Receipts, Payments, and Cash Application
This domain tests how cash enters Receivables and how it is matched and applied: manual receipts, automatic receipts, lockbox, AutoMatch, AutoCash, tolerances, and the difference between unapplied and on-account amounts.
Receipt processing
A receipt is created in a receipt method's currency and can be applied to specific transactions, left unapplied, or placed on account. AutoMatch matches receipts to transactions using identifiers such as transaction number, sales order, or purchase order, with amount and date tolerances. AutoCash applies a receipt by executing an ordered set of rules; each rule specifies an action such as apply to the oldest invoice, apply with discount, write off a small difference, or leave unapplied. Rule order matters because the first rule that can act wins.
Worked example
A customer sends 1,000 for invoice 980. The over/under payment tolerance is 2 percent, so 20 is inside tolerance. AutoCash applies 980 to the invoice, writes off 20 as an overpayment write-off, and closes the invoice. If the tolerance were 1 percent, 20 would exceed it and the excess would remain unapplied, leaving a residual balance to investigate.
Traps
- Reversing a receipt when unapplying the application would have sufficed; reversal affects accounting.
- Forgetting that AutoCash rules execute in sequence, so a broad first rule can prevent a more specific later rule.
- Mixing up unapplied cash and on-account cash; both are unapplied to transactions but age and report differently.
- Applying a receipt in a currency different from the invoice without considering exchange rate handling.