Unapplied Cash Receipts - GP 10.0

[appelq]

A customer may do one of the following:
1. Send us a check in error (hard to believe but true)
2. Over Pay a specific Invoice
3. Pay us money but not tell us what invoice to apply the money to.

How does GP handle this Unapplied Cash?
I guess what I want is a way to accept the cash from Customer A and Debit Cash, but Credit an account other than A/R. Also, I don't want this cash to show up in a way that reduces the amount due from that customer in total, or reduce the balance on the Aged Accounts Receivable reports.

The reasoning is that:
1. We use the A/R balance as collateral for our line of credit at the bank and do not want to under report the amount available to borrow against.
2. We don't know if the money we just received is even ours to keep, so until we know what to apply it to, it should stay out of the way, but still be trackable for application later.

Any thoughts?
thanks in Advance.
Chuck

 

[VictoriaYudin]

I think you have a number of options:
1. Enter the cash receipt against the customer and AR, as you're doing now, take the hit on your borrowing base. You are, after all, getting the cash into your bank account.
2. Don't enter the check at all (nor cash it) if you're not sure it's your money. No hit to your borrowing base, but you also don't have the cash.
3. Enter the cash received in Bank Rec, as a debit to cash and a credit to something like 'customer deposits' or suspense. Once you figure out where the cash belongs, enter a credit memo in AR or a Payables transaction to send someone a check back. This is my least favorite because of the fact that it creates additional work when you figure out what you're going to do with that money, and you cannot enter a cash receipt anymore, you would need to enter a credit memo, makes the AR records somewhat less clear.

I guess a lot of this depends on how much money you're talking about. If it's small amounts here and there, you might just be better off with #1. If it's large amounts, you want to verify that you're not violating any agreements with your bank by doing this and also verify with your CPA as to where that money should be held in the meantime, I believe technically it should be a liability.

One thing I would NOT do, however, is change the GL account on the cash receipt. For 2 reasons:
1. You're going to start getting into reconciliation issues.
2. You AR subledger balance will still show the cash receipt, even if the AR GL account does not, so if you need to give you bank backup of the AR total, then you're still in the same position of showing lower AR than you want to.


Victoria
Flexible Solutions, Inc.

 

[appelq]

Thanks for the reply.

One problem is that the Amount that fits into this "Unapplied" category is usually only part of the check sent in.
We may get a check for 10,000 referring as an example, $1000 each to 9 known invoices. the remaining $1000 is "Unapplied" for one of the reasons in my first post.

question: In GP, can you accept a check from customer ID "ABC" and mark that unapplied amount to another Customer ID? I'm thinking of setting up Dummy Customer ID to hold the Unapplied amount. this way the customer ABC's balance is not affected, and I can put the Dummy Cust ID in a Class of customers ineligible for the borrowing base.

The open question would be tracking the money, and later applying it correctly to an actual invoice for an actual customer ID later on.

 

[VictoriaYudin]

The only way to split up the application of a check between different customers it to enter 2 separate cash receipt transactions - so in your example you would enter a $9,000 cash receipt for the actual customer and a $1,000 cash receipt for the dummy customer. But even if you did this, you would not be able to later on 'move' that cash receipt to apply it to the actual customer. You'd have to enter a credit to the actual customer and a debit to the dummy customer to accomplish this.

Maybe this is just a reporting issue - if it's ok to be able to pull out certain customers, why not change the report that shows what your borrowing base is to also add back any unapplied payments? For example, your customer's 'real' balance is $15,000, but $1,000 is an unapplied payment, then your report should show that this customers borrowing base is $16,000. I don't know what reporting you're doing, most likely you would not be able to do this in Report Writer. I know when we've worked with customers that needed to give AR reports to the bank for lines of credit and such, we created custom reports for them.

Victoria
Flexible Solutions, Inc.