Accounts Receivable - Setup

Setup Procedures

Before processing Accounts Receivable, the following steps should have been completed.

Set Up Tax Codes

If charging tax, be it federal, state, provincial, county, or municipal on any customer invoices, the tax code must be set up. In a later step, specific taxes are associated with specific customers, allowing the system to automatically calculate the required taxes on invoices for those customers. These taxes may have already been set up if the AP module setup was completed before doing AR.

Set Up Payment Terms

Payment Terms are used to calculate the discount and due dates of an invoice. Every customer must have a payment term associated with them, even if the term is due on receipt. Again, if the AP module setup was completed before AR, then these may already have been defined.

Set Up Bank Accounts

Bank account codes are used by the cash receipt and check reconciliation procedures. There must be at least one bank account defined in the Banking system.

Since payments are also processed to suppliers in the Accounts Payable application, this step may have already been completed. However, if depositing money from customers in a different bank account than from which suppliers are paid, then the bank account used for cash receipts must be set up.

Set Up Interest Codes

Interest codes allow the setup of different types of financial charges to be charged to customers when their accounts are overdue. An interest calculation procedure can be used to automatically update customer accounts with the correct amount of interest each month.

Each customer set up must have an interest code. If there is no plan to charge interest on overdue accounts, set up one code on this screen (use the code "N/A" to indicate not applicable, setting all the values to zero), and use this code for each customer created.

Set Up Invoice Series Codes

(Optional) Invoice Series Codes are invoice types and are used to differentiate the different AR invoices being created. They also enable the definition of specific AR control and retainage accounts, if required. AR invoice series codes allow for the distinction between different invoices types.

Set Up Write-Off Types

Write-off types are codes that represent different reasons why a write-off of a customer balance was performed.

Set Up Collectors

Collectors are used to define who is responsible for collections for a specific customer. There must be at least once collector setup.

Set Up AR Control File

The AR Control File contains important information about how the Accounts Receivable module will interact with other modules, what special screens it will use, and what general rules will govern processing. The AR Control File is also used to set up default General Ledger accounts specific to Accounts Receivable. These default accounts will appear for each new customer set up, making entry of new customers faster.

Logon to Accounts Receivable Using Desired Company Code

Every user must login to AR via this screen at least once. Also setting the Default Company makes it harder to make a mistake and enter data into the wrong company.

Set Up Customer Class Codes

A customer class code is normally used to associate customers who buy similar goods or services.

Each customer defined must be associated with a customer class.

Set Up Aging Periods

Aging periods are used to produce the aging reports and A/R statements, both of which show how long individual invoices have remained unpaid. In this application, the actual length of these periods is decided by the user.

Set Up Customers

Before any invoices can be entered in the Accounts Receivable module, customers with which business is done must be entered as business partners. Once a business partner is defined, it can then be defined as a customer.

Repeat this procedure for each company.