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You're reading from  Microsoft Dynamics NAV 2016 Financial Management - Second Edition

Product typeBook
Published inJan 2017
PublisherPackt
ISBN-139781786469496
Edition2nd Edition
Tools
Dynamics NAV
Concepts
Enterprise Resource Planning
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Authors (3):
Anju Bala
Anju Bala
author image
Anju Bala

Anju Bala is MCT/MCP/MCTS in Microsoft Dynamics NAV and AX. She is an ITIL Expert and Prince 2 certified as well. She has both business and technical skills and has been working with Dynamics NAV since 2010. She started in the ERP world as a trainer, but soon evolved the skill set of a complete Dynamics NAV professional, including all the tasks involved in Dynamics NAV implementation: consulting, analysis, development, implementation, training, and support to end users. Over the course of her Dynamics NAV career, Anju has often been designated as the primary person responsible for the success and failure of a Dynamics NAV implementation. Her extensive career in the Dynamics NAV business is evidence of her success rate and expertise. She specializes in Microsoft Dynamics NAV and Microsoft Dynamics AX. You can find out more about her and get in touch with her through her LinkedIn profile at https://in.linkedin.com/in/balaanju.
Read more about Anju Bala

Cristina Nicolas Lorente
Cristina Nicolas Lorente
author image
Cristina Nicolas Lorente

contacted on 9 may '16
Read more about Cristina Nicolas Lorente

Laura Nicolàs Lorente
Laura Nicolàs Lorente
author image
Laura Nicolàs Lorente

Laura Nicols Lorente started working with Dynamics NAV back in 2005, first in the support department, mostly solving functional issues and doubts. She soon jumped to full deployment: consulting, analysis, development, implementation, migration, training, and support. Right at the beginning, she realized that it was very important for a Dynamics NAV consultant to have a deep knowledge of business workflows. Technical skills are just not enough. So she started training herself in accounting, taxation, supply chain, logistics, and so on. She discovered a whole new world and found it very interesting. After having enough consultancy experience, she got to manage the first project on her own. And then, she realized that even tech and business knowledge is not enough; she also needed management skills. So, after reading different management books and trying different approaches on the projects she worked on, she decided to deepen her knowledge by taking a master's degree in project management. She is now transitioning to agile management and agile development for better project success. She continues her training in the three areas (tech, business workflows, and management) whenever she gets a chance to. The Web is a huge source of inspiration for her: groups, forums, blogs, books, and so on. She also contributes by sharing her knowledge and experience with the Spanish Dynamics NAV community. Laura is also a coauthor of the book Implementing Microsoft Dynamics NAV 2013, which had really good comments coming from different Dynamics NAV experts.
Read more about Laura Nicolàs Lorente

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Chapter 2. Managing Payments and Banks

The sales and purchase cycle does not finish after the goods are shipped, or the services are provided, and the invoice has been issued. After that, the company has to charge for items delivered and has to pay for services received.

The management of advanced payments, cash payments, or deferred payments is of vital importance for the company. In this chapter, we will learn how to do the following:

  • Manage different payment methods such as payment registrations

  • Handle incoming and outgoing payments in NAV

  • Import bank reconciliation

Managing due dates

When you start working with a new customer or vendor, you reach an agreement with them on when are invoices due. On the Payments tab of the customer and vendor card, you select the Payment Term tab that suits the agreement. After that, the program will automatically calculate the due date when you create an invoice.

Payment terms

The Payment Terms page contains one line for each set of Payment Terms the company uses. You can create as many payment terms as you need.

Every set of payment terms must contain a Due Date Calculation formula that the program uses together with the document date of the invoice to calculate the due date. In addition, you can also specify a Discount Date Calculation formula and a Discount % that will be used to calculate discounts on the basis of early payments.

Navigate to Departments/Financial Management/Receivables/Setup to see the full list, which is shown in the following screenshot:

The payment term code is assigned to each customer by filling...

Using credit cards and other payment methods

Different payment methods, used both by customers and vendors, can be defined at Departments/Financial Management/Receivables/Setup/Payment Methods.

