Accounts Payable Processing
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Payment Control
Payment processing and payment control are determined by the following settings in the Fund Accounting Profile:
- Overpayment Control Level field settings:
F - Fatal - Prevents overpaying the purchase order amount.
W - Warning - Issues a warning if you are overpaying the purchase order amount but allows overpayment.
N - None - Allows overpayment of the purchase order amount without issuing a warning. - Overpayment Control Type field settings:
A - Amount - Allows you to set the upper limit for PO overpayment based on the dollar amount entered in the profile's Overpayment Amount Limit field.
P - Percentage -Allows you to set the upper limit for PO overpayment based on the percentage entered in the profile's Overpayment Percentage Limit field.
B - Both - Allows you to use both a dollar amount and a percentage to set the upper limit for PO overpayment. The system applies whichever setting allows for the higher overpayment amount.
N - None - Does not use an overpayment limit. - Pay Prior To Receive field settings:
F - Fatal - Prevents you from making a final payment for an item that has not been received. If you have the security resource to override this field setting, you can continue.
W - Warning - Issues a warning if you try to make a final payment for an item that is not fully received but still allows you to enter the payment.
N - No Checking - Allows final payment regardless of whether the PO item is fully received.
Budget Monitoring
The system monitors budgeting when you enter a payable's accounting distribution. For each expenditure budget account you enter, the system refers to the Check Budget Balance field in the appropriate Organization Chart record.
Following are the field's settings and how they affect entry of a payable record's accounting distribution:
N - No Checking - Allows distributing amounts exceeding the expenditure budget account's budget balance. No warning is issued.
W - Warning - Issues a warning if you try to distribute amounts exceeding the expenditure budget account's budget balance. The system still allows you to enter the payment.
F - Fatal - Prevents distribution of amounts exceeding the expenditure budget account's budget balance.
Ledger Transactions
When you finish entering a payable record, the system generates the following ledger transactions:
- For expenditure budget accounts in the accounting distribution, the expenditure amount is increased and if applicable, the encumbrance amount is reduced. These transactions are recorded in the Expenditure Ledger.
- The same entries are made on the Project Ledger for any project budget accounts included in the payable's accounting distribution.
When payments are posted to the Expenditure Ledger, the following General Ledger balance sheet account transactions occur:
Debit
Expenditure Control account
Credit
Accounts Payable account
When an encumbrance is involved in a payment, these additional balance sheet account transactions occur on the General Ledger:
Debit
Reserve for Encumbrance account
Credit
Encumbrance Control account
- The payable record is added to the Transaction Ledger with a Transaction Code of 21 - Accounts Payable. You can search for the record using the Transactions page. For details, refer to Detailed Displays.
- If an encumbrance is involved, the system updates the Encumbrance Ledger record's Payment Balance by adding the payment amount. If the payment exceeds the record's Remaining Balance, then the excess amount is recorded in the Change Balance field.
Likewise, if the transaction is a final payment less than the encumbrance's Remaining Balance, then the system updates the ledger record's Change Balance to show the difference between the Payment Balance and Original Amount as of the final payment. In this case, the Change Balance shows a negative amount.
Vendor Information and Vendor Checks
- If you assigned a 1099 payment type for the vendor when entering the payable's accounting distribution, then the system updates the associated Vendor record's 1099 Amount fields in the Vendor List.
- Once you save a payable record, you can print a vendor check using the Fund Accounting > Entry & Processing > Vendor Checks > Vendor Checks option.
- When entering a payable record in the Post Accounts Payable page, you can use the Single Check field to group invoices with the same vendor. To verify the grouping of vendor payments, use one of the following options: Fund Accounting > Reports > Accounts Payable Reports > Cash Requirements or Fund Accounting > Reports > Accounts Payable Reports > Cash Requirements in Check Format.
For information on generating accounts payable checks, refer to Print Vendor Checks. - If you need to issue a credit memo to a vendor, you must set up two payables: one for the amount of the credit memo and one to record the payment where you are applying the memo.
- Be sure to leave the Single Check field blank for both of these records. When you process vendor checks, enter a due date that includes both the credit memo and the vendor payment.
- The system will print a vendor check that subtracts the credit amount from the payment amount. The check stub will print a row showing that the credit memo was applied to the payment.
- The system does not print checks for negative amounts, so make sure you follow these rules if you need to apply a credit to a vendor payment.
Electronic Funds Transfer
Based on your selection of a Vendor or Alternate Vendor Address code in the Post Accounts Payable page, the system displays an indicator next to the page's Invoice Date field showing how the payable will be handled in terms of the EFT (Electronic Funds Transfer) feature.
The EFT indicator that displays is based on three fields in the EFT/ACH tab of the Vendor List or Alternate Vendor Address record: Transaction Code, Bank Code, and Bank Account Number.
- If the payable's vendor does not have data set up in these three fields, then the message No EFT displays.
- If the vendor has the appropriate fields set up, then the system selects the transaction code from the Vendor or Alternate Vendor Address record to determine which EFT indicator to display:
Transaction Code EFT Indicator
22 - Checking Credit EFT - Checking
23 - 2nd Checking Prenote Prenote - Checking
24 - 1st Checking Prenote Prenote - Checking
32 - Savings Credit EFT - Savings
33 - 2nd Savings Prenote Prenote - Savings
34 - 1st Savings Prenote Prenote - Savings - Electronic funds transfers can only be processed when the EFT - Checking or EFT - Savings indicator displays.
- If EFT payments are allowed, the Print Check checkbox displays in the Post Accounts Payable page instead of the Single Check checkbox. The Print Check field enables you to determine whether the payable should be processed as a vendor check or included in an ACH file for electronic processing.
- Prenote transactions are included in the ACH file when a vendor check run includes EFT payments or when you run the EFT Prenotes option. A prenote transaction code shows that each record represents test data so the bank can verify the vendor's account information before processing payments.
For more information on EFT payments, refer to Payable Entry - Electronic Funds Transfer. Additional details are available in the following sections of Vendor Checks:
Accounts Payable Approval
If your site uses an approval process for accounts payable records, then the system will include an *Approval* field in the Post Accounts Payable page so you can select a code identifying the approval rules to apply.
In a case where approval processing is used, the system checks each distribution line item when you save the payable, and it applies approval rules from the Approval and Account Approval tables. An approval record is created for a payable item in each of the following circumstances:
- An approval level from the payable's approval code is required, and there is no dollar amount range associated with the level.
- The item's dollar amount falls within the minimum/maximum range for a required approval level from the payable's approval code.
- The item's distribution expenditure account falls within the range defined in a record from the Account Approval table.
Line items routed for approval are stored in batch files identified by the payable's Control Number. For a description of how approval processing affects payable entry, refer to Accounts Payable Approval.