Configure Advanced Payables and Receivables

Contents 1 Configuration of Accounting information in the Business Partner 2 Configuration of Payment Methods 3 Configuration of Financial Accounts 4 Accounting Entries 5 Defining alternate matching algorithms 6 Configuring Business Partners 6.1 Payment Methods 6.2 Payment terms 6.3 Financial Account 7 Payment Execution Process 8 Bank Statement file 9 Configuration of Write Off Accounts

Configuration of Accounting information in the Business Partner

The Finance role should be used.

Each payment within the system (receivable or payable):

• has a business partner associated with it (customer or vendor)
• is in default initial status -- when it is created

Navigate to the Master Data Management || Business Partner screen and see two tabs:

• [Customer >> Customer Accounting]: to manage accounting related to statuses of receivables
• [Vendor/Creditor >> Vendor Accounting]: to manage accounting related to statuses of payables

To configure the accounts, navigate to the Master Data Management || Business Partner window and switch to the [Customer Accounting] tab. Default configuration should already exist for each general ledger configuration.

Fields to note:

• Customer Receivables No. - account where the posting will be made for receivables.
• Customer Prepayment- account where the posting will be made for prepayments.

This configuration process is identical for the supplier and vendors. If this functionality is required for each business partner then these steps will be required for each business partner. However, to make sure newly defined business partners do not require this lengthy process, configure the Business Partner Categories accordingly so that the accounts will be predefined there and that new business partners will inherit them.

Configuration of Payment Methods

As many payment methods as required can be defined. Each payment method can be configured with different business logic for collections and payments. Navigate to the Financial Management || Receivables & Payables || Setup || Payment Method screen.

Here is the explanation of the main fields:

• Payment In section:
  • Allowed - Indicates whether this payment method is allowed for receiving payments in the given financial account. Once a payment method allows payment in transactions the rest of configuration values are displayed.
  • Automatic Receipt -  When flagged system automatically generates a received payment transaction when the Sales Invoice is processed for the given pair of payment method and financial account (taken from customer tab).
  • Received payments in other currencies - indicates that this payment method allows receiving payments in other currencies than the Financial Account default currency.
  • Automatic Deposit - When flagged system automatically generates a financial account transaction once a Receive Payment document is processed, moving its status from Payment Received to Payment Deposited Not Cleared.
  • Execution Type - Drives the way a payment is executed. When Manual is selected, system assumes that the execution of the payment will be done manually outside OB application. Execution processes (such as electronic instructions for the bank to collect or pay an amount) can be deployed through modules.
  • Upon Receipt Use - Account to be used as target account for posting of Received Payment transactions.
  • Upon Deposit Use - Account to be used as target account for posting of Financial Account Deposit transactions.
  • Upon Clearing Use - Account to be used as target account for posting of Financial Account Reconciliation transactions.

• Payment out section:
  • Allowed - Indicates whether this payment method is allowed for making payments against the given financial account. Once a payment method allows payment out transactions the rest of configuration values are displayed.
  • Automatic Payment -  When flagged system automatically generates a make payment transaction when the Purchase Invoice is processed for the given payment method and financial account (taken from vendor tab). You can use this setup for example for cash over the counter transactions.
  • Make payments in other currencies - indicates that this payment method allows making payments in other currencies than the Financial Account default currency.
  • Automatic Withdrawn - When flagged system automatically generates a financial account transaction once a Make Payment document is processed, moving its status from Payment Made to Payment Withdrawn Not Cleared. You can use this setup for example for credit card payments.
  • Execution Type - Drives the way a payment is executed.
    • Manual: The creation of a payment is a manual event. For example, payment by cash.
    • Automatic: The system will automate the creation of a payment document by launching a process to support payment. An example might be a check printing utility that automatically prints checks, or a credit card interface to make payment by credit card. When Automatic is selected, system displays additional fields to be configured:
    • Execution Process - Business logic applied to a payment to be made. Additional modules can be installed to provide additional business logics for payment execution (Example: Printing of a check in a given format).
    • Deferred - If this execution process should be used to automate the process, but it will be triggered at a later point in time (by someone launching the execution process manually), then please ensure this option is selected. As an example, you may wish to print all checks in a batch run at the end of the day.
  • Upon Payment Use - Account to be used as target account for posting of Make Payment transactions. This would normally either be left blank (if financial transaction is to be created later in the workflow), or have an Intransit Payment Account or a Financial Account selected.
  • Upon Withdrawal Use - Account to be used as target account for posting of Financial Account Withdrawn transactions. This would normally either be left blank (if no financial transaction required for the Withdrawal event) or have a Withdrawn Payment Account selected.
  • Upon Clearing Use - Account to be used as target account for posting of Financial Account Reconciliation transactions. This would normally be the Financial Account, but could be left blank if the receipt has been posted to the Financial Account earlier in the process (perhaps upon payment or upon withdrawal)

