Receivable transaction types are used to differentiate the different types of cash and non-cash transactions that can be applied to orders, invoices and accounts. One of the most important distinctions to make is the difference between Deposit transaction types and Payment transaction types.
A Deposit transaction is money received prior to an event start date.
A Payment transaction is money received on the event start date or after.
Why Use Deposits and Payments?
For organizations that are using the Accounts Receivable module but no other accounting modules, recording deposits and payments is useful for determining the following:
- How much money do we typically collect before the event?
- How much money are we waiting to collect until the end of the event?
- Are there any trends occurring that would cause us to consider asking for more money before the event?
- Aging reporting
- Payments are used to reduce the open AR amount.
- Deposits are held in a separate account to distinguish them from invoiced orders and open AR amounts.
For organizations that are using the Accounts Receivable module and the General Accounting & Analysis module, the difference becomes more meaningful because the receivable transaction types are directly responsible for how the cash receipts are allocated in the GL.
- Payments are a straight forward distribution where cash is increased and accounts receivable is decreased.
- Deposits have a more complex configuration because money received prior to the event needs to be placed in an Advance Deposit/Deferred Revenue liability account until it is ready to be matched against an invoice to reduce accounts receivable.
- When the money is first collected and a deposit transaction is created, the GL cash entry is increased and the GL Advance Deposit/Deferred Revenue liability account is increased.
- When the order with the deposit has been invoiced (revenue and accounts receivable is recognized), the Advance Deposit/Deferred Revenue liability account will be decreased along with a reduction to accounts receivable.
How Do I Add a Deposit?
Deposits are entered the same way as payments; however, the selected transaction type needs to be a deposit transaction type. The only difference is during the setup of the deposit receivable transaction type in the Receivable Transaction Types screen which is done during configuration.
Comments
2 comments
Hi,
Can we move previously receipted payments or credit notes (sitting as credits in debtor accounts) to treat them as a deposit for future events? If so could you advise the process to configure the receivable transaction type?
I have seen the 'deposit' transaction type has an additional GL entry option perhaps if you could explain how this works in addition to the GL distribution.
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The Deposit transactions are designed to create 2 entries. First transaction (GL Distribution) occurs when deposits received (DR Cash - CR Advance Deposit). The second transaction (Deposit GL) occurs the order is Invoiced (DR Advance Deposit - CR Accounts Receivable). You should seek advice from your consultant for best practices or if you are using payment plans.
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