Recording Customer Payments Received as Draft or Definite Postdated Check

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

• The starting conditions listed in Processing Customer Payments must be met.
• FAM function 30 (Manual receipts) with at least one detail record must be defined for draft handling in 'FAM Function. Open' (CRS405).
• An accounts receivable account for not remitted drafts must be defined in 'Accounting Identity. Open' (CRS630).
• Accounting rules for accounting event AR75 (Drafts not remitted) must be defined in 'Accounting Rule. Set' (CRS395).
• At least one payment method for recording drafts must be created in 'AR Payment Method. Open' (CRS076). The values defined for this payment method control subsequent processing, for example, whether the draft is accepted or not accepted and whether the drawee reference number must be entered during recording in 'Payment Received. Record' (ARS110).
• You should include the customer in the routine for payment advice. Do this by selecting the 'Advice rule' check box in 'Customer. Open' (CRS610/K). Note that a payment advice for a draft must be based on the invoice date, not the due date.
• Number series type 85 under number series 1 must be defined for recording received drafts, if the drawee reference number is not entered manually.
• A bank account for the customer must be defined in 'Bank Account. Open' (CRS692). For this account you can also define credit limits and fees for collecting drafts, for example.
• If you wish to record bank fees when recording the draft in 'Payment Received. Record' (ARS110), bank fee types must be created in 'Payment Received. Specify Bank Fee Type' (ARS015).

Follow These Steps

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).