Status Changes

Remitted drafts have received remittance status 20. Checks have status 90.

Account Entries Created

Accounts receivable and the general ledger are updated. Drafts are posted to a specific transition account and checks to a bank account. The following account entries are created:

Checks – Payment Class 1

Accounting Rule Account Debit Credit

AR05–372

Checks not cashed

x

Bank

x

Checks – Payment Class 2

Accounting Rule Account Debit Credit

AR30–195

Drafts/checks not remitted (not an AR account)

x

Bank

x

Drafts Collected on Due Date

Accounting Rule Account Debit Credit

AR30–195

Drafts/checks not remitted (AR account)

x

AR75–196

Drafts remitted

x

Drafts Discounted

Accounting Rule Account Debit Credit

AR30–195

Drafts not remitted(AR account)

x

AR75–197

Drafts discounted

x

Before you start

  • Customer checks and drafts must be recorded and have status Not remitted.
  • Number series type 81 under number series 0 must be defined for bank remittance transactions in 'Number Series. Open' (CRS165).
  • If the bank to receive the remittance is not manually entered: Bank quotas determining the bank where drafts and checks are to be cashed must be defined in 'Bank Quota. Open' (ARS955).
  • The company's bank account must be configured for the remittance in 'Bank Account. Open' (CRS692/E). See Register Bank Account.
  • A general ledger account for Drafts remitted and an accounts receivable account for Checks remitted must be defined in 'Accounting Identity. Open' (CRS630)
  • Accounting rules AR75–196 (Drafts/checks remitted) and AR75–197 (Drafts discounted) must be defined in 'Accounting Rule. Set' (CRS395).
  • The payment type set up for drafts in 'Payment Type. Open' (CRS078) is defined with 'Bank confirmation type' set to 1 for reconciliation in 'Bank Remittance. Reconcile Payments' (ARS350) or set to 2 for reconciliation in 'Bank Remitt. Reconcile Payt per Due Date' (ARS355).

Follow these steps

  1. Create Bank Remittance Proposal.
    Create a proposal of either drafts or checks to be remitted in 'Bank Remittance. Open' (ARS300). Check that the correct records are included in the proposal. Adjust the proposal by deleting any records that should not be included in the final remittance statement. Confirm the verified proposal and print the remittance statement. When printing the statement, the general ledger and accounts receivable are updated automatically.
    Note: If the bank remittance concerns drafts that are defined for reconciliation in (ARS355), then the selected drafts must be in the same currency as the bank account for which the proposal is created. Thus, the currency selected for the remittance proposal on 'Bank Remittance. Create Proposal' (ARS301/E) must be the same as the currency defined for the bank account in 'Bank Account. Open' (CRS692).
  2. Send remittance statement to bank.

    Send the original checks or drafts together with the remittance statement to the bank or banks selected.

  3. Reconcile collected drafts or checks.

    The bank remittance, once confirmed in (ARS300), is displayed with the included payment documents in 'Bank Remittance. Reconcile Payment' (ARS350), unless the bank remittance concerns drafts that are defined for reconciliation in (ARS355).

    Based on the report on cashed drafts returned by the bank, reconcile drafts in (ARS350) or in (ARS355). At the same time, specify any deductions due to bank fees or deduction of calculated interest between the discount date and the due date.

    Cashed checks do not need to be reconciled or otherwise reported. The only exception is definite postdated checks (type 1), since they are processed as drafts in M3.

    For information about how to report checks or drafts rejected by the bank, see Managing Customer Checks or Drafts Rejected by Bank.

Status in (ARS300) in the RSTA field in the FARREM table

When processing a remittance proposal in (ARS300), the proposal is updated to these statuses:
  • 00 = The proposal is being created.
  • 01 = The proposal is ready for processing.
  • 02 = The proposal is currently in use by another user.
  • 04 = The proposal is being deleted.
  • 06 = The proposal or confirmed remittance document is being printed.
  • 09 = The bank remittance is confirmed in (ARS300), and the bank confirmation handled in (ARS350).
  • 10 = Temporary status indicating that the remittance is being updated to receive status 11= Reconciled in (ARS350).
  • 11 = Bank remittance is reconciled in (ARS350).
  • 19 = The bank remittance is confirmed in (ARS300), and the bank confirmation handled in (ARS355).
  • 20 = Temporary status indicating that the remittance has been selected for deletion.
  • 21 = The bank remittance is reconciled in (ARS355), but risk cancellation is not performed.
Note: Bank remittance for payment type that is defined with the bank confirmation type 2='Bank confirmation per due date' in (CRS078) is set to status 19 when confirmed in (ARS300). If the remittance is selected for deletion in (ARS300), the status is set to 20 and a control is performed to determine whether deletion is allowed based on these conditions:
  • If all records that are included have been reconciled in (ARS355) and risk cancellation has been performed in (ARS330), then the remittance proposal is deleted.
  • If all records included have been reconciled in (ARS355) but risk cancellation has not been performed in (ARS330), then the status is set to 21.
  • Otherwise, the status is reset to 19.

SEPA for draft remittance

Customer agreements are retrieved from 'Direct Debiting Agreement. Open' (ARS450) when doing drafts remittances in 'Bank Remittance. Open' (ARS300). The parameter for SEPA schemes and agreement type must be selected on the payment type in 'Payment Type. Open' (CRS078) for payment class=4. When confirming these SEPA draft remittances, the customer agreements in (ARS450) are updated in the same way as for SEPA direct debiting remittances.