Customer Invoice to Cash
Introduction
The Customer Invoice to Cash process involves the process from the moment the invoice is created until the moment the customer's debt (payment) is settled/reconciled.
Abstract Business Process
The abstract Customer invoice to cash business process is defined by the following diagram:
The process can be summarized in two steps:
- Issuing the invoice
- Managing payments
Roles Involved
The following roles are involved within this process:
- Finance - all of the invoicing and payment collection is done by the finance staff
Configuration
Some configuration needs to be done before performing this process. Please refer to the Configuration Manual.
Step by Step
Issue the Sales Invoice
The Finance role should be used.
There are five ways of creating a Sales invoice:
- Creating it from scratch (in case no previous order/shipment exists)
- Generating several of them automatically
- Retrieving lines from pending Sales Orders or Goods Shipments to be invoiced
- Copy all lines from an already existing Sales Invoice
- Using the Create Invoices from Sales Orders screen
1. Creating a Sales Invoice from Scratch
Using the Sales Management || Transactions || Sales Invoice window create a new record:
Fields to note:
- Business Partner - select the customer to be invoiced
- Order Reference -An internal reference number used by the Business Partner can be entered in this field.
- Transaction Document - select the AR Invoice, do not use other options!
- Invoice date - the date when an invoice is issued
- Accounting date - the date that defines to which accounting period this transaction will be posted to
- Payment method - payment method that the customer will use to pay this invoice
- Payment terms - the payment term that defines the due date of the invoice
Go to [Lines] tab and add one line per product:
Fields to note:
- Product - select the product to be invoiced
- Invoiced quantity - quantity of the product to be invoiced.
- Net Unit price - price applied to the product
- Tax - tax to be applied to the product's amount (automatically pulled from product definition)
- Line Net Amount - Invoiced Quantity multiplied by Net Unit Price. Price of the line before taxes.
Back in the [Header] click the Complete button.
2. Generating Sales Invoices Automatically
Navigate to the Sales Management || Transactions || Generate Invoices menu item that opens a new window. Parameters entered here will describe the invoices to be generated automatically:
Fields to note:
- Invoice Date - date that will be used as the Invoice Date for the generated documents
- Organization - organization to create invoices for.
- Sales Order - leave blank to consider all sales orders or select a specific one to generate an invoice for. Note that only pending orders are included inside this dropdown.
- Business Partner - if none is selected, all business partners with pending invoicing will be considered. If a specific customer is selected here, only sales order to that business partner will be considered for automatic invoicing.
Click OK and all orders pending to be invoiced that match the filters defined above will automatically be invoiced. A Sales Invoice document is created for each Business Partner.
When the process is finished, a message will be shown with the document numbers of the invoices that have been created.
To see the generated invoices, use the Sales Management || Transactions || Sales Invoice window.
3. Retrieving Lines from Sales Orders or Goods Shipments
Create a new invoice and fill all required fields inside [Header].
Please refer to the Creating an Invoice from Scratch section for description of fields in [Header].
Then, click the Create lines From button to bring up a new dialog:
The Order and Shipment/Receipt dropdowns will be filled with documents pending to be invoiced for the business partner of the invoice selected inside [Header]. After selecting a sales order or goods shipment, the lines pending to be invoiced will be shown in the grid. Select the desired line(s) and click OK. The selected line(s) will be copied into the [Lines] tab where they can be additionally manually edited (e.g. changing the quantity, unit price, etc...).Back in the [Header] complete the document using the Complete button.
4. Copying all Lines from an already existing Sales Invoice
Create a new invoice and fill all required fields inside [Header]. Please refer to the Creating an Invoice from Scratch section for description of fields in [Header].
Then, click the Copy Lines button to bring up a new dialog. Select the Sales Invoice from which the lines should be copied, select whether the price should be retrieved from the pricelist and click OK to execute.
This process can be repeated to select line of other Sales Invoices also.
5. Using the Create Invoices from Sales Orders screen
In the Create Invoices from Sales Orders screen, all Sales Order that are eligible for Sales Invoice creation are listed. Filters for date range, Business Partner and Organization can be applied.
Select the Sales Orders for which a Sales Invoice should be created and click Process to execute.
Linking of documents
When this process is finished, the original order, the underlying shipment and the final invoice will all be linked.For example, each shipment's line will be linked to the sales order line it delivers for. Within the [Lines] of the Goods Shipment window the user can click on the links to drill down.