These Payment Method  settings can be modified per individual financial account. To do so, use the Financial Management || Receivables and Payables || Transactions || Financial Account screen and see the [Payment Method] tab. The Finance role should be used.

When adding a new payment method to a financial account, the system assigns the default configuration defined for that given payment method. Those default values can be overwritten for each financial account.

Configuration of Financial Accounts

For all cash locations or bank accounts that will be used, a Financial Account record should be entered. To create a financial account as well as configure the chart of accounts behind them, use the Financial Management || Receivables and Payables || Transactions || Financial Account screen:

Fields to note:

• Header section:
  • Type - Selecting between Bank and Cash.
  • Business Partner - a Financial Account should also link to a business partner (a vendor in this case) since the bank is a provider of services for which you are charged (fees). For each new bank, a new business partner (vendor) should also be opened.
• Bank section:
  • Bank Code - first four digits of the bank account number that uniquely identify a bank (Spain)
  • Branch Code - second four digits that uniquely identify a specific branch of the bank (Spain)
  • Bank Control Digit - the ninth digit that serves as a control digit (Spain)
• Bank Account section:
  • Currency - currency of the bank account
  • Account Control Digit - tenth digit of the account number (Spain)
  • Partial Account Number - Last ten digits of the account number (Spain)
  • Account No. - full account number in a generic format. Used when a bank does not use the IBAN format.
  • IBAN - Unique international account identifier according to the IBAN standard.
• Additional fields to note:
  • Matching Algorithm: Algorithm selected for Matching Using Bank Statement feature. Standard algorithm is provided as the default one to be selected by the APR Module. Any other algorithm can be provided through a module so that it perfectly manages the bank statement matching.

Upon creating a new bank account, the system automatically assigns its accounting based on the defaults configured inside the Financial Management || Accounting || Setup || General Ledger Configuration screen, [Defaults] tab:

These accounting settings can be modified per individual financial account. To do so, use the Financial Management || Receivables and Payables || Transactions || Financial Account screen and see the [Accounting Configuration] tab. The Finance role should be used to do so.

Here is the explanation of these accounting fields:

• General section:
  • Bank Fee Account - Account used to post the commissions or minimum amount differences to as explained earlier.
  • Bank Revaluation Gain Account - Account used to post the currency conversion gains to.
  • Bank Revaluation Loss Account -  Account used to post the currency conversion losses to.

It is possible to post the imported Bank Statement. There is checkbox Enable Bank Statement. If the checkbox is selected, two additional fields are shown:

• Bank Asset Account
• Bank Transitory Account

Above accounts will be used for the Bank Statement Posting.
The Bank transitory account should match the "Cleared" payment accounts (payment in/out) in order to get accounting balanced.

• Payment In section:
  • In Transit Payment Account - Transitional account used to post to upon completion of each financial statement. 
  • Deposited Payment Account - Account used upon each incoming transaction for a financial account. 
  • Cleared Payment Account -Account used upon each incoming transaction reconciliation for a financial account.

• Payment out section:
  • In Transit Payment Account - Transitional account used to post to upon completion of each financial account transaction.
  • Withdrawal Payment Account - Account used upon each outgoing transaction for a financial account. 
  • Cleared Payment Account -Account used upon each outgoing transaction reconciliation for a financial account.

The defaults and the individual bank accounts are configured according to national accounting laws.

[Accounting History] is the tab where all the accounting entries related to transactions of the given financial account are displayed.

In the Payment Method tab the payment methods will be entered that are applicable for that particular financial account. When selecting a payment method for a Financial Account, the defaults of that payment method are loaded but can be overwritten to make it specific for that particular Financial Account.

