View source | Discuss this page | Page history | Printable version   
Toolbox
Main Page
Upload file
What links here
Recent changes
Help

PDF Books
Add page
Show collection (0 pages)
Collections help

Search

Coworking:Payment Method

This article is protected against manual editing because it is automatically generated from Openbravo meta-data. Learn more about writing and translating such documents.
Back button.png   Back to Coworking:Financial Management


Contents

Introduction

Payment Methods represent means of payment employed by your enterprise or by a business partner, such as:

Each payment transaction is associated with a Payment Method. A payment method defines how a payment in/out is going to be managed within the receivables and payables Payment Cycle, and besides how it is going to be accounted.

Payment Methods are associated to Financial Accounts, so that payments can be registered in a bank or cashbook.
The payment methods which can be used within the payables and receivables management are the ones assigned to a Financial Account, therefore if any payment method configuration needs to be modified, that has to be done in the Payment Method tab of the financial account.

It is possible to associate multiple Payment Methods to a single Financial Account.
For instance, both checking and electronic payments may be associated to a single Financial Account as each payment method has its own configuration.


Payment Cycle

To better understand the configuration of a Payment Method, it is necessary to understand the flow of events within the payment cycle:

In the image below, a Simple Payment Workflow is shown:

Payment Method 01.png

The way to create each payment stage in Openbravo is described below:

First Stage:
A "Receipt" can be registed in:

A "Payment" can be registered in:

Above payment stages can create an accounting event depending on the payment method accounting configuration.

Second Stage:
A "Deposit" can be registed in:

A "Withdrawal" can be registed in:

Above payment stages can create an accounting event depending on the payment method accounting configuration.

Third and final Stage:
A "Reconciliation" can be registered in:

Above payment stage can create an accounting event depending on the payment method accounting configuration.

Payment Status

To better understand the configuration of the payment method, it is also necessary to understand the payment status related to the process steps.

During the whole Payment Cycle, the payment is defined by one status so the user knows the last step of the process that took place and the following step that should take place.

In the following explanation and diagram below, the different Payment Statuses are explained.

Payment Method 02.png


In more detail, the way those payment status change within the payables and receivables payment cycle is:

1. The Receipt of the money in or the Payment of the money out, before the transaction is confirmed on the bank account, changes the payment status to either:

If there is an execution process set up in the payment method, the extra action of executing that process changes the status from "Awaiting Execution" to either "Payment Received" or "Payment Made".

2. The Deposit of the payment in the financial account changes the payment status from "Payment Received" to "Deposited not Cleared"
and the Withdrawal of the payment from the financial account changes the payment status from "Payment Made" to "Withdrawn not Cleared".

3. The Clearing or reconciliation of the payments changes the payment status from either "Deposited not Cleared" or "Withdrawn not Cleared" to "Payment Cleared"

Payment Method

The image below shows the Payment Method window. That is the window where payment methods are configured.

However payment methods are assigned to financial accounts therefore a different configuration of a given payment method can also be defined in the payment method tab of the financial account window.

FinAccountPaymentMethod.PNG

As a consequence of that the same method of payment can have different configuration "versions" depending on the financial account it has been assigned to.

It is very important to remark that:

are the ones which are already assigned to a financial account.
In other words, it is not possible to use a payment method if it is not assigned to a financial account.

Finally, if it is required to review the payment method assigned to a business partner, the steps to follow for doing that are:

Payment Method configuration includes below features.


Payment Methods can be configured as explained below in detail:

Payment Method configuration

Payment In Configuration:

Payment Out Configuration:

One of the key features allowed by the payment method configuration is to get that two of the three payment cycle stages can be automated:

ManualAutomaticActions.png

As shown in the image above, if the Automatic Receipt/Payment and Automatic Deposit/Withdrawn are selected, the manual actions to execute are:

because, the Payment In/Out as well as the Deposit/Withdrawn transactions are automatically created.

If the Automatic Receipt/Payment and Automatic Deposit/Withdrawn are NOT selected, the manual actions to execute are:

Accounting Payment Workflow

Openbravo allows a flexible payment accounting process, that means that a payment associated to a given payment method can be posted or not in any of its Payment Cycle stages.

As already described a payment received from a customer goes through below stages:

Analogue situation happens while making a payment to a vendor:

Payment Method 10.png

For each step, it is possible to specify the default account for the receivables and payables cycles independently.

Each financial account needs to have at least one default account for both the receivables and payables cycle at either step 1, step 2 or step 3.

Both on the payables and receivables side, the first step containing an account represents the moment in which the supplier liability or customer receivables are cancelled.

