See document titled “AR Month End Procedures & Reports”. One of the procedures in the document is: Clear Paid Inv.’s from A/R Open. This is located in:
Account Receivable (Module 2)
System Management Functions (Task 32)
- Clear Paid Inv.’s from A/R Open (Sub-task 4)
- System Management Functions (Task 32)
This process removes paid or zero balance items from the A/R Open Items file (Task 18) and moves them to the Cleared A/R History (Task 24).
It is recommended that this procedure is done once per month after following the normal A/R month end procedures. However, on occasion a need arises to clear paid invoices for one customer during the month. It is also recommended to follow the procedures in the document titled “A/R Daily Balancing” before clearing the paid invoices from the A/R Open file . Below is a simple example of why clearing paid invoices may be performed for one customer in the middle of the month and why it may be a problem:
- Invoice #121, dated 12/10/xx for $100.00
- Invoice #185, dated 12/25/xx for $200.00, unpaid.
- Payment dated 01/02/xx, for $100.00 applied to invoice #121
The customer calls. They received their statement dated 12/31/xx and it shows a balance of $300.00. Invoice #121 for $100.00 is still outstanding on the statement. They would like a new statement showing the invoice has been paid. Therefore, you clear paid invoices from the A/R Open file for this customer # with a cutoff date of 01/02/xx. Now Invoice #121 and the payment are cleared off of the account. You send the customer a new statement showing a balance of $200.00, with only invoice #185 outstanding. The customer is happy.
At a later date, you realize you forgot to print an A/R Aged Trial Balance (ATB) report for the end of the previous month, 12/31/xx, so one is printed with a cutoff date of 12/31/xx. When you balanced on 12/31/xx the A/R total was $100,500.00 and the G/L A/R account also had a balance of $100,500.00 for 12/31/xx. However, now the new A/R ATB report now has a total of $100,400.00. This is because invoice #121, dated 12/10/xx for $100.00 is no longer in the A/R Open Items file (Task 18), and being the information in the A/R Open Items file is what appears on the trial balance, the invoice can’t be on the new A/R ATB report because the invoice was cleared off of the customer’s account.. To avoid this from occurring, please follow the steps listed below:
Before running “Clear Paid Inv.’s from A/R Open” program in the middle of the month:
- Make sure there is an A/R ATB with detail report for the previous month.
- Make sure the A/R daily balancing spreadsheet is up to date.
- Make sure the A/R daily balancing spreadsheet is balanced to the “Display Total Value of A/R Open” (2/32/1) and a current A/R ATB with detail.
- Print an A/R ATB with detail for the customer whose account is being cleared with a current cutoff date
- Print an A/R ATB with detail for the current month for all customers.
- IF interfacing & obtaining A/R, daily, into the G/L (module 4), make sure the G/L A/R balance is the same as the A/R daily balancing spreadsheet.
After running “Clear Paid Inv.’s from A/R Open” program in the middle of the month:
- Print an A/R ATB with detail report for the customer cleared. Make sure it has the same balance as before clearing.
- Check the “Display Total Value of A/R Open” (2/32/1). Make sure it has the same balance as before clearing.
- Print an A/R ATB with detail report for all customers. Make sure it has the same balance as before clearing.
NOTE: All of the reports recommended in this document may be printed or may be saved to a file. Make sure you have access to one or the other. Check with your IT person for assistance on saving reports to a file.
NOTE: The A/R (Module 2), A/R Open Items (Task 18), Erase Selected Open-Item Records (Sub-task 5), SHOULD NEVER BE USED. The appropriate person may ask us for assistance on putting a password on this sub-task.