Each sales invoice line will also be linked both to the sales order line and the shipment line it invoices. Within the [Lines] of the Sales Invoice window the user can click on the links to navigate to either of them.
The original sales order line will also have the Delivered Quantity and the Invoiced Quantity fields inside [Lines] updated. This way, sales staff can easily see the status of their orders.
From the Sales Order Header by clicking 'Linked Items', the connected Sales Invoice and Goods Shipment information is displayed and by clicking the links, the user can navigate to these documents.
Payment Plan
When completing an invoice, a payment plan will be created related to the invoice. Revise it inside [Payment Plan]:
These are the relevant fields:
- Due date - the deadline by which this payment is supposed to be paid. This date is calculated depending on the Invoice date and the Payment terms
- Payment Method- the form of payment of the invoice
- Expected Amount- full amount To be paid in the due date.
- Received - Amount already paid.
- Outstanding - Amount that remains unpaid.
- Last Payment Date - Date of the last payment received against this payment plan.
- Number of payments - Number of payment events against this payment plan.
A brief summary of the payment plan information of each invoice appears in the invoice header. These are the relevant fields:
- Total Paid - Amount that has been paid against the invoice.
- Outstanding Amount - Amount not yet paid.
- Days till Due - Number of days for the debt to due.
- Due Amount - Amount planned to be already paid.
At this point the payment status is Awaiting Payment
Monitor Payments
Using the Finance role, the Sales Management || Transactions || Sales Invoice window is available to search open invoices of a business partner and have a good overview of individual outstanding payments from invoices.
- Total paid - Amount paid for the selected invoice.
- Outstanding Amount - Amount pending to be paid for the selected invoice.
- Days till due - Number of days left to reach the next maturity date. If it is a negative value it reflects number of over due days
- Due Amount - Total amount that has already reached the maturity date.
- Payment complete - Flag indicating if an invoice is fully paid.
- Last calculated on date - Date on which this info was last calculated.
The Payment Report displays payments and their statuses:
To see which invoices need to be collected, you can filter in this report by the status 'Awaiting Payment'.
Also, you can either see all payments by leaving the overdue checkbox unselected or just the overdue payments by selecting the overdue checkbox.
Review Cash Forecast
The Finance role should be used.Forecast report is not available yet.
Review Aging Receivables
The Finance role should be used.Payment Aging Balance report is not available yet.
Perform Collection Actions
The following will be explained:
- Receive Payments
- Write Off Bad Debt
Receive Payments
There are two ways to receive a payment:
- using the Payment In screen
- using the Add Payment button directly within the corresponding Sales Invoice
Both are described below.
Payment In
Navigate to Financial Management || Receivables & Payables || Transactions || Payment In screen and create a new record. Fill out the information reflecting the amount received and the business partner involved.
Fields to note:
- Received From - Customer owner of the debt.
- Payment Method - Form of payment used.
- Deposit to - Financial Account were amount is going to be deposited.
- Amount - Amount received.
Press Add Payment Details button to link the amount to existing open transactions with the selected customer (orders or invoices).
Fields to note:
- Amount - Amount received. Amount can be changed in this screen
- Transaction type - Filter the transactions to be displayed:
- Orders - Open orders for the selected business partner
- Invoices - Open invoices for the selected business partner
- Invoices or Orders - Both open invoices and open orders.
- GL Items - Used to receive amounts not related to any invoice or order for example a subsidy.
If the amount paid is less than the outstanding amount, the system will offer the options to Write of the difference (See next section) or Leave as an underpayment (the remaining debt will be paid afterwards). In case that the amount paid is more than the outstanding amount, the system will offer the options to leave credit to be used later or refund amount to customer. When selecting the option to leave the credit to be used later, the available credit information will appear on future payments and can be selected to be used. When selecting the option to refund the amount to the customer, the system adds a credit payment.
Press Process button and select processing option (Action regarding document)
Fields to note:
- Action regarding document:
- Process received payment(s) - Payment is processed and documents are marked as paid.
- Process received payment(s) and deposit - Payment is processed, documents are marked as paid, and payment amount is reflected in the financial account (bank).
The Payment Status is changed from Awaiting Payment to Payment Received.
After process completion, the description field is updated with Invoice and Order numbers and the amount left as credit.
Add Payment Button
It is also possible to register a payment directly against a sales invoice. Find the sales invoice and click Add Payment button to link a payment to the given invoice.
