Treatment of On Account Entries – Customers and Vendors

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