For instance, if the Receive Payment Account is empty and you specify a Deposit Account, the customer receivables is cancelled at the moment of the deposit, not at the time of recording of the payment.

Any subsequent step having an account would offset the account in the previous step with the account in that step to represent the diminishing of the risk.

In other words, each of the stages can be posted in the windows/tabs where those ones are created if there is a value defined in the "Upon...Use" fields.

For instance:

It is important to remark that if any account is left empty that would imply that the process button "Post" is shown as "Post:Disable for accounting" in the corresponding window.

Examples

This section shows some "Payment Methods" examples and the flow of events of those payment methods:

Example 1: Payment by Check

The objective of this example is to show how to pay a purchase invoice linked to a "Check" Payment Method configured in such a way that all the payment stages are manual but the "Payment" creation and the "Check Number" registration:

The steps to follow are:

To get this example working "Check" Payment Method needs to be assigned to the Financial Account to be used.

Besides "Check" payment method needs to be configured as described below:

PaymentMethod CheckFA1.png

The vendor used in the example needs to have a the financial account used and "Check" payment method assigned in the Vendor tab.

And finally, the financial account used in the example needs to have the standard matching algorithm setup.

Let's review how to execute each of the steps listed above:

1. Creation and booking of the purchase invoice.

As already mentioned this action automatically creates the payment in the Payment Out window.
Once reviewed this payment can be processed.
The payment action to take while processing the payment out is "Process Made Payment(s)", therefore the payment is not automatically withdrawn from the Financial Account, first thing is to send a check to the vendor.
Once processed the status of the payment changes to "Awaiting Execution" as the check box "Deferred" is set to Yes.
Overall, this step means the registration of the transfer of money out before it is confirmed on our bank, what is missing now is to register the check number.

2. Registration of the check number after processing the payment created.

Payment Out window shows a process button named "Execute Payment", therefore the execution process can be executed to allow entering a check number.
Once executed the payment status changes to "Payment Made".

3. Posting of the Payment

The payment can be manually posted by the end-user in the Payment Out window or can be automatically posted by the Accounting Sever Process, if that is the case the label of the "Post" button would have automatically changed to "Unpost".
Payment posting looks like:
Account Debit Credit
Vendor Liability 10.000,00 EUR
Upon Payment Use the "In Transit Payment OUT Account" 10.000,00 EUR

4. Addition of the withdrawal transaction in the Financial Account which can the be posted

This step is done in the Financial Account used by using the "Add Transaction" process button.
Once done the payment is shown in the Transactions tab of the financial account window and changes its status to "Withdrawal not Cleared"
Overall, this step means the addition of the payment in the financial account once it is confirmed by our bank account, in our example once the money has been withdrawn from our bank account.
The withdrawal can be manually posted by the end-user in the Transactions tab of the financial account window or can be automatically posted by the Accounting Sever Process, if that is the case the label of the "Post" button would have automatically changed to "Unpost".
Withdrawal posting looks like:
Account Debit Credit
In Transit Payment OUT Account 10.000,00 EUR
Upon Withdrawal Use the "Withdrawal Account" 10.000,00 EUR

5. Import of the bank statement which allows the reconciliation of the withdrawal

The import of a bank statement can be done if the Financial Account has at least the "Standard" Matching Algorithm assigned and whenever a file import module is installed and its dataset applied.
If that is the case the import can be executed in the Financial Account by using the process button "Import Statement".
That import process allows to import bank statements having a "Standard ofx" format.
The bank statement and the bank statement lines can be reviewed once imported in the Imported Bank Statements tab of the financial account.
The financial account has now the deposit and withdrawal transactions as well as the bank statements lines. Those can be matched by using the process button Match Statement.
Once reconciled the payment status changes to "Payment Cleared".

Example 2: Wire Transfer

The objective of this example is to show how to register a customer payment linked to a "Wire Transfer" Payment Method configured in such a way that all the payment stages are manual but the "Deposit" creation in the financial account.

The steps to follow are:

To get this example working the "Wire Transfer" payment method needs to be assigned to the Financial Account to be used.

Besides "Wire Transfer" configuration needs to be as described below:

PaymentMethod WireTransfer1.png

Let's review how to execute each of the steps listed above:

1. Issue of the Sales Invoice

As configured in the payment method used while issuing the sales invoice ("Automatic Receipt" check box is set to "No"), no payment transaction document is going to be automatically created upon completion of the invoice.

2. Creation of the customer Payment or Receipt

As explained previously, the creation of the payment transaction is done manually:
In the Sales Invoice window by using the process button "Add Payment".
Or in the Payment In window by using the process button "Add Details"

3. Process of the Receipt

As "Automatic deposit" check box is set to "Yes" when processing the payment only the action "Process Received Payment(s) and Deposit" is enabled, this action automatically creates the deposit transaction in the Financial Account.

