These Supplier (Vendor) Payment routines record payments made to Suppliers (Vendors) as opposed to the Supplier (Vendor) Batch Payments program (Article: How do I Prepare a Supplier (Vendor) Batch Payments Run) which make actual payments. They provide for the manual entry of payments already made and do not undergo or have the protection of Payment Approval. There are two functions on the Purchasing Menu: “Payments - Quick Entry” and “Payments & Allocations” and both integrate fully with your Bank Accounts.
2. Payments - Quick Entry:
This option does not facilitate the allocation of payments to specific Invoices/Credits in the Supplier’s (Vendors) Account. It will merely post the payments to the account and the allocation process must take place separately and subsequently. Neither can you avail of Payment Discounts, and the Suppliers (Vendors) in the batch must all have the same Currency which must also be the same as that of the chosen Bank Account. The payments are entered in a batch with Control Totals (although a single entry can constitute a Batch). You can enter as many payments in a batch as you wish. If you close the window, without processing the batch, then it will be saved and will be re-presented for further data entry subsequently. This program also has the optional facility (called “Auto Invoice”) to generate and allocate an Invoice against the Payment – generally used to make Payments to Suppliers (Vendors) from whom you do not expect to receive an Invoice.
On selecting this option you will be presented with the following Window. Here you select the Bank Account from the Drop Down List for which you are preparing this batch of Supplier (Vendor) Payments followed by the entry of the Date of the batch (which will also be the date of each payment – but which you can change entry by entry). Should you be aware in advance of any Bank charges which might be levied against this batch of payments, then you can use the “Add Bank Charges” facility which will invoke a related Bank Credit Journal for the purpose. The standard default System Account for Bank Charges is 4100.
On occasion you may need to pay a Supplier (Vendor) without an Invoice. For example Monthly Rent, Broadband usage, Rental Contracts and other such items. You may also choose to use it for paying Employee Expenses. The “Auto Invoice” button allows you to create, generate, and post a corresponding Invoice for the Payment (and which will be automatically allocated to each other);
When you have finished entering you Supplier (Vendor) Payments you can post all the Payments (and any auto-generated Invoices) to their respective Supplier (Vendor) Accounts by clicking on “Process Batch” at the foot of the Supplier (Vendor) Payments – Quick Entry screen.
Also, however, if you want to leave this Window or Log out of the system without “Process”ing this Batch of Payments, you can subsequently return to this function where the previously entered items will still be available for you to carry on entering further payments.
In the case of payments to Foreign Currency Suppliers from your Foreign Currency Bank Accounts you will be presented with a slightly different version of the screen where you can also enter the Rate of Exchange (to be used for immediate General Ledger Postings in your Base Currency – and which may subsequently be subject to revision);
3. Purchase Payments and Allocations:
In this program you can also manually enter a Payment and allocate it against one or more outstanding transactions on the Supplier Account. You can also just use the allocation facilities on their own - for example, if you’ve previously used the Payments Quick Entry, or want to allocate Credits, Discounts, etc. And, you can also use this program to pay a Foreign Currency Supplier from your Base Currency Bank Account or from another Foreign Currency Bank Account.
In this first example we are going to enter a Payment Amount of £4,000.00 (“On Account”) and allocate it against two outstanding Invoices – one fully and the other partially. Select the Supplier (Vendor) Account from the Drop Down list. The Bank Account will automatically default to the Bank Account associated with that Supplier’s (Vendors) Master record (but you can select another one if you wish – from its Drop Down List) and the date will default to today’s date (which you can also overwrite). For ease of Bank Reconciliation purposes you should keep this date as accurate as possible.
Bank Charges do not feature in this example. Choose a Department from its Drop Down – if required. Next enter the Reference number of the Payment or the Cheque number – again important in subsequent Bank Reconciliations. The “Amount Withdrawn” is a calculated amount and is the sum of the Payment Amount plus any Bank Charges. The Description is an optional field.
If that is all you wish to do at this juncture, then click on one of the “Process” options” at the bottom of the window. This will then just create a Payment Transaction on the Account with no Allocations;
Alternatively, you can allocate the Payment (fully or partially) by entering the relevant amounts against each Invoice under the “Allocate” column in the lower displayed grid (Yellow above). “Process and Print” will produce a Remittance Advice or you can email it directly;
The Allocation facility can also be used to create the Payment Amount. Just double click in each of the Allocate fields in the lower grid against the relevant Invoices. This will then add each allocated amount to the “Payment Amount”. However, make sure that the total Payment Amount shown is what you expected before Processing!
4. Allocations Only:
You can also use this facility to subsequently allocate (fully or partially) previously entered Payments (and Credit Notes, etc.). In this example, we are going to allocate a remaining Purchase Payment and a new Debit Note in order to fulfil an Invoice transaction;
After the Debit Note has been entered and presented in the account, you just double click on the relevant transactions in order to allocate the multiple debits (Partial Payment and Debit Note) to the Invoice. Indeed, you can use this method to allocate multiple Debits to multiple Credits.