Note that both CASH and CREDITCARD have a Bal. Account No. defined. When you post an invoice with one of the payment methods selected, the system will create and post the payment against the invoice, so you don't have to manually do it later on. This is useful when the payment is done at the same time the invoice is raised.

When you use the credit card payment method in a sales order or invoice, you have to specify which credit card will be used. Credit cards are created on the customer card, through the Credit Cards - Credit Cards action found on the ribbon. Information commonly required for credit cards has to be filled in, such as the card type, the holder's name, the card number, and the expiry date. Once the credit card is selected, an authorization against the total invoice amount is required...

Posting payments

When you pay or are being paid, you need to register the transaction in your system, no matter what method you have used. To do so, you use the Cash Receipt Journal window or the Payment Journal window. Both work the same way, but the Payment Journal can also be used to print checks. To post a payment, you need to inform:

  • The customer that is paying you

  • The bank account that they used to make the payment

  • The invoice that is being paid

  • Consider the following example:

Imagine that customer 20000, Selangorian Ltd. has paid us for invoice 103032, which was due on 02/09/2017. Let's follow the steps needed to post the payment:

  1. Access the Cash Receipt Journal window from Journals/Cash Receipt Journals.

  2. Select the BANK section and double-click on it.

  3. Create a new line on the journal with the following information:

    Posting Date

    Document Type

    Document No.

    01/26/2017

    Payment

    This gets filled by a series number.

  4. To indicate the customer that is paying:

    Customer balances

    The balance is the total amount a customer owes you or you owe to a vendor. Customer and vendor balances can be seen on their card through a field called Balance (LCY). LCY stands for Local Currency. This means that, regardless of the currency used, amounts are always translated to your local currency.

    To learn the details of the balance amount, you can click on the amount and the corresponding ledger entries will be shown. This can be seen in the following screenshot:

    As you can see, customer 20000, Selangorian Ltd. has seven pending invoices. Two of them are already due (they are shown in red) and invoice 00-8 has been partially paid (note that the remaining amount is lower than the original amount).

    Which invoice has been paid?

    Customer 20000, Selangorian Ltd. has had many other transactions in the past. In the previous screenshot, we just viewed open transactions, but we can see them all by going back to the card and clicking on Ledger Entries in the Navigate tab.

    To see...

    Payment registration

    The payment registration functionality is a unique method of handling customer receipts without creating entries through the Cash Receipt Journal. This functionality is designed to support users in tasks involved in balancing internal accounts, using actual cash figures to ensure effective collection from customers. To perform this, we have to perform the following steps:

    1. Go to Departments/Financial Management/Cash Management/ Payment Registration .

    2. Set up Payment Registration.

    3. Change Amount Received or Date Received: The Payment Registration window shows all open customer ledger entries. Normally, you only have to mark the entries, post them, and then you are done.

    4. Lump Payment: This covers multiple invoices for one customer with a single payment.

    5. Finance charge for overdue amounts: A Finance Charge Memo window can be created directly from the Payment Registration window by selecting the Finance Charge Memo function.

    6. Handling payment discounts: When a payment...

    Payment reconciliation

    A payment reconciliation journal is where we specify payments, either incoming from customers or outgoing to vendors, that have been recorded as transactions on your electronic bank site and that need to be applied to their related open entries.

    You can perform the following main activities in the Payment Reconciliation Journal window:

    • Import files with bank transactions for payments that have been made to or from your bank account and then automatically apply the payments to their related open entries.

    • Review and manually apply payments that were applied automatically to wrong open entries, or were not applied at all, from the Payment Reconciliation Journal window, shown as follows:

    Payment application rules

    In the Payment Application Rules window, you set up rules to govern how payments should be automatically applied to their related open entries when you use the Apply Automatically function in the Payment Reconciliation Journal window. For this, refer to the following screenshot:

    The bank data conversion service

    The bank data conversion service is available out-of-the-box without additional charge to all Microsoft Dynamics NAV customers.

