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Learn to work with Financial Transactions |
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On this page
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Overview
A Financial Transaction financial transaction is an event carried out between a buyer and a seller to exchange services or physical goods measured in terms of moneyfor payment. The transaction’s nature is differentiated by its classification(Invoiceclassification of a transaction (such as Invoice, Credit Note, Payment, Refund etc.). It involves a change in the status of the finances of the businesses or individuals involved, which is directly reflected on the customer's Accounts Receivable by updating its balance.
Major features
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) determines its inherent features and in turn its notation in the double-entry accounting system (whether it is debit or credit).
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Transactions are reflected in the
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- Payment : Used to credit the account. i.e. deduct money from balance
- Invoice: Used to debit the account. i.e. add money to balance
- Credit Note: Used to credit the account. i.e. deduct money from balance
- Refund: Used to debit the account. i.e. add money to balance (Can only be created if a negative account balance exists)
- Invoice Cancellation: Used to credit the account. i.e. deduct money from balance
- Payment Cancellation: Used to debit the account. i.e. add money to balance
- Write Off
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accounts receivable (and finances) of the parties involved.
Financial transaction features
- The transaction classifications available in the system either credit the accounts receivable (Payment, Credit Note, Invoice Cancellation and Write-off deduct funds from balance) or debit it (Invoice, Refund, and Payment Cancellation add funds to balance).
Transactions that are not yet posted can be rejected. Posted transactions can
be cancelledbe canceled.
- Posting of financial transactions depicts that the transaction is taken into consideration by system financial processes, such as its inclusion Posted transactions have been processed by the system, included in the account's balance . Once posted the transaction and can no longer be updated.
- Transactions Draft transactions can be created with an intermediate step (before being posted) giving you the ability to make subsequent changes before posting.Allocations are used to allocate credit financial transactions against invoices, in order to settle any and modified before they are posted.
- Credit financial transactions are allocated against invoices to settle an outstanding amount. Allocations are applied automatically by the system based on following the specified allocation principle specified in the system(FIFO or Against Item &FIFO).
- Invoices which that are not expected to be settled, due to customer's inability to proceed with the settlement considered as not collectable can be written off.
- Payments can Payments can be moved transferred between accounts.
Setting Up Financial Transactions
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Configuration > Finance Application > Financial Transactions |
Categories
Financial Transaction categories are used to provide a business classification to the transaction such as user-input, automated, call centre. These classifications provide the user with input on how the transaction was handled, and can also be used by the business to analyse the type of calls they receive. Once categories are configured you can add the ones you would like to make available from each financial transaction type.
Payment Methods
Payment Methods are the options available to customers for paying for products. The payment method is defined during the creation of payments. Once configured you can add the ones you would like to make available from each financial transaction type. Payment methods related to payment gateways, such as PayPal or credit card, once configured must also be added to the payment gateway providers so that the system can identify how the payment will be received.
Refund Methods
Refund Methods are the options available to for refunding a customer's account. The refund method is defined during the creation of refunds. Once configured you can add the ones you would like to make available from each financial transaction type. Refund methods related to payment gateways, such as PayPal or credit card, once configured must also be added to the payment gateway providers so that the system can identify how the refund to the customer will be made.
Rejection Reasons
Rejection Reasons is the explanation for rejecting a financial transaction. Only Financial Transactions in a 'Draft' state can be rejected. Once configured you can add the ones you would like to make available to use in the system in the financial transaction definition.
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Financial Transaction Types determine the behaviour and nature of each financial transaction, which is according to the classification set on the Financial Transaction Type. There are seven classifications that can be used to create financial transaction types and multiple types can be created for each classification, such as a payment type to be used for voucher payments and another type for cash payments. On creating a payment you can select the type that it best fits the purpose.
Types can also be used by different processes in the system as conditions. For example, you can set up the system to void a wallet transaction when a 'wallet related' payment cancellation type is created.
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Classifications define the operational characteristics of each transaction. User-definable types are used to distinguish between financial transactions of the same classification. There are seven classifications that can be used to create financial transaction types. Multiple types can be created for each classification, such as a payment type for voucher payments and another type for cash payments. When a payment is created, the most suitable type can be selected.
Types can also be used by system processes as conditions. For example: Void a wallet transaction when a financial transaction of type 'wallet payment cancellation' is created.
Configure the following entities before setting up types and then add the entities you want to have available in the system for each financial transaction type.
- Categories are used to label financial transactions in a meaningful way. Categories indicate how the transaction was handled and can be used by the business for transaction analysis purposes.