Accounting Entries

The accounting configuration allows the user to decide when he or she wants to recognize the received amount in the bank or cash account. The system can be configured in such a way that the user can decide which account is to be used in each of the steps of the payment cycle (Receipt/Made - Deposited/Withdrawn - Cleared/Reconciled). This allows the user to decide whether an intermediate account or not should be used for the bookings and also when the bank or cash asset should be recognized. A general ledger posting of the Payment Receipt (Using Upon receipt use "In Transit Payment Account") looks like this:

A general ledger posting of the Payment Receipt (Using Upon receipt use "Deposited Payment Account") looks like:

There is a third account (clearing account) that can be defined so that every step in the flow can generate its own accounting entry. Accounting can be configured to decide which steps will generate accounting and which accounts will be used in each of the steps. The user can decide whether the payment event generates accounting or not, whether financial account transaction recognition event generates accounting or not and whether reconciliation events generate accounting or not and as well which account will be used for each event. This configuration can be defined per financial account and payment method as seen in the previous section. Whenever an event is disabled for accounting the document will show the following message when trying to post it:

Defining alternate matching algorithms

During the reconciliation process, Openbravo uses a matching algorithm to automatically match transactions in a financial account with transactions contained in a bank statement.

You can develop alternate matching algorithms as a Java class implementing the interface org.openbravo.advpaymentmngt.utility.FIN_MatchingAlgorithm. Once developed, you can register that class for usage in the Financial Management || Receivables & Payables || Setup || Matching Algorithm screen.

Configuring Business Partners

Payment Methods

Once the payment methods have been defined, a default payment method to be used on orders or invoices can be assigned to each business partner. To do so, follow these steps:

• Login as client administrator
• Navigate to Master Data Management || Business Partner screen
• Find a customer (business partner)
  • switch to the [Customer] tab and specify:
  • the default means of payment in the Payment Method field and
  • the Financial Account to which the payment will be automatically received (for sales transactions where the payment method is set to automatically receive payment). For more information see the Financial Account section.
• Find a vendor
  • switch to [Vendor/Creditor] tab and specify:
  • the default means of payment in the PO Payment Method field and
  • the Financial Account from which you will automatically make payment (for purchase transactions where the payment method is set to automatically make payment). For more information see the Financial Account section.

Payment terms

Please refer to the WIKI configuration manual: http://wiki.openbravo.com/wiki/ERP/3.0/Configuration_Manual/Business_partners#Setting_up_Payment_Terms

Financial Account

Once Financial Accounts have been defined, the default Financial Account to receive a payment from or making payment to can be assigned to business partners.

In order to associate a default Financial Account:

• Login as client administrator
• Navigate to Master Data Management || Business Partner
• Find a customer
  • Switch to the [Customer] tab,
  • Specify the default Financial Account in the Financial Account field
• Find a vendors
  • Switch to the [Vendor/Creditor] tab
  • Specify the default Financial Account in the Financial Account field

Payment Execution Process

The Payment Execution Process controls:

• The format of the payment documents / files to be created by the payment run. For example, cheque printing formats or electronic bank file layouts.
• The interaction with the user in order to ensure that the system has enough information to execute a payment run effectively. For example, asking the user to provide the number of the next cheque on the printer.

It is not possible to change the configuration of the payment run execution processes from the Openbravo user interface. It is, however, possible to view available payment methods:

• Navigate to Financial Management || Receivables & Payables || Setup || Execution Process where Openbravo provides two example payment processes:
  • Simple Execution Process
  • Print Check Simple Process
• Each payment process is associated with an Execution Process that is a Java class containing the logic necessary to correctly complete the payment process. In order to change the behaviour of these example processes (or add additional payment formats) it is necessary to edit the example Java class objects or add new execution processes.

Bank Statement file

To import Bank Statements, several modules are available for the different file formats:

• Standard OFX: to import bank statements with an .ofx format. For more information, see the documentation available: http://wiki.openbravo.com/wiki/Projects/StandardOFX
• Cuaderno 43: the bank statement format used in Spanish companies.

For information about how to develop a module for a different file format:

http://wiki.openbravo.com/wiki/ERP/2.50/Developers_Guide/How_To_Create_Bank_File_Import_Module

Configuration of Write Off Accounts

The Company Admin role should be used.

The configuration of the account where write offs (losses) will be posted to needs to be done within the [Defaults] tab of the Financial Management || Accounting || Setup || General Ledger Configuration screen:

Select the correct account within the Write-off field by using the assistant popup dialog that is opened upon clicking the tiny icon to the right of the field.

Categories: WorkInProgress | Configure Order to Cash