Understanding the A/R Module – Part 1
In order to really understand the A/R module of flowerSoft, you really have to know what happens when you enter an order into flowerSoft.
First of all, A/R or Accounts Receivable deals only with orders having an ON ACCOUNT method of payment and therefore only with “house” accounts.
Orders with any other type of payment do not interface or affect the A/R module.
Many of you are familiar with the term “out of balance” account that flowerSoft uses to indicate to you that something is wrong with the account.
“How does an account go out of balance?”, you ask. Well, there is a couple of ways but first let me explain how flowerSoft keeps track of A/R transactions.
When you enter an ON ACCOUNT order in flowerSoft, three different files are affected by the transaction.
- The customer profile record is updated to reflect a new outstanding balance.
The “Charges” field is increased by the total amount of the order and the “Balance” field is recalculated by subtracting the amount in the “Payments” field from the amount in the “Charges” field.
So now we have an “Outstanding” balance in the customer’s profile record.
- flowerSoft also adds a record of the transaction to a file we’ll refer to as the “statement transactions” file. The only transactions that go in this file are orders with an ON ACCOUNT method of payment, finance or rebilling charges, and “on account” payments or credits to “house” accounts.
The records in this file are never deleted. So if you add all the debits and subtract from that amount all the credits, you should come up with an “outstanding” balance. This “outstanding” balance should match the amount in the “Balance” field in the client’s profile record.
- flowerSoft also adds another record to a file we’ll call the “open invoices” file. When an order with an ON ACCOUNT method of payment gets created, a record is added to this file for the amount of the order.
When finance/re-billing charges are calculated, a record (even if for $0 Dollars) is also added to this file.
When a customer makes an “on account” payment, the records in this file either get deleted if paid in full or their outstanding balance is reduced by the amount of the payment applied against them.
When a customer has several invoices with outstanding amounts and the payment received does not match the outstanding balance, flowerSoft displays a list of the outstanding invoices. Those invoices are the records kept in this file.
If you add up all the outstanding balances in this file, you come up with another “outstanding” amount for each account. This amount should also match the “outstanding amount” of the statement transactions file and the “Balance” field of the client’s profile file.
So in essence, you have a customer’s outstanding balance in 3 different files. If these balances are not all the same, the account is said to be “out of balance.”
If everything goes right during the order-taking and payment-recording processes, you will not have any out of balance accounts. However, this is not always the case.
Sometimes you will have an error occur after the invoice prints (always after the invoice prints) that will prevent the posting to these files to complete and that is when an out of balance account will come up.
It may be that only 2 or the 3 files got updated or maybe only 1 of the 3. If the order-taking process does not complete without generating an error, an out of balance account will be created.
The same is true for the on account payments entry. It should complete without errors.
Another way to create an out of balance account is to enter a COD or Pay on Pickup order for the account. The account will be out of balance until that order is paid.
Why? Because the “Charges” amount was increased by the order, but since there was no payment at the time the “Payments” field did not also increase.
So now that balance in the client’s profile record will be different than the balance in the “statement transactions” file and the “outstanding invoices” file.
This, however, is an acceptable situation because it will be corrected as soon as you pay the COD or Pay on Pickup order.
So for now, I just want you to understand what takes place when an ON ACCOUNT order get created.