The software allows for accrual accounting: you can record an entry (commitment), while specifying that you have not yet collected all or part of the sum (payment).
The management of payables and receivables is part of a commitment logic: it allows an accounting follow-up even if the payment has not yet been done.
This module is only available in Ninja and Shaolin accounting levels, on which you will find more information in this article (add article hyperlink).
This article addresses the following points:
- Principle of the payables and receivables module
- Record a payable/receivable entry
- Follow-up of payables and receivables
- Cancel a payable or a receivable
Principle of the payables and receivables module
What is a payable/receivable?
In both cases, there is a commitment made by a person or organization to honor a payment due to a third party. The latter has the right to demand payment. A distinction is therefore made between:
- The receivable: a third party undertakes to settle a payment that corresponds to revenue in my accounts. As a creditor, I have the right to demand payment.
- The payable: I undertake to pay a third party the payment corresponding to an expense in my accounts. I have an obligation to pay the amount as a debtor.
How the feature works
The Payables/Receivables module involves several steps:
- The Commitment: an expense or revenue entry is entered with a subsequent payment. The entry is displayed in the Payables/Receivables page in order to monitor it;
- The Payment: a payment entry reduces the amount still to be paid;
- Settle the entry: the sum of the payments is equal to the amount of the commitment, the payable/receivable is therefore balanced and is no longer displayed in the module.
Record a payable/receivable entry
The software allows a simplified entry of payables/receivables within the framework of commitment accounting.
Record a receivable (outstanding revenue)
Revenue (payment not yet received)
Go to the Accounting > Book Entry > Revenue page to record revenue by entering the label, the date of the commitment, the amount, and the account.
Example: You have received a grant from a town hall that will not be paid for 3 months. You want to enter it in your accounting as a receivable.
Then click on Subsequent Payment to indicate the payment as receivable, and click on Save. This will create a receivable in accounting.
If you do not see the option "Subsequent Payment", you have chosen the "Panda" level. To change this level, go to Accounting > Settings and choose a higher level.
You can also optionally enter the fields concerning the subsequent payment: the date on which you expect to receive the payment, the amount, and the payment method used.
It is also possible to add multiple payment installments by clicking on Add Installment, for example, if your grant will be paid in installments.
Partially paid revenue
If part of the revenue is paid on the record date, enter that payment in the Subsequent Payment section by clicking on Payment has already been made and entering the amount and date.
Record a payable (outstanding expenses)
The steps will be the same in the case of a payable: go to the Accounting > Book Entry > Expense page to enter the expense.
Example: you have recorded the purchase of a computer, but have not yet paid for it. You want to record it in your accounting as a payable.
Then enter the amount, the title, the account, and the date of the commitment.
You can also add a payment received as well as multiple installments if needed. Once recorded, the entry will be displayed on the Payables/Receivables page for tracking purposes.
Follow-up of payables and receivables
Payment monitoring: payments awaiting
Once you have entered your payables or receivables, you will find them in the Accounting > Book Entry > Payables and Receivables page.
Only the entries created from the expense/receipt entry will be visible in the payables/receivables follow-up page. Entries created in the advanced entry will not be displayed.
You can thus display entries according to:
- The time period
- The amount is still to be paid
- The amount of the entry (advanced search)
- The related person (advanced search)
If an entry does not appear, make sure you have selected a sufficiently long period of time, increase the number of results displayed (Max. number of results) and click on Search.
Settle a payable or a receivable
On this page click on the "Detail" icon of the payable or receivable you wish to settle.
You will be able to settle your payable by clicking on Add a payment and filling in the payment information (amount, date, etc.). Furthermore, you can add as many payments as you need, depending on the number of due dates.
When recording the payment, this message may be displayed:
You can consolidate several payables/receivables entries together to settle them with a common payment. We invite you to consult the article consolidates payments for more explanation.
Cancel a payable or a receivable
One of the expenses or revenues you recorded was never debited/credited to your account, so you want to reverse the accounting operation.
When can I cancel a payable or receivable
From a practical point, if you have reliable information that the payable or receivable will not be paid, you can cancel it.
For example, an issued check will not be debited after 1 year and 8 days, but the debt or claim remains valid. You can also waive a debt for financial reasons (third party not solvent) or if it is a deliberate choice ("commercial" gesture).
In case of doubt, you can contact your accountant.
Accounting logic of a payable/receivable cancellation
There are mainly 2 approaches:
- Reversal: the debt/receivable entry is canceled by making the opposite entry.
For example: for a debt, the expense account used at the beginning is credited.
- Extraordinary revenue/expense: a revenue/expense of the same amount is recorded.
For example: for a debt, the bank account is credited.
Recording a payable/receivable cancellation in the software
The recommended method is the reversal method: we will record an inverse entry, which we will then consolidate with the payable /receivable to settle it.
Record the cancellation entry
To record the cancellation of a payable, go to the Accounting > Book Entry > Revenue page. Reversing a payable will be done by recording an expense entry.
In the account field, select refund/credit note. A new Select field will appear: select the account related to the entry to be canceled.
Ensure to check the subsequent payment when recording the entry. This will create a receivable (payable to be reversed) or a payable (receivable to be reversed) that will need to be consolidated with the entry to be reversed to settle it.
A few important points to remember when entering a cancellation:
- Unless it is a partial cancellation, the amount of the cancellation entry is the same as that of the entry to be canceled;
- If a person is linked to the entry to be canceled, he/she must also be linked to the cancellation entry;
- The account to be refunded is the one that was used in the entry to be reversed.
Consolidating the entry to be canceled with the reversal entry
Once the reversal has been recorded, you must indicate to the software that it is canceling a particular payable/receivable entry. This is done by consolidating the entry to be canceled and the reversal entry.
We recommend that you consult the article consolidating payments for more explanations.
Once the two entries have been grouped:
- They are displayed in the details of the entry to be canceled (1 expense and 1 revenue of the same amount)
- The remaining amount to be paid will be equal to $0
- They will no longer be listed in the payables/receivables monitoring page.
To go further
We advise you to read the following articles related to the topics discussed above: