OpenPro Application Guide Accounts Receivables (AR)
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This chapter provides the background to understand this package. Basic terms are defined and the interface to other optional OpenPro.com packages is described.
<Accounting> is the methodical collection, systematic categorization, and organized presentation of financial records.
An <inquiry> function enables you to view all items for a selected customer.
<Accounts Receivable> (A/R) records customer sales and anticipated revenue. It tracks all customers, purchases, payments and outstanding balances.
<Aging> is the time elapsed after the billing date or due date. You may select to age either by due date or by Invoice date. Four aging periods are available in A/R, normally structured as:
You may use these aging periods, or define your own.
When aging is done by invoice date, a document becomes one day old on the first day after the invoice is posted. An invoice written and posted on January 1 would be 30 days old on January 31, regardless of the due date. When aging is done by due date, a document becomes one day old on the first day after the due date. An invoice due for payment on January 1 would be 30 days old on January 31, regardless of the invoice date.
The <AR Open Items> function (under the “Assist Import” menu) enables you to set up the A/R Open Item File to match your records when you begin using this module.
The <A/R Open Item file> is a permanent file into which transactions (sales and cash receipts) are posted. This file contains every sale, debit memo, credit memo, cash receipt, and finance charge that has not been purged. It holds the complete, itemized, current record for all customer accounts.
This module contains functions that allow the entering, editing and posting of <cash receipts>. To help you apply payments to open items, you can print a Cash Application Worksheet. This lists all open items for specified customers, showing current balances due and the valid discount amounts.
You can automatically apply cash for an open item customer. This enables you to pay the oldest outstanding invoice first. You can also apply such payments to a specific invoice.
A Cash Receipts Edit List is available to help you in the editing procedure. On request, the module posts cash receipts to the A/R Open Item file. You may also prepare deposits, print deposit slips, and deposit summaries.
The system tracks <commissions> due to sales representatives and can print a Commissions Due Report on request. Commissions may be based on either booked invoices or fully paid invoices.
A <cost center> is a segment of a company (for instance, a department or a regional office) for which sales and/or expenses (and sometimes costs) can be calculated separately from the total sales and expenses of the entire company. A typical use for tracking sales by cost center is for a company that has several sales offices. By making each sales office a cost center, you can separately track the sales performance of each office.
The open item and balance forward methods are two generally accepted methods of tracking <customer accounts>. OpenPro.com A/R enables you to use both of these methods:
The <Open Item> method enables you to apply each cash receipt (payment you receive) or credit memo to one or more specific sales (invoices), debit memos, or finance charges. You can partially pay or skip specific items, applying payments to later items.
With the open item method, every transaction made against a customer’s account is kept on disk until you decide to remove the matching debits and credits.
The total balance due is calculated for an open item customer. The ability to look at older, partially paid invoices from previous months can be helpful, especially for highly active customers who pay by specific invoice number.
<Balance Forward> Accounting provides for the summarizing of items into a single balance brought forward amount. When a payment is received from a balance forward customer, that payment is always applied to the oldest unpaid item(s).
This method is useful for customers who only buy occasionally and whose accounts usually contain only a few transactions.
OpenPro.com Accounts Receivable contains options for interactive maintenance of the <Customer file>, including entering, changing, and deleting. In addition to the name and address, this file contains information on a customer’s last payment, account balance and sales volume. Several codes are provided which enable you to tailor the handling of customers individually.
Customers can be set up as a miscellaneous type in the Customer file, so that you can enter sales or cash receipts for one time customers without first having to put the customer’s full name and address on file.
Customer lists and labels can be printed either numerically or alphabetically.
You can view or print a report showing fully paid A/R open items and their matching payments after they have been purged from the A/R Open Item file.
Most of the information you enter into your computer is stored on disk. In order for computer programs to locate specific pieces of data (within large masses of data), data must be organized in some predictable way. OpenPro.com accounting software organizes your data for you automatically as it stores it on your disk. The following are terms that are associated with the structure of data:
A <character> is any letter, number or other symbol you can type on your keyboard.
A <data file> is a group of one or more related records. A data file is often referred to simply as a <file>.
The Customer file in Accounts Receivable is an example of a data file. Such a file is made up of several records, each of which contains the name, address, etc. for each customer.
Each file is kept separate from other files on the disk. There are other types of files in addition to data files. Programs are stored on the disk as program files. However, references to files in this user manual mean data files unless specifically stated otherwise.
A record in a data file is often referred to as an <entry>.
A <field> is a group of one or more contiguous characters representing a single piece of data. For example, a name, a date and a dollar amount are all fields.
A <record> is a group of one or more related fields. For example, the fields representing a customer’s name, address and account balance might be grouped together into a record called the customer record.
The terms <debit> and <credit> refer to the types of transactions that must be recorded in G/L accounts to accurately reflect the activity occurring in all accounting areas. Refer to the Glossary in the Installation and System Guide for definitions of debit and credit.
In A/R, a debit memo issued by you to a customer increases what that customer owes you, and a credit memo decreases what is owed. Debit does not always mean an increase in an account and credit does not always mean a decrease in an account. In some accounting areas, a debit increases a G/L account and a credit decreases a G/L account. In other areas, a debit decreases, and a credit increases, a G/L account.
