Lesson 3

Configuration of Cash Management

Back to F050: Basic Financial Configuration

Lesson 3: Configuration of Cash Management

For users to process cash transactions in Acumatica ERP, the cash management functionality has to be implemented in the system. This lesson describes the basic configuration to be performed, including specifying the preference settings for cash management, creating entry types, creating cash accounts, and modifying payment methods.

Cash Management: To Specify Cash Management Preferences

In this activity, you will learn how to specify the basic settings to be used for the cash management functionality.

Story

Suppose that the SweetLife company with an actual ledger has been created and the company's chart of accounts has been defined in Acumatica ERP. Acting as an administrator, you need to specify the cash management preference settings. You will specify the cash-in-transit account to be used, which is mandatory in the system, and the settings that make it easier for users to create entities when using the cash management functionality.

Process Overview

In this activity, you will specify cash management preferences on the Cash Management Preferences (CA101000) form.

Step: Specifying the Cash Management Preferences You specify the basic settings the system will use for the cash management functionality as follows:

  1. Sign in to the company you have prepared with the admin username.
  2. Open the Cash Management Preferences (CA101000) form.
  3. In the Cash-In-Transit Account box of the Reconciliation Settings section, select the 10500 - Cash in Transit account. This account is the only cash management setting that is required for a company.
  4. In the Posting and Release Settings section, make sure that the Automatically Post to GL on Release check box is selected. With this setting, all cash transactions will be automatically posted to the general ledger aer release.
  5. In the Data Entry Settings section, clear the Hold Transactions on Entry check box. With this setting, when new cash documents are saved, they will have the Balanced status, which simplifies the processing of these documents.
  6. Clear the Require Document Ref. Nbr. on Entry check box. This setting prevents users from having to specify a reference number for cash transactions and deposits created in the system.
  7. On the form toolbar, click Save.

Activity Recap

In this activity, we have illustrated how to set up cash management preferences—the cash-in-transit account, the settings for the posting and release of cash management documents. Lesson 3: Configuration of Cash Management | 22

Cash Management: Entry Types

In Acumatica ERP, you use entry types to classify cash transactions for correct processing and to provide default values for transaction settings.

Entry Types

An entry type functions like a transaction template, providing default values for a transaction and indicating how the transaction should be processed in the system. When you define an entry type on the Entry Types (CA203000) form, you specify the type of transactions and documents for which the entry type can be used in the Module column, selecting one of the following options:

  • CA (default option): The entry type that is used for creating cash transactions (receipts and disbursements) or recording bank service charges on cash management, accounts receivable, and accounts payable forms. These transactions affect the balances of GL accounts only; that is, they do not affect customer or vendor balances.
  • AP: The entry type that is used for creating cash management transactions for which the system creates prepayments (for transactions that are disbursements) or refunds (for transactions that are receipts) in accounts payable. These transactions affect vendor balances. The AP entry type is used only on cash management forms.
  • AR: The entry type that is used for creating cash management transactions for which the system creates payments (if the transaction is a receipt) or refunds (if the transaction is a disbursement) in accounts receivable. These transactions affect customer balances. The AR entry type is used only on cash management forms. In general, the configuration of entry types consists of the following steps:
  1. You determine which types of cash transactions the company usually generates.
  2. You create the required entry types by using the Entry Types form.
  3. On the Cash Accounts (CA202000) form, you associate each entry type you have created with the cash account that is involved in the cash transactions of the entry type.

Cash Management: To Create an Entry Type

In this activity, you will learn how to define an entry type, which categorizes cash operations in the system.

Story

Suppose that as an administrator, you need to define entry types for cash operations of the SweetLife company. For now, an entry type for recording bank service charges is needed.

Process Overview

In this activity, you will create an entry type on the Entry Types (CA203000) form.

Step: Defining an Entry Type To define an entry type, perform the following instructions:

  1. Sign in to the company you have prepared with the admin username. Lesson 3: Configuration of Cash Management | 23
  2. On the Entry Types (CA203000) form, create a new record.
  3. In the Entry Type ID column, type BANKFEE.
  4. In the Disb./Receipt column, select Disbursement.
  5. In the Entry Type Description column, type Bank Fees.
  6. In the Module column, make sure that CA (the default setting) is selected.
  7. In the Default Offset Account column, select 61100 - Bank Service Charges.
  8. On the form toolbar, click Save to save the entry type.
    When you create cash accounts, you can assign this entry type to the necessary cash accounts. For details, see Cash Management: To Create Cash Accounts.

Activity Recap

In this activity, we have illustrated how to create a Disbursement entry type in the system.

Cash Management: Cash Accounts

Cash accounts are used to keep records of the outgoing and incoming payments and cash. You can create cash accounts that represent bank accounts, amounts of cash on hand, or amounts of cash in transit. Each cash account is linked to a general ledger account.

Configuration of Cash Accounts

In general, the configuration process of a cash account involves the following steps:

  1. You determine which existing GL account the cash transactions will be recorded to, or you create a GL account designated for this purpose.
  2. You create the cash account and link it to the GL account that you decided to use for this purpose.
  3. If any transactions may have been posted to the GL account before you created the cash account and linked it to the GL account, you run validation of the cash account balance.
    This configuration is enough for you to start making funds transfers between your cash accounts. To be able to record transactions other than funds transfers (cash entry transactions and incoming and outgoing payments), you also need to perform the following steps:
  4. You configure the following entities:
  • Entry types: You use entry types to classify cash transactions so that they can be processed correctly. For details on entry types, see Cash Management: Entry Types.
  • Payment methods: You use payment methods to define the way the money is transferred into and out of the organization. For details on payment methods, see Cash Management: Payment Methods.
  1. You associate entry types and payment methods with the appropriate cash accounts.