- Payment Methods are the options available to customers for compensating sellers. The method is defined when the financial transaction is created. If the method involves using a payment gateway (such as PayPal or Stripe) also add the method as 'supported' in the configuration of the payment gateway provider so that the system can identify the payments that it should process.
- Refund Methods are the options available for reimbursing customers. The refund method is defined when the financial transaction is created. If the method involves using a payment gateway (such as PayPal or Stripe) also add the method as 'supported' in the configuration of the payment gateway provider so that the system can identify the refunds that it should process.
- Rejection Reasons are the options available to justify a declined transaction. Only transactions in a 'Draft' state can be rejected.
Configure a default financial transaction type for each classification and add it to the financial transaction definition.
Type fields
The table describes the sections of Financial Transaction Type Data Entry page, and explains how the fields in the page are used.
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Allocations are always performed Against Item when the credit Financial Transaction refers to one or more specific invoices.
If the credit Financial Transaction is referring to more than one invoice, then the Allocation is applied on those invoices using FIFO
- If the amount to be allocated to the invoice is more than the un-allocated amount then
- If there are other transactions which are already allocated against an invoice using FIFO, then they are de-allocated and re-allocated based on 'FIFO'
- If the amount that should be allocated is still more than the unallocated amount of the invoice, then an amount equal to the unallocated amount is allocated against that invoice, setting the Allocation Type to 'Against Item' and the remaining amount of the credit Financial Transaction is allocated using FIFO.
Otherwise, "If the credit Financial Transaction amount is just enough to cover the invoice then the whole amount of the credit Financial Transaction is allocated against the invoice, setting the Allocation Type to 'Against Item'
Allocations are always performed on a FIFO basis if the credit Financial Transaction is not referring to specific invoices.
Allocations are always performed on an Against Item basis when an invoice cancellation is posted.
In the case of an invoice cancellation, the cancellation is always allocated against the referred invoice and the Allocation Type is set to 'Against Item'
If other transactions were already allocated against the invoice, then they are de-allocated and allocated again based on 'FIFO'
- When cancelling a payment already allocated against an invoice, the cancelled payment is de-allocated and the invoice is allocated again based on 'FIFO'
- De-allocation is performed by creating an Allocation record with a negative amount and setting the Allocation Type to 'De-allocation'
- The de-allocated record keeps a reference to the Allocation record that resulted in its de-Allocation.
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Printouts
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Financial transaction printouts displays Printouts display all the information contained in a Financial Transactions. It is available through the Financial Transactions financial transaction. They are available through the financial transactions Data Entry page, in one of the following formats: HTML, XLS, CSV, RTF, PDFand PDF.
Refer to to Printouts for information on how they can be created, printed and sent.
Credit note details printout
A Find examples of financial transaction printouts below:
A Credit Note Details printout provides information in the selected credit notePrintout displays information on a selected Credit Note.
An Invoice
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An Invoice Details Printout displays displays information regarding on a selected Invoice.
Invoice cancellation details printout
An An Invoice Cancellation Details Printout provides the information of an displays information on a selected Invoice Cancellation.
Payment printout
A Payment Printout provides the information of a paymentA Payment Details Printout displays information on a selected Payment.
