Chapter 13:

BANKING PROCESS
INCOMING PAYMENT

When a customer pays using cash, check or credit card, you enter an Incoming Payment that generates
the following automatic journal entry:

Debit on a clearing account - cash on hand/ credit card/ checks received.

Credit on customer account.

- Cash: the system retrieves the cash on hand account from the Cash on Hand field on the Sales
tab under Administration → Setup → Financials → G/L Account Determination.

- Credit Cards: the system retrieves the credit card account from the G/L Account field in the credit
card definition under Administration → Setup → Banking → Credit Cards.

- External tools like point of sale system and authorization of credit card transactions can be
integrated into the standard process.

- Check: the system retrieves the checks received account from the Checks Received field on the
Sales tab under Administration → Setup → Financials → G/L Account Determination.

- You can change the default clearing account while issuing the Incoming Payment.

A Deposit document must be processed in order to transfer the funds from the clearing account to the
house bank account and clear the clearing account.
The Deposit functions in SAP Business One. Banking→ Deposits → Deposit.

Bank Transfer: this payment mean does not involve a clearing account. The customer transfers the
payment directly to your house bank. Debit on the house bank account, Credit on the customer account.

OUTGOING PAYMENT

▪ Note that the system does not involve a clearing account for manual outgoing payments for credit card,
checks and bank transfers. Instead, the credit posting is done directly on the bank account.

Postings for Outgoing Payments:

- Cash: Debit on vendor account, credit on cash on hand account or the bank account number.

Because most companies have multiple cash registers with one assigned cash on hand account
each, you must manually enter the correct cash on hand account number.

- Credit Card: Debit on vendor account, credit on bank account. You must manually enter the bank
account number.

- Check: Debit on vendor account, credit on bank account. You must manually enter the bank
account number.

- Bank Transfer: Debit on vendor account, credit on bank account. The system retrieves the bank
account from the Bank Transfer field on the Purchase tab under

Administration → Setup → Financials → G/L Account Determination

EXECISES FOR FINANCIALS
PRACTICE YOUR SKILLS : BANKING

At the conclusion of the exercise, the student will be able to:

1. Post incoming and outgoing payments manually using different payment means
2. Post Cash deposit
3. Use manual reconciliation function

INCOMING PAYMENTS
Incoming Payment (using cash payment means)
1. Create an A/R invoice for any domestic customer, for example, C20000. Post this invoice
with a payment term that allows cash discount.

Tip: To check the payment terms for a customer, click the yellow navigation arrow on the Payment Terms
field. If the Cash Discount field is blank, select a cash discount from the dropdown list. To see the terms for
the cash discount, click the orange navigation arrow.

To make sure that discount is not applied for prompt payment, change the Due Date and select a
date that is over one month in the past (this is for the exercise only). Leave the Posting Date as
today.
a. Choose Sales – A/R → A/R Invoice.

Field Name or Data Type Values

Posting Date <Today's date>
Due Date < Past date >

b. Post this invoice with any item. Ignore the warning message about the due date.
2. Post an Incoming cash payment.
Chose Banking → Incoming Payments → Incoming Payments.

Field Name or Data Type Values

Code <Code of the customer you used
in the previous step>

a. Select the open invoice you posted in the previous step.

b. Choose Goto → Payment Means, or choose the Payment Means icon from the menu bar.
You can also right click and choose the Payment Means option.
c. Choose the Cash tab.
d. Click in the Total field.
e. Select CTRL + B to copy the payment amount to the Total field.
f. Choose OK.
g. Choose Add and confirm your entries
 3. Check the Posting.
a. Open the incoming payment document that you just created and navigate into the journal entry
through the Transaction No. field

Incoming Payment with Cash Discount (using check payment means)

The customer pays the invoice amount less the discount using a check. Post the payment using the check
payment means
A. Create an A/R Invoice with Cash Discount
1. Choose Sales – A/R → A/R Invoice.

Field Name or Data Type Values

Posting Date <Today's date>

2. Select any item (from the Contents tab).

3. Choose the Accounting tab.
4. Check if the default payment term allows discounts. Tip: To check the payment terms for a
customer, click the orange navigation arrow on the Payment Terms field. If the Cash Discount field
is blank, select a cash discount from the dropdown list. To see the terms for the cash discount, click
the orange navigation arrow.
5. Approve the system message. Choose Update.
6. Choose OK, then Add
B. Post an incoming check payment.
The customer pays the invoice amount less discount using a check.
1. Choose Banking → Incoming Payments → Incoming Payments.

Field Name or Data Type Values

Code <Code of the customer you used
in the previous step>

2. Select the open invoice you posted in the previous step.

3. Choose Go to → Payment Means.
4. Choose the Check tab.
5. Press Tab to move to the Amount field in the row.
6. Select CTRL + B to copy the payment amount to the Amount field.
7. Choose OK.
8. Choose Add and confirm your entries.
9. Check the Posting. Open the payment document that you just created and navigate into the journal
entry through the Transaction No. field. Check the automatic cash discount posting.