5. Foreign Currency Payments:
The system facilitates the payment of a Foreign Currency amount from either a Foreign Currency Bank Account or from the Base Currency Bank Account. In the case of the former, you must have established and set up Foreign Currency Bank Account facilities (for each Currency) with your Bank(s) and also have set up such equivalent Bank Accounts in this system (Article: How do I Manage my Bank Accounts, Company Credit Cards, etc?).
This particular window is invoked when the Bank Account associated with the Supplier has a payee Currency other than that of the Company’s Base Currency (but which is still the same Currency as that of the Supplier). (The Supplier’s (Vendors) Bank Account General Ledger Code is located in the Bank Account field on the “Accounts Detail” Tab of the Suppliers (Vendors) Master record, as is the Supplier’s (Vendors) Trading currency. It is not the Supplier’s (Vendors) receiving Bank Account which is located on the Finance Settings Tab).
Having called up the relevant Foreign Currency Supplier and entered the relevant date of the Foreign Currency Payment, enter the amount paid in “Payment Amt” followed by any adjustments to the displayed Exchange Rate – which generates the Base Currency Amount (greyed out). N.B. If the adjustment is in excess of 10% of the original displayed rate then this will give rise to an error when you “Process”. To rectify this change the exchange rate in the Currency table.
Again, there are no Bank Charges. In this case the “Amount Withdrawn” from the US$ Bank Account is the same as the Payment Amount. Next enter the BI Code if required, an optional Description, and finally a Cheque or Reference No.
However, it’s possible that you may not maintain Foreign Currency Bank Accounts in your Company. In this case you are paying a Foreign Currency Amount from your Base Currency Bank Account. There will almost certainly be Bank Charges and the “Amount Withdrawn” is the amount in Base currency that you were charged by the Bank for the Foreign Currency payment excluding Bank Charges. These (Amount Withdrawn plus Bank Charges) are then used to calculate the Rate of Exchange (as shown on the screen below). This is the Bank Rate of Exchange and, inevitably, it will differ from the Rate of Exchange on your system’s Currency Table resulting in General Ledger Posting for FX Gains or Losses when you allocate the Payment to the Invoices.
In unusual circumstances, however, it is possible to pay a Foreign Currency Supplier (Vendor) from a Bank Account whose Currency is neither that of the Supplier (Vendor) nor the Base Currency. This example is of a US$ being paid out of a Euro Bank Account;
In this case the “Amount Withdrawn” is the Euro equivalent of the US$ amount and is used to calculate the Base Currency amount using the Rate of Exchange on the Currency Table.
You should also refer to the Article entitled “How does Foreign Currency Accounting Work” for further information regarding the treatment of Foreign Currencies and in particular the sections dealing with Foreign Currency Revaluation of unallocated transaction balances (also known as “open items”) and the Revaluation of Foreign Currency Bank Accounts.
6. Other Functions and Facilities:
The first option, for example, allows you to create a Payment using a simple step by step approach by filling in the data in the pop-up data entry window;
Alternatively, if you click on the “Show Me” button in this Pop-Up Window, the system will undergo a step by step tutorial where you can enter the data on the original screen following the “Next Step” instructions;
And this one allows you to make an allocation using, again, a simple step by step wizard;
The available list of Invoices (and other equally signed transactions) and Payments are shown in their respective Drop Down lists.
Again, with the “Currency Triangulation” option you can either fill in the Pop-Up Window followed by the step by step guide to populate the data onto the original screen.
The “Create Filter” button allows you to build a filter in order to focus in on those transactions in which you are most interested;
Click on the “Blue” field to select a field. Click on the “Green” field to select an Operator which will then request a value or another field. Click on the “Plus” button to add another filter and click on the “X” button to remove a filter. For more detailed instructions refer to the Article “How do I Navigate the General Features and Facilities of the System?”.
The “Pay” button allows you to pay outstanding transactions or chosen transactions;
The “Allocate” button allows you to allocate all Payments and Credit Notes to all outstanding transactions or chosen transactions. If there aren’t sufficient Payment and Credit Notes it will automatically create a Payment for the Balance on the Account.
N.B. However, you should be careful not to accidentally create an unintended Payment!
To complete the process you must click on the “Process” button on the bottom right hand side of the screen. Fully allocated transactions will then be updated in the system and disappear from this grid.
“Clear All Allocations” will un-allocate any allocated transactions shown on the Grid. It will not restore fully allocated transactions which have disappeared from the grid by virtue of their being complete.
The “Grid Options” allow you to add and remove Columns from the grid display. This facility, along with the Filtering and Sorting options available in the Grid Header are fully described in the Article entitled: “How do I Use and Customise the General Ledger Transaction Browser?”.
The subject of “Discounts” is dealt with in the Article entitled “How do I Process Discounts, Refunds and Rebates”.
If you require to “Reverse” or “Un-allocate” any of these aforementioned transactions the details of how to do this can be found in the Article entitled “How do I Amend, Correct or Delete a Transaction”.