    The bank data conversion service is used for the following:

    • Enabling users to export payment files from Microsoft Dynamics NAV in any format required by their bank to enable efficient processing of outgoing payments

    • Enabling users to import bank statement files from any bank in the format required by Microsoft Dynamics NAV to enable efficient reconciliation of payments and their bank accounts

    • Providing support for many banks on all Microsoft localized versions of Dynamics NAV

    Making payments with the bank data conversion service or SEPA credit transfer

    In the Payment Journal window, you can process payments to your vendors by exporting a file together with the payment information from the journal lines. You can then upload the file to your electronic bank where the related money transfers are processed.

    To enable SEPA credit transfers,...

    Bank account currency restrictions

    After you have set up your bank accounts, you may need to transfer an amount between two bank accounts that have the same and different currency codes.

    The following screenshot shows the bank account currency restriction for posting a transaction:

    Bank reconciliation

    The purpose of the bank reconciliation feature is to check whether the statements your bank provides you with agree with the bank account ledger entries that you have been creating while posting payments. It helps you check whether there is any cash movement that you have not posted into the system yet. At the end of a given period, the statement ending balance must equal the balance of the bank account in Dynamics NAV.

    To create a new bank account reconciliation, follow these steps:

    1. Go to Departments/Financial Management/Cash Management/Bank Account Reconciliations and click on New.

    2. Select the WWB-OPERATING code in the Bank Account No. field.

    3. Select 03/31/2017 as the statement date and write -600000 as the Statement Ending Balance.

    4. Click on the Suggest Lines... option from the ribbon bar and click on OK.

    5. New reconciliation lines are created as copies of open bank ledger entries.

    6. Check the reconciliation lines against the bank statement lines.

    7. Post the lines.

    In the preceding...

    Summary

    In this chapter, you learned how to manage payments using different payment methods both for customers and vendors. We have also learned how to create and post those payments in the system and how they affect the balances for customers and vendors. Finally, we have seen how to reconcile banks ledger entries in Dynamics NAV with the actual bank statement.

    In the next chapter, we will see how different accounting processes are managed.

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    Authors (3)

    author image
    Anju Bala

    Anju Bala is MCT/MCP/MCTS in Microsoft Dynamics NAV and AX. She is an ITIL Expert and Prince 2 certified as well. She has both business and technical skills and has been working with Dynamics NAV since 2010. She started in the ERP world as a trainer, but soon evolved the skill set of a complete Dynamics NAV professional, including all the tasks involved in Dynamics NAV implementation: consulting, analysis, development, implementation, training, and support to end users. Over the course of her Dynamics NAV career, Anju has often been designated as the primary person responsible for the success and failure of a Dynamics NAV implementation. Her extensive career in the Dynamics NAV business is evidence of her success rate and expertise. She specializes in Microsoft Dynamics NAV and Microsoft Dynamics AX. You can find out more about her and get in touch with her through her LinkedIn profile at https://in.linkedin.com/in/balaanju.
    Read more about Anju Bala

    author image
    Cristina Nicolas Lorente

    contacted on 9 may '16
    Read more about Cristina Nicolas Lorente

    author image
    Laura Nicolàs Lorente

    Laura Nicols Lorente started working with Dynamics NAV back in 2005, first in the support department, mostly solving functional issues and doubts. She soon jumped to full deployment: consulting, analysis, development, implementation, migration, training, and support. Right at the beginning, she realized that it was very important for a Dynamics NAV consultant to have a deep knowledge of business workflows. Technical skills are just not enough. So she started training herself in accounting, taxation, supply chain, logistics, and so on. She discovered a whole new world and found it very interesting. After having enough consultancy experience, she got to manage the first project on her own. And then, she realized that even tech and business knowledge is not enough; she also needed management skills. So, after reading different management books and trying different approaches on the projects she worked on, she decided to deepen her knowledge by taking a master's degree in project management. She is now transitioning to agile management and agile development for better project success. She continues her training in the three areas (tech, business workflows, and management) whenever she gets a chance to. The Web is a huge source of inspiration for her: groups, forums, blogs, books, and so on. She also contributes by sharing her knowledge and experience with the Spanish Dynamics NAV community. Laura is also a coauthor of the book Implementing Microsoft Dynamics NAV 2013, which had really good comments coming from different Dynamics NAV experts.
    Read more about Laura Nicolàs Lorente

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