Tip:
The default check clearing account appears automatically in the Payment Means window, at the top. If the
customer bank details were defined in the customer master data, under the Payment Terms tab, it will
appear as the default check details here.
Partial Incoming Payment (using cash payment means)
A. The customer pays part of his debt on an open A/R Invoice.
1. Create an A/R Invoice. Choose Sales – A/R → A/R Invoice.

Field Name or Data Type Values

Posting Date <Today's date>
Due Date <Past date >

2. Post this invoice to any customer with any item. Ignore the warning message about the due date.
B. Post partial incoming payment
1. Post a partial incoming payment paid in cash by your customer.
2. Choose Banking → Incoming Payments → Incoming Payments.

Field Name or Data Type Values

Code <Code of the customer you used in
the previous step>
3. Select the open invoice you posted in the previous step.
4. Click in the Total Payment field of the selected open item end. Enter an amount less than displayed.
5. Choose Go to → Payment Means.
6. Choose the Cash tab.
Note that the Balance Due field displays the reduced amount.
7. Click in the Total field.
8. Select CTRL + B to copy the payment amount to the Total field.
9. Choose OK. Choose Add and confirm your entries.

C. Check the customer Account Balance

1. Open the incoming payment document that you just created.

2. Choose the orange arrow to the left of the business partner code. This opens the business partner
master data.
3. Choose the orange arrow to the left of the account balance amount.
4. Select the check box Display Unreconciled Trans. Only. Make sure the invoice and the partial
payments are not displayed.
OUTGOING PAYMENTS
A. Create A/P an Invoice.
1. Choose Purchasing – A/P → A/P Invoice.

Field Name or Data Type Values

Posting Date <Previous date>
Due Date <Today’s date minus 1 month>

2. Post this invoice to any vendor with any item.

B. Post an Outgoing Payment (Bank Transfer)
1. Choose Banking →Outgoing Payments→Outgoing Payments

Field Name or Data Type Values

Code <Code of the customer you
used in the previous step>

2. Select the open A/P invoice you created in the previous step.
3. Go to Payment Means
4. Choose Bank Transfer tab

Field Name or Data Type Values

Transfer Date <Today’s date >
Reference 12345

5. Put the cursor on the Total field and press CTRL+B

6. Choose Ok
7. Choose Add.
CASH DEPOSIT
Post cash deposit.
A. Choose Banking → Deposits → Deposit

Field Name or Data Type Values

Bank Account <select the house bank account to which you
deposit the cash>
G/L Account <Account number of your cash on hand account>
Amount 2000

B. Choose the Cash tab.

C. You can choose different Cash Account if you deposit money from another account.
D. Choose Add.
MANUAL RECONCILIATION
To verify the transactions recorded in SAP Business One against the balance received from the bank, and
to create adjustments if required use the manual reconciliation function.

Type the ending balance of the external bank statement, according to a certain date Let us say you
received an external bank statement for the bank account, with an ending balance of XXX. The bank
statement is updated for today. Enter the ending balance supplied by your instructor.

A. Enter the bank statement details

1. Choose Banking → Bank Statements and External Reconciliation→ Manual
reconciliation.

Field Name or Data Type Values

Account Code 161010
Ending Balance Supplied by your instructor
End Date Today

2. Choose OK to open the Reconciliation Bank Statement window.

B. Clear two transactions
1. The table displays the open transactions as recorded in your books. That is, transactions recorded
in SAP Business One.
2. Under the Cleared column, select the boxes for two transactions you would like to clear with the
current ending balance.
3. Your instructor will specify one Payment transaction and one Deposit transaction.
4. You can see that the Cleared Book Balance field is updated according to the selected rows. The
Difference field is updated, respectively.

C. Create adjustments.
1. You can see that there is a difference of XX between the cleared transactions and the ending
balance. In this case, we can create adjustments.
2. Enter a Check for Payment you know is the missing amount.
3. Choose Adjustments to open this window.
4. Choose Checks for Payments.
3. Choose OK.
D. Checks for Payments
1. Enter the following information

Field Name or Data Type Values

To Order of Choose a vendor
Using CTRL + Tab
Credited G/L Acct 161010
Remarks Payment on Account
Amount The difference of XX
Country United Kingdom
Bank Choose a bank

2. Choose Add.
3. Back to the Reconciliation Bank Statement window. See that in the table, the adjustment journal
entry was added automatically and selected as cleared. The difference is now zero.
E. Reconcile the Bank Account
Once we are sure that our selection is correct, we can reconcile the chosen transactions recorded in
SAP Business One against the balance received from the bank.
1. Choose Reconcile. The reconciliation has ended successfully.