Financial Transactions Business Examples
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Scenario 1. Company ZX would like to create refunds once a month for its customers refund customer accounts with a negative outstanding balance. The refunds are paid out to the customers through their bank account. Once the bank makes the payment to the customer's accountbalance on a monthly basis, by transferring funds to their bank accounts. Once the payments are processed, the bank sends a file back to Company ZX with all ZX an import file with the successful payments. Company ZX can the update the customer's accounts , which it can use to update customer account balances. Solution User Process |
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Scenario 2. Company ZX would like to cancel 'Posted' Invoices invoices that were created by error. Solution Configuration The user should select the Invoice invoice to be cancelled canceled and create a Financial Transaction financial transaction of the appropriate Type.As a result, the Invoice type. The invoice will be available for future reference without affecting the account's Balancebalance. The Financial Transaction 'Invoice Cancellation Type' financial transaction type indicates the reason the Invoice invoice was cancelledcanceled. More detailed information can be viewed through the Cancellation's Issue Reasonobtained from the cancellation issue reason. |
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Scenario 3. Company ZX imports Payments payments from the bank through using an import file. Solution User Process Back office operators should follow the process described below: Company's ZX Back Solution User Process ZX back office personnel should access Company's ZX the suspense account on a daily basis. The action "Move to Account" MOVE TO ACCOUNT action should be executed for each of the Payments payment, once the intended account has been determinedis confirmed. |
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Scenario 4. A customer of Company ZX purchases 2 Cards. He gets a discount for both, 15% for the first one and €20 for the other onetwo cards, granting a 15% and €20 discount, respectively. Solution User Process Create a new Financial Transaction of Type Invoicefinancial transaction of type 'Invoice'. In the Items items tab, add 2 two lines with the following information:
System Calculations:
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Scenario 5a. Company ZX wants the 15th day of the month as the Invoice 'Due Date'to be the invoice due date. Solution Configuration The Accounts Receivable Credit Rule accounts receivable credit rule should be set up defining the nth day to be equal to 15 after x months are equal to 1(n=15), X months (X=1) after the posted date. User Process If the user defines a due date when posting an invoice, the system either validates the date or returns an error message. e.g. In case the Date of Posting is on 20 MayFor example, assuming the date of posting is 20/05:
If the user leaves the 'Due Date' empty the system will set it due date empty, it is automatically set to 15/06. Scenario 5b. Company ZX would like wants to have the 'Due Date' due date always set to 10 days after the 'Posted Date'posted date. Solution Configuration User Process When posting the Invoice: If the user defines a due date when posting an invoice, the system either validates the date or returns an error message. e.g. In case the Date of Posting is on 20 May: For example, assuming the date of posting is 20/05:
If the user leaves the 'Due Date' empty then the system will set it due date empty, it is automatically set to 30/06. Scenario 5c Even though Company ZX would like to allow requires agents to set the 'Due Date' at due date a maximum of 10 days after the 'Posted Date', it posted date but requires the System system to set the 'Due Date' due date to 5 days after the 'Posted Date'posted date. Solution Configuration The Accounts Receivable definition 'Credit Rule' accounts receivable definition credit rule should be set up defining X Days after transaction's 'Posted Date' X days (X = 10) after the transaction's posted date. Proximity range should be set to -5 (days) User Process If the user defines a due date when posting an invoice, the System system either validates the date or returns an error message. e.g. In case the Date of Posting is on 20 MayFor example, assuming the date of posting is 20/05:
If the user leaves the 'Due Date' empty then the system will set it due date empty, it is automatically set to 25/05 (the smallest allowed 'Due Date' based on the set 'Proximity Range')earliest allowed due date according to the proximity range).
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Scenario 6a. Company ZX allows wants to enable its customers to make payments using an online payment gateway. Solution Configuration
User process
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FIFO Principle In the following example, we have one Invoice which invoice has already been allocated to a Credit Note credit note using the FIFO modelprinciple. After Once a second Invoice invoice is created, the first Invoice invoice is cancelledcanceled.
FIFO & Against Item Principle In the following example, we have 3 Invoices of which the 2 first There are three invoices in the following example. The first two are allocated from Credit Notes credit notes that were intended for the invoices in question. The first Invoice invoice is then cancelledcanceled.
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Glossary
CRM.COM Term | Definition | ||
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Accounts Receivable | A ledger of the financial transactions carried out between a company and its customers, such as invoices and payments. | ||
Payment Gateway | An e-commerce application service provider that authorises credit card payments A service provided by a third-party system that authorizes credit card or direct payment processing for e-businessesbusiness. | ||
Stripe | A build in integration of CRM.COM and Stripe payment system, which can be used to accept online customer merchant payment gateway for processing online payments. | ||
Wallet | A financial account which allows customers to use a customer account whose credit balance is used to fund transactions within CRM.COM. | ||
Wallet Transaction | A financial event used to debit or credit transaction that debits or credits the wallet. | ||
Normal Billing Run | A mechanism process that is used to charge customers for goods and services provided over a period of time. Each run is usually performed on a monthly basis and issues a bill including the invoices and credit notes associated with customer subscriptions or jobs. | ||
Rewards Participant | The customers who have signed up for Rewards or have been automatically selected to participateA customer who can be awarded offers provided through the rewards program. | ||
Quick Sale | Is the process through which users are able to easily and quickly A process used to swiftly sell physical goods to customers and invoice them the same time. | Vouchers | Vouchers are an alternate way of paying an amount of money - generates invoices to charge the customer's account. |
Voucher | An alternate form of payment across CRM.COM modules. Customers can buy Vouchers vouchers and use them to perform for payments within the system, while optionally, limitations can exist on the products money can be spent on. |
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Related Links
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