Finance Charge Transactions

On the release of each document with charges, the system generates a batch of transactions that update the cash account, the customer receivables account or vendor payable account, and the General Ledger expense accounts selected to accrue charges of the respective entry types (specified as an offset accounts). The system behavior differs depending on the module you use to record finance charges or the document for which you add charges.

Generation of Finance Charge Transactions for AP Documents

When you release a document with charges in Accounts Payable module, the system generates a batch of transactions that update the cash account, the vendor payable account, and the General Ledger expense accounts specified as an offset accounts. Accounts are affected as shown below.

Generation of Finance Charge Transactions for AR Payments

You can define how the system should record finance charges for the payments made in Accounts Receivable based on whether you select the Deduct From Payment check box for the particular entry type on the Entry Types form, as described below.

If the bank deducts the amount of charges from the payment amounts and displays only the resulting amounts on the statements, select the check box for the entry type. For example, when you release an Accounts Receivable payment, the system generates the following transactions (this example displays only the basic transactions; for the complete list of possible transactions for an Accounts Receivable payment, see Invoice Payments: Release of Payments).

If the financial institution presents the charges as separate transactions on its statements, you clear the Deduct From Payment check box for the appropriate entry types. The sample batch transactions for an Accounts Receivable payment are shown in the following table.

Generation of Finance Charge Transactions for Funds Transfers

For funds transfers, the system generates a batch of transactions that update the source cash account, the destination cash account, and the General Ledger expense account; the batch generates separate GL transactions for each registered expense. Accounts are affected as shown below.

Generation of Finance Charge Transactions for Bank Deposits

Once the deposit is released, the system generates a batch of deposit-associated transactions to transfer the payment amounts from clearing accounts to the bank account, and to post the bank charges incurred for the deposit as expenses. The total amount of the bank charges will be deducted from the deposit amount. Accounts are affected as shown below.

To indicate to the system that bank charges should be posted as separate transactions in the batch, before you release the deposit, select the Separate Charges check box on the Financial tab of the Bank Deposits (CA305000) form. In this case, accounts are affected as shown below.