How do I Process Sales Receipts and Allocations?

Step by Step Guide to processing Customer Receipts.

Written By Gerry Mckeown ()

Updated at May 22nd, 2018

1.     Introduction:

There are two functions on your Sales System Menu by which you can enter funds received from your Customers: “Receipts - Quick Entry” and “Receipts & Allocations”.  In the case of Cheques received, both allow you to either start a new “Lodgement” or add to one which has previously been created.  A Lodgement is a batch of Cheques received from your Customers to which you add a reference number and which subsequently corresponds to an actual Bank Lodgement of the Cheques entered against that Lodgement No.  For Bank Reconciliation purposes this greatly simplifies the process subsequently (see the Article entitled “How do I Carry out a Bank Reconciliation”) as this constitutes just a single entry. Lodgements remain open (several simultaneously) in order to accommodate further additions until such time as a Bank Reconciliation is carried out which includes a specific lodgement – whereupon that lodgement becomes unavailable for further additions.

In the case of Customer Bank Transfers into your chosen Bank Account as displayed on the Invoice or Statement, you should logon to your on-line Bank Account(s) daily or frequently in order to ascertain whether new Customer Receipts have been received by Bank Transfer from them.  You can then enter those Receipts through either the Quick Entry facility (without allocating them) or through the Receipts and Allocations facility – both of which are described below.   

2.     Customer Receipts - Quick Entry:

This option does not facilitate the allocation of Sales Receipts against Sales Invoices (and other transactions) in the Customer’s Account.  It will merely post the receipts to the account and the allocation process must take place separately and subsequently.  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 Customer Receipts, enter the Date of the batch (which will also be the default date of each receipt), the Lodgement No. (only if required in the case of Cheques and enter either a new number or an existing one) and then enter the details of each of the Customer Receipts making up the Batch.

Should you be aware in advance of any Bank charges which might be levied against this batch of receipts, then you can use the “Add Bank Charges” facility which will invoke a related Bank Credit Journal for the purpose.  The standard System Account for Bank Charges is 4100.

On occasion you may receive payments from Customers without an Invoice.  The “Auto Invoice” button allows you to create, generate and post a corresponding Invoice for the Receipt (and which will be automatically allocated to each other);

When you have finished entering you Sales Receipts you can post all the Receipts (and any auto-generated Invoices) to their respective Customer Accounts by clicking on “Process Batch” at the foot of the Customer Receipts – Quick Entry screen.

Also, if you want to leave this Window or Log out of the system without “Process”ing this Batch of Receipts, you can subsequently return to this function where the previously entered items will still be available for you to carry on entering further receipts.

In the case of lodgements of Foreign Currency Receipts to 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.     Sales Receipts and Allocations:

This facility will more than likely be used for Bank Transfer type receipts (e.g. Credit Transfers, Direct Debits, etc.) from your Customers as well as Cheques.  Using this function you can also allocate Receipts to Invoices and other transactions, or not, and you can also just allocate previously entered receipts from the Customer Receipts - Quick Entry module.

Firstly, to enter details of the Receipt, you must select the Customer Account from the Drop Down list whereupon the Grid will be populated with the details of that Customer’s Un-allocated transactions. The Bank Account will automatically default to the Bank Account associated with that Customer’s 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, however, use the transaction date if it is a Bank Transfer type receipt rather than a Cheque which may be added to a Lodgement.  Next enter the Reference number of the Receipt or the Cheque number.  If it’s a Cheque, you can than choose to add this transaction to a Lodgement.  If there are Lodgements already in progress you will see them in the related Drop Down box and if you wish to add this transaction to a Lodgement then select one of the Lodgement Nos. shown. Otherwise, leave it blank, or enter a new Lodgement Reference No. to create a new one.

You should now enter the total amount which formally should have been receipted (“Receipt Amount”).  If there are Bank Charges related to the receipt (these are, in reality, deductions by the bank from the “Receipt Amount”) enter this amount in the “Bank Charges” field and this will then be deducted from the “Receipt Amount” to arrive at the “Amount Deposited” (the “Bank Charges” will be automatically posted to the System Bank Charges Account – 4100 and the “Amount Deposited” to the GL Control Account associated with the chosen Bank on Processing).

You now have the option to select a BI Code from the Drop Down list and an optional Description to be associated with the transaction. If this is all you wish to do at this juncture, then click on one of the “Process” options” at the bottom of the window;

which, if chosen, will produce a PDF Receipt in the following format (which you can then email to your Customer);

Or a Statement of Account like this which you can also email to your Customer;

However, before you click “Process” you may also wish to allocate (partially or fully) the “Receipt Amount” to other transactions in the Customer Account.  When you first selected the Customer Account you will also have been presented with the list of outstanding unallocated (or partially allocated) transactions relating to that account;

Simply enter the amounts you wish to allocate against the Invoices (or other) relevant transactions that you wish to allocate against.  By way of a shortcut, if you “double click” with the mouse against an empty entry under the “Allocate” column, the program will allocate fully the amount in the corresponding “Outstanding” entry.  When you click the “Process” button at the bottom of this screen, the system process the allocations and produces a receipt for emailing to your Customer;

In this example the Receipt has been fully allocated (although it did not necessarily need to be) against Invoices 491, 492 and 493 with the remainder partially allocated against Invoice 488.

N.B.  You can also use this Allocation facility to quickly enter a Receipt. Begin by selecting the Customer’s Account as heretofore and then enter the amount received in the “Allocate” Column against the relevant Invoices (or Double Click in each cell to allocate the full amount outstanding).  The “Receipt Amount” in the header portion of the Window will then be computed from these allocations and all that needs to be done to finish the task is to enter the “Bank Charges” (if any) followed by the “Reference No.” and, if required, the “Lodgement Reference” followed by “Process”.   However, make sure that the Receipt 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 Receipts (and Credit Notes, etc.);

Just enter the amounts you want to allocate (shown in Red in this example) in the “Allocate” column. This total can then be distributed against Invoice (and other equally signed) transactions (shown in Green in this example.  Click on “Process” at the bottom of the screen and the result will be like this;

Sales Invoices 481 and 486 have now been fully allocated (along with Receipts 000171) and consequently no longer appears on this screen whereas the Receipt No. 000168 still has 1,183.50 left to allocated later.

5.     Foreign Currency Receipts:

The system facilitates the receipt of Foreign Currency amounts into either a Foreign Currency Bank Account or into a 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 Customer has a Currency other than that of the System’s the Base Currency (but which is still the same Currency as that of the Customer).  The Customer’s Trading Currency and default Bank Account are both located on the Account Details Tab of the Customer’s Master record.  In this instance, having entered the Foreign Currency Amount you now must enter the Exchange Rate prevalent at the time of Receipt which will calculate and display the Base Currency equivalent (for General Ledger Posting purposes). After entering Bank Charges (if any) the Amount Deposited will be calculated and displayed.

However, it may be that you do not maintain Foreign Currency Bank Accounts in your Company.  In this case where you are entering a Foreign Currency Amount which has been deposited to your Base Currency Bank Account you must enter the equivalent amount Deposited after Bank Charges (if any).  This is the Base Currency amount and the Exchange Rate is calculated from this amount taking into account any Bank charges levied.

In unusual circumstances, however, it is possible that a Foreign Currency Customer could forward Remittances which need to be deposited in a Bank Account whose Currency is neither that of the Customer or the Company’s Base Currency.  In this example an Australian Customer has forwarded payment to be lodged into a Euro Bank Account;

In this case you have the opportunity to both provide the Exchange Rate for the Australian Dollar amount received which is then used to calculate the Base Currency amount for GL Posting purposes and also the equivalent amount deposited to the Euro Bank Account after taking account of any Bank Charges which may have been levied.

You should also refer to the Article entitled “How do the Multi-Currency Features of the System 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:

Other Receipt and Allocation facilities are available on clicking the buttons at the bottom left hand side of this screen. 

This one, for example allows you to create a Receipt 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 Sales Receipts 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 “Allocate” button allows you to allocate all Receipts and Credit Notes to all outstanding transactions or chosen transactions.  If there aren’t sufficient Receipts and Credit Notes it will automatically create a Receipt for the Balance on the Account.

N.B.  However, you should be careful not to accidentally create an unintended Receipt in this instance!

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 in the Sales System?”. 

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, Reverse or Delete a Transaction?