General Ledger updates for credit cards
Sales orders paid for by credit cards are posted to the general ledger after a credit card order is shipped and invoiced. This table provides an example of how general ledger sales entries may be posted with credit card payment processing.
| Account | DR | CR |
|---|---|---|
| Cash Received/Credit Card Orders | 67.08 | |
| AR - Clearing Credit Card Orders | 67.08 | |
| AR - Credit Card Orders | 67.08 | |
| Sales Tax Payable - California | 3.88 | |
| Freight Collected & Handling | 9.95 | |
| Gross Sales - Inventory Items | 53.25 | |
| Cost of Goods Sold | 12.70 | |
| Inventory | 12.70 |
In this example, cash is posted immediately based on how the credit card payment type is set up. The setup of a credit card payment type, such as a Visa card, determines the general ledger accounts that are used to post the general ledger Sales journal entry.
When you invoice a sales order paid for by credit card, a settlement request is sent to the credit card bank. The bank makes the deposit into your bank account; however, this transfer of cash is not immediate. The deposit often occurs 2 to 3 days after the bank receives the settlement request. You must decide whether you want to post the cash immediately, regardless of when the bank will transfer the funds, or whether you want to keep an open transaction in Accounts Receivable (AR). Then, when the bank sends the funds, you can post a cash receipt against this transaction and then update cash in the general ledger.
When you create a payment type for a credit card, you have the option to set the payment type to post to AR at invoicing. If you select this option, the system creates an AR transaction instead of automatically posting cash when the sales order is invoiced. If the payment type is not set up to post to AR, the system does not create an AR transaction for the credit card company. Instead, cash is posted automatically, as shown in the example in this section.
When posting a payment for a non-refundable transaction where the payment type is not set to post to AR, the transaction will debit the GL account for the payment type. Invoicing will reverse the debit and post to the cash account associated with the credit card payment type.