Treatment of On Account Entries – Customers and Vendors
What is the SOP ?
SOP in FInsys, SOP in any Software of the world
SOP is that
Step 1 : “enter that entry in the Debit Credit of the relevant party” same day of Receipt / Payment.
Step 2 : When you get the Payment Advice / details, edit the voucher and knock off the bills properly.
Step 3 : If your ERP does not allow the editing rights to you, then instead of editing, pass a “3z” voucher, to adjust the on account receipt with the Pending invoices, properly
Benefit : This “3z” voucher will knock off the Bills and the receipts and still not come as a entry in the printable Finsys Statement of Account
Once again : SOP to all team members of the MLG BPO Team and all Finsys Customers, and all accounting community in general
Do things correctly
if payment advise is mentioned, then do as per payment advise
if on account is mentioned, enter on account
if advance is mentioned, enter as advance
if partial payment, enter properly against that bill
Correct Closing Balance of Customers (Accounts Receivable) in the Ledgers and Statement of account
Note in the Bill wise outstanding, this on account entry will come as a separate row.
And it will continue, till it is properly knocked off against the correct bills
Correct Closing Balance of Vendors (Accounts Payable) in the Ledgers and Statement of account
Note in the Bill wise outstanding, this Vendor side, “On account” entry will come as a separate row.
And it will continue, till it is properly knocked off against the correct bills
Correct Debtors & Creditors for the Bank stock and debtors report.
Closing ledger balance will be correct. ((whereas if you had them in the suspense account then the closing will not be correct ))
However, the on account entry will remain. If you dont send 0-30-60-90 days report format to bank. Then no problem. Else, you must try to solve the pendencies of editing the on account entries, before sending out the Bank 0-30-60-90 days reports as per SOP
Removes chances of anybody sending a wrong Payment Reminder Letter , or Balance Confirmation, when it is already received but unknown due to parking it wrongly in Suspense account.
Benefit: Comparatively better info
Removes chances of anybody giving double payment, when it is already paid “on account”. This is a big mistake in case you put the on account entry in suspense A/c.
Benefit: Comparatively Safer Vendor payments
GST 180 days limit, else disallow ITC Credit
GST says pay vendor within 180 days, so, again proper knock off is required. Always try to avoid the tendency of some people to do the FIFO knock off. That is not a good policy
Payments to MSME within 45 days limit, else MSME Act / Companies Act Problems
This law says pay vendor within 30/45 days, so, again proper knock off is required.
Always try to avoid the tendency of some people to do the FIFO knock off. That is not a good policy
Thank you.
Contact Finsys ERP Team for suggestions and action on 9015220220 ( Extn : 4 ) for (Accounts Queries)
or Contact MBB – the Accounting BPO division of Finsys Infotech Limited for business ideas how your books can be faster , and ontime, always