The system will automatically calculate finance charges based on parameters that you define in Rules setup AR Finance Charge. You can then edit and post them as you wish. A Finance Charges Edit List assists in this process. You can also manually enter finance charges through the Miscellaneous Charges function.
Control information parameters include the following:
A Finance Charges Journal is automatically printed when finance charges are posted.
This function provides the capacity to recover corrupted data files. You can also use it to convert important data files to a format which can be interfaced to commonly used data base and word processing packages.
When a company makes sales and receives payments, this activity affects not only Accounts Receivable (A/R), but also the area of accounting called <General Ledger> (G/L).
General ledger is the area of accounting where all accounting records are brought together to be classified and summarized. Financial statements are printed based on this data.
A <General Ledger (G/L) account> is a specific category under which all financial activity of a certain kind is classified. For example, you might have a General Ledger account called “telephone expenses”, under which you categorized your telephone bills.
Typically, an independent business has a hundred or more G/L accounts. In the OpenPro.com accounting module, each time any financial activity occurs in any area, the dollar amount is recorded under the appropriate G/L account.
Refer to the “Reformat Account Number” chapter in the Installation and System Guide (ISG) for complete information on General Ledger Account Numbers.
<Help> refers to descriptions of functions that appear on the screen by pressing a designated key (HELP) on top right of screen in the black scroll bar. The Help text gives you a quick reference to the highlights of functions while you are running the application.
<Mini-find> or popups refer to a list of available entries for a particular field. Many fields allow you to press a designated key to show all available data on file. For instance, when entering an invoice you may press this key at the Sales Representative field to bring up a list of all sales representatives on file. Selecting an entry from this list is often easier and faster than remembering the sales representative codes or searching through all possible entries until the right one is reached.
You can interface Accounts Receivable (A/R) to other OpenPro.com modules, either at the time of installation or later. The table below summarizes the possible connections and the advantages of each. All of these interfaces are optional.
OpenPro Modules That May Interface to Accounts Receivable
Module
O/E Order Entry
POS Point of Sale
Ecomm Ecommerce cart
What it does
Handles back orders, quotations, and picking tickets.
NOTE: O/E can be interfaced without I/C if desired.
Why interface to it?
Module
G/L General Ledger
What it does
Handles the primary accounting functions of your business.
Why interface to it?
Module
C/R Check Reconciliation
What it does
Maintain bank account information from several packages.
Why interface to it?
Module
J/C Job Cost
What it does
Maintains records on work in process.
Why interface to it?
Module
S/A Sales Analysis
What it does
Provides management reports showing sales performance in various categories.
Why interface to it?
Detect trends for goods and services by:
The above chart is not a complete list of OpenPro.com products, only of those that may be linked to A/R.
You may also run several OpenPro.com modules without interfacing them to one another. For instance, some users use I/C primarily to control kit assembly and A/R to handle their invoicing without linking them together. They forego the advantage of driving their inventory control from their invoices, but they also avoid the need to run O/E.
<Miscellaneous Charges> is a selection that enables you to interactively enter, edit, and post miscellaneous charges (sales, finance charges, credit/debit memos). When you enter miscellaneous charges, you may distribute miscellaneous charges and freight charges to various G/L accounts.
<Multi-Company> refers to the capability to do accounting functions for multiple companies with the same set of software.
In Accounts Receivable, this term is used in two ways:
You may specify that passwords are required. A <password> is a unique code you assign to each individual using your OpenPro.com software. In order to use a protected function when passwords are required, each potential user must first enter a valid password.
To <post> is to take transactions from a temporary file and move them to a permanent file (where other transactions probably already exist). For example, in A/R invoices are initially entered into a temporary transaction file. After they have been entered and edited, they are posted to the more permanent A/R Open Item file.
<Templates> or <Recurring Bills> are sales that recur at a regular time interval. Examples are rent collected from tenants, loan repayment amounts, and regular monthly service charges.
These sales need to be entered as sales only once. Then, they can be selected periodically and turned into invoices.
A <sale> or <sales transaction> is a computer record of an invoice, finance charge, debit memo, or credit memo. Refer to the “Data Organization” section in this chapter for the definition of record.
This Accounts Receivable module generates sales history information that may be used by the OpenPro.com Sales Analysis module.
<SPOOL> is a computer acronym meaning send printer output off-line. Spooling is a process that generates a report to be printed at a later time. Instead of reports going directly to a printer, they are saved as a disk file. When directed, some saved reports can be printed in one long run (for example, overnight).
You assign a <statement> cycle to each customer in the customer record.
Statement cycles are used in one of the following ways:
You can print statements for designated cycle[s] on request.
As used in accounting, a <transaction> is a business occurrence involving money and goods or services. For example, a transaction occurs each time you gas up your car. You pay money in exchange for goods (gasoline).
In OpenPro.com software, <transaction> is the record of a completed business occurrence involving money and goods or services.
The records of sales made and payments received are examples of transactions from the area of accounting called Accounts Receivable. The records of purchases and the payments you make for such purchases are transactions from the accounting area called Accounts Payable. The records of quantities of goods received or exported are transactions from the area of accounting called Inventory Control.
The OpenPro.com Accounts Receivable module provides the following features:
We have included the necessary functions and instructions to enable you to upgrade from an earlier version of this same OpenPro.com module. Please refer to the Installation and System Guide for more information.