Register customer payments by checks
There are two ways to handle payments received by checks. CPA Books support both approaches so that you can use the one that better fits your habits.
Register customer payments by checks
There are two ways to handle payments received by checks. CPA Books support both approaches so that you can use the one that better fits your habits.
Undeposited Funds: once you receive the check, you record a payment by check on the invoice. (using a Check journal and posted on the Undeposited Fund account) Then, once the check arrives in your bank account, move money from Undeposited Funds to your bank account.
One journal entry only: once your receive the check, you record a payment on your bank, paid by check, without going through the Undeposited Funds. Once you process your bank statement, you do the matching with your bank feed and the check payment, without creating a dedicated journal entry.
We recommend the first approach as it is more accurate (your bank account balance is accurate, taking into accounts checks that have not been cashed yet). Both approaches require the same effort.
Even if the first method is cleaner, CPA Books support the second approach because some accountants are used to it (quickbooks and peachtree users).
Invoice creation
Draft invoices can be manually generated from other documents such as Sales Orders, Purchase Orders,etc. Although you can create a draft invoice directly if you would like.
An invoice must be provided to the customer with the necessary information in order for them to pay for the goods and services ordered and delivered. It must also include other information needed to pay the invoice in a timely and precise manner.
Option 1: Undeposited Funds
Configuration
- Create a journal Checks
- Set Undeposited Checks as a default credit/debit account
- Set the bank account related to this journal as Allow Reconciliation
From check payments to bank statements
The first way to handle checks is to create a check journal. Thus, checks become a payment method in itself and you will record two transactions.
Once you receive a customer check, go to the related invoice and click on Register Payment. Fill in the information about the payment:
- Payment method: Check Journal (that you configured with the debit and credit default accounts as Undeposited Funds)
- Memo: write the Check number
This operation will produce the following journal entry:
Account | Statement Match | Debit | Credit |
|---|---|---|---|
Undeposited Funds | X | 01/07/2015 | 100.00 |
Bank | 100.00 |
If you use this approach to manage received checks, you get the list of checks that have not been cashed in the Undeposit Funds account (accessible, for example, from the general ledger).
Option 2: One journal entry only
These is nothing to configure if you plan to manage your checks using this method.
From check payments to bank statements
Once you receive a customer check, go to the related invoice and click on Register Payment. Fill in the information about the payment:
Once you receive a customer check, go to the related invoice and click on Register Payment. Fill in the information about the payment:
- Payment method: the bank that will be used for the deposit
- Memo: write the check number
The invoice is marked as paid as soon as you record the check.
Once you will receive the bank statements, you will do the matching with the statement and this actual payment. (technically: point this payment and relate it to the statement line)
With this approach, you will get the following journal entry in your books:
Account | Statement Match | Debit | Credit |
|---|---|---|---|
Undeposited Funds | X | 01/07/2015 | 100.00 |
Bank | 100.00 |
If you use this approach to manage received checks, you can use the report Bank Reconciliation Report to verify which checks have been received or paid by the bank. (this report is available from the More option from the Accounting dashboard on the related bank account).
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