Cash Management: To Create Cash Accounts

In this activity, you will learn how to create cash accounts in the system. Lesson 3: Configuration of Cash Management | 24

Story

Suppose that as an administrator, you need to add cash accounts to the system, as requested by the accountant of the SweetLife company. You will create cash accounts that correspond to the following GL accounts: 10100 - Petty Cash and 10200 - Company Checking Account.

Process Overview

In this activity, on the Cash Accounts (CA202000) form, you will create a cash account and a company checking account to be used with this cash account.

Step 1: Creating the Cash Register Account To configure SweetLife's cash register account, do the following:

  1. Sign in to the company you have prepared with the admin username.
  2. On the Cash Accounts (CA202000) form, add a new record.
  3. In the Summary area, specify the following settings:
  • Cash Account: 10100
  • Account: 10100 - Petty Cash This box holds the GL account to which this cash account is linked, so that cash transactions can be traced in the general ledger.
  • Description: SweetStore Cash Register
  1. On the table toolbar of the Payment Methods tab, click Add Row.
  2. In the Payment Method column, select CASH.
  3. On the form toolbar, click Save.

Step 2: Creating the Company Checking Account To configure a cash account to be used with the company checking account, do the following:

  1. While you are still on the Cash Accounts (CA202000) form, click Add New Record on the form toolbar.
  2. In the Summary area, specify the following settings:
  • Cash Account: 10200
  • Account: 10200 - Company Checking Account
  • Description: Checking Account
  1. On the table toolbar of the Payment Methods tab, click Add Row.
  2. In the Payment Method column of the added row, select CHECK.
  3. On the table toolbar of the Entry Types tab, click Add Row.
  4. In the Entry Type ID column of the new row, select BANKFEE.
  5. On the form toolbar, click Save.

Activity Recap

In this activity, we have illustrated the following:

  1. The system administrator created a cash account for the new company and specified a payment method for this account. Lesson 3: Configuration of Cash Management | 25
  2. The system administrator created a checking account for the new company, specified a payment method for it, and assigned an entry type to this account.

Cash Management: Payment Methods

In Acumatica ERP, you can configure the payment methods that your organization uses to pay its vendors, as well as the payment methods that are used by customers to pay your organization. The settings of the payment methods describe how the particular payment is done and provide the default cash account to be used to record payments. Acumatica ERP has predefined payment methods that can be adjusted to the business needs of an organization.

Payment Method Setup

You use the Payment Methods (CA204000) form to review the predefined payment methods and update them. (You can also define new payment methods on this form.) On this form, you perform the following general steps to set up a payment method:

  1. In the Summary area, you specify the identifier, the means of payment (Credit Card, Cash/Check, or Direct Deposit), and the description.
  2. You use the appropriate check boxes to specify how you want the payment method to be used. If the payment method is used for customer payments, you select the Use in AR check box. If the payment method is used for payments to vendors, you select the Use in AP check box.
  3. On the Allowed Cash Accounts tab, you add rows for each of the cash accounts to be linked to this payment method, and you specify the appropriate settings for each listed account. The linked cash accounts can include regular cash accounts and clearing accounts.
  4. If necessary, you modify the settings on the Settings for Use in AR and Settings for Use in AP tabs.
  5. In the Summary area, you make sure that the Active check box is selected so that the payment method can be used.

Payment Method Deactivation

On the Payment Methods (CA204000) form, you can deactivate a payment method if you do not want it to be used for new payments. If a payment method has been deactivated, the unreleased payments that use this payment method cannot be processed on the Process Payments / Print Checks (AP505000) form, but they can be released. You can select an inactive payment method in the Payment Method box on the Release Payments (AP505200) form to release the payments that use this payment method.

Cash Management: To Modify a Payment Method

In this activity, you will learn how to set up a payment method for use in accounts receivable and accounts payable.

Story

Suppose the SweetLife company uses checks to pay for its vendor bills and to receive payments for customer invoices. Acting as an administrator, you will modify the CHECK payment method (which is predefined in the system) so that it can be used in accounts receivable and accounts payable. Lesson 3: Configuration of Cash Management | 26

Process Overview

In this activity, on the Payment Methods (CA204000) form, you will update the settings of the CHECK payment method.

Step: Setting up the CHECK Payment Method for Use in AP and AR To make the needed changes to the CHECK payment method, which will be used in accounts payable and accounts receivable, do the following:

  1. Sign in to the company you have prepared with the admin username.
  2. Open the Payment Methods (CA2040PL) list of records, and select the CHECK payment method. The system opens the payment method on the Payment Methods (CA204000) form.
  3. In the Summary area, select the Use in AR check box.
  4. Make sure that the Use in AP check box is selected.
  5. On the Allowed Cash Accounts tab, for the 10200 cash account, select the AP Default, Use in AR, and AR Default check boxes. Payment methods are linked to cash accounts, and you have selected the 10200 cash account as the default one for the payment method used in accounts payable and in accounts receivable.
  6. On the form toolbar, click Save.

Activity Recap

In this activity, we have illustrated how to modify a payment method that has been predefined in the system so that it can be used in accounts payable and accounts receivable. Lesson 4: Configuration of Credit Terms | 27