4. Posting of the deposit

The wire transfer can be manually posted by the end-user in the Financial Account - Transaction tab or can be automatically posted by the Accounting Sever Process, if that is the case the label of the "Post" button would have automatically changed to "Unpost". Payment posting looks like:
Account Debit Credit
Customer Receivables 10.000,00 EUR
Upon Deposit Use the "Cleared Payment Account" 10.000,00 EUR

5. Import of the the bank statement which allows the reconciliation of the deposit

The import of a bank statement can be done if the Financial Account has at least the "Standard" Matching Algorithm assigned and whenever a file import module is installed and its dataset applied.
If that is the case the import can be executed in the Financial Account by using the process button "Import Statement".
That import process allows to import bank statements having a "Standard ofx" format.
The bank statement and the bank statement lines can be reviewed once imported in the Imported Bank Statements tab of the financial account.
The financial account has now the deposit and withdrawal transactions as well as the bank statements lines. Those can be matched by using the process button Match Statement.
Once reconciled the payment status changes to "Payment Cleared".

Example 3: Payment with Cash

The objective of this example is to show how to register a customer payment by using "Cash" Payment Method configured in such a way that all the payment stages are automatic but the creation of the corresponding sales order.

The organization uses Openbravo to keep track of the sales which are paid in cash by their customers.

The steps to follow are:

To get this example working the "Cash" payment method needs to be assigned to the Financial Account to be used.

Besides "Cash" configuration needs to be as described below:

Payment Method 17.png

Let’s review how to execute each of the steps listed above:

1. Creation of the sales orders.

As already mentioned upon completion of the order, the corresponding goods shipment and sales invoice are automatically created.
As per the payment method setup, upon completion of the invoice/s the corresponding receipts and deposits are automatically created.
The payment status at this stage is Deposited not cleared.

2. Post the "Deposit

The deposit can be manually posted by the end-user in the Transaction tab of the financial account window or can be automatically posted by the Accounting Sever Process, if that is the case the label of the "Post" button could have automatically changed to "Unpost".

Deposit posting looks like:

Account Debit Credit
Customer Receivables 10.000,00 EUR
Upon Deposit Use the "Deposit Account" 10.000,00 EUR

3. Manual reconciliation of the deposits.

As the financial account does not have a matching algorithm configured, it is not possible to import bank statement lines to be later on matched against the financial account transactions, but to manually reconcile the financial account transactions by using the process button "Reconcile".
This process opens the "Reconciliation" window which shows all the deposits "Received In" and all the withdrawals "Paid Out" to be reconcile.
Once reconcile the payment status changes to "Payment Cleared".

Example 4: Payroll Payment by Wire Transfer

The objective of this example is to show how to register a "Payroll" payment and get it ready until it can be paid at the end of the month.

The steps to follow are:

To get this example working the payment method "Wire Transfer" assigned to the Financial Account to be used needs to have below configuration:

Let's review how to execute each of the steps listed above:

1. The first step is to create a GL Item to properly account the payroll payment.

2. The second step is to create the payroll payment in the Payment Out window.

3. The third step is to execute the payment as currently the payment status is "Awaiting Execution" because the check-box "Deferred" is set as "Yes" in the Payment Method.

4. The next step is to post the withdrawal in the Transaction tab of the financial account.

Account Debit Credit
GL Item Debit 10.000,00 EUR
Upon Withdrawal Use the "Withdrawal Account" 10.000,00 EUR


5. The final step is to reconcile the withdrawal in the financial account.

Example 5: Pre-payment against invoice

The objective of this example is to show how to register a prepayment against purchase invoice or sales invoice.

The steps to follow are:

To get this example working the payment method assigned to the Financial Account to be used needs to have below configuration:

Let's review how to execute each of the steps listed above:

1. Create an invoice

Create an invoice and complete it.

2. Create a payment against the invoice

The payment date must be prior the accounting date of the invoice. This way, you can generate a pre-payment.

3. Post the payment

You can see that additional entry is generated (from Payable/receivable to Prepayments)



Full list of Payment Method window fields and their descriptions is available in the Payment Method Screen Reference.

Back button.png   Back to Coworking:Financial Management

Retrieved from "http://wiki.openbravo.com/wiki/Coworking:Payment_Method"

This page has been accessed 713 times. This page was last modified on 13 June 2013, at 15:52. Content is available under Creative Commons Attribution-ShareAlike 2.5 Spain License.