Fields to note:
- Payment Document No. - Reference number for the added payment.
- Received From - Owner of the debt. In this case the invoiced customer.
- Payment Method - Form of payment used.
- Deposit to - Financial Account were amount is going to be deposited.
- Actual Payment - Amount received.
- Payment Date - Date of the payment event.
- Transaction type - Filter the transactions to be displayed:
- Orders - Open orders for the selected business partner
- Invoices - Open invoices for the selected business partner
- Invoices or Orders - Both open invoices and open orders.
The amount entered in Actual Payment field will be automatically spread among the pending debts. First, debts associated to the given invoice will be marked 'to be paid', and in case the amount is bigger that the grand total of the invoice then it will mark next invoices 'to be paid' till the whole amount is consumed.
If the amount paid is less than the outstanding amount, the system will offer the options to Write of the difference (See next section) or Leave as an underpayment (the remaining debt will be paid afterwards). In case that the amount paid is more than the outstanding amount, the system will offer the options to leave credit to be used later or refund amount to customer. When selecting the option to leave the credit to be used later, the available credit information will appear on future payments and can be selected to be used. When selecting the option to refund the amount to the customer, the system adds a credit payment.
Press Process button to complete the transaction.
Fields to note:
- Action regarding document:
- Process received payment(s) - Payment is processed and documents are marked as paid
- Process received payment(s) and deposit - Payment is processed, documents are marked as paid, and payment amount is reflected in the financial account (bank)
The payment status is changed from 'Awaiting Payment' to 'Payment Received'.
Write Off Bad Debt
When there is a difference between the amount paid and the outstanding amount which results into an underpayment, there is an option to write off the debt.For example, Customer A owes 758,01 euros but pays 758 euros via transfer. The remaining amount (0,01 euros) is so small that most of companies will no longer manage that debt and will write it off.
Just by selecting Write off the difference option, the remaining 0.01 euros will be posted in the ledger as a loss.
Execution Process
For collection there is no execution process defined, so the Execution Type is set to Manual. This means that the payment status Awaiting Execution is not used for collection.
When needed developers have the option to create a module with a payment execution process for different payment methods such as Bill of Exchange, Promissory Notes, etc.
The execution process will then be activated from the Payment In window or from the Payment Execution window.
Payment Transaction
Navigate to the Financial Management || Receivables & Payables || Transactions || Financial Account || Account window and select a defined Financial Account.
Financial Accounts are used in Openbravo to represent accounts at financial institutions, such as bank accounts, credit cards, electronic payment services, as well as cash and petty cash registers.
Go to the Transactions tab to see the transactions associated with this financial account.
Fields to note:
- Account: The account number and name of the financial account.
- Last reconciliation: The date of the last time this account was reconciled with the bank statement from the bank. A count of the number of unmatched items is shown for today's date.
- Current Balance: The current balance of the account.
- Hide reconciled transactions: By default the grid only shows unreconciled transactions.
Grid:
- Date: The transaction date.
- Business Partner: The name of the business partner.
- Payment No: The reference to the Payment Document (e.g., the cheque number)
- Description: The text added to the payment transaction upon entry.
- Paid Amount: The amount of the payment made.
- Received Amount: The amount of the payment received.
- Cleared: Whether the transaction has been matched to a transaction on the Bank Statement.
Add Transaction
The user can add a Transaction (Payment, GL item or Bank Fee) to the account by clicking on the Add Transaction button.
In the grid all the completed payments will appear. Select them and press OK button. The user can also add a new payment clicking on the Add Payment button. In a new popup all the pending payments will be shown based on the selected filtering option.
After clicking on the Process button, the application will return to the previous popup and the recently added payment will be shown in the grid. This is the result of adding all the payments as transactions.
The payment status has changed from 'Payment Received' to 'Deposited not Cleared'.
Cash & Bank
Please refer to the Financial Account to Reconciliation chapter of the user manual for more information on how to reconcile Financial Account transactions.
Accounting
There is no specific accounting procedure or configuration that this process requires apart from the regular business partner and product configuration.
Posting of a Sales Invoice
When a Sales Invoice is posted to the general ledger, a posting will be similar to:
The information of the post is retrieved according to the configuration of:
- Customers Receivables No. account in [Customer Accounting] tab under Master Data Management || Business partner window
- Tax Due account in Financial Management || Accounting || Setup || Tax rate window, under [Accounting] tab
- Product revenues account in Master Data Management || Product window under [Accounting] tab