Overview

A financial transaction is an event carried out between a buyer and a seller to exchange services or physical goods for payment.  The classification of a transaction (such as Invoice, Credit Note, Payment, Refund) determines its inherent features and its notation in the double-entry accounting system (debit or credit).  Transactions are reflected in the accounts receivable (and finances) of the parties.

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 canceled.

• Posted transactions have been processed by the system, included in the account's balance and can no longer be updated.
• Draft transactions can be created 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 following the specified allocation principle (FIFO or Against Item &FIFO).
• Invoices that are not considered as collectible can be written off.
• Payments can be transferred between accounts.

Setting Up Financial Transactions

Types

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 the Financial Transaction Type Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

Main Information
Classification: Determines the nature of the transaction, including its notation in the double-entry accounting system (debit or credit). Classifications are fixed and are the following: Invoice Invoice Cancellation Credit Note Payment Payment Cancellation Refund Write-off
Allowed Payment Methods (Visible for the payment classification)
The predetermined ways to make a payment in the system. At least one method must be defined.
Allowed Refund Methods (Visible for the refund classification)
The predetermined ways to issue a refund in the system. At least one method must be defined.
Allowed Categories
Predetermined categories that can be used in financial transactions of each type.

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Business definitions

Definitions regarding:

• The default financial transaction type used to create transactions of each classification. 
• The rejection reasons that agents can use.
  
  

Definition fields

The table describes the sections of the Financial Transaction Definition Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

System Generated Financial Transaction Settings
Determine the default financial transaction type that will be selected when creating a financial transaction of each classification. For the Write-off classification also define a Default Write-off Product (used in the write-off financial transaction items when an invoice is written off).
Available Rejection Reasons
Select the reasons for which financial transactions in a 'Draft' state can be rejected.

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Related configuration areas

Mandatory modules must be configured for the financial transactions module to work.

Optional modules may be configured for the financial transactions module to operate at its full capacity

Using Financial Transactions

Financial transactions are used to debit or credit customer accounts. CRM.COM provides seven different transaction classifications to select from when creating a new transaction.  Transactions can be created manually or by the system.  Refer to the 'Debit and Credit Classifications' diagram below to find out which transaction classifications debit or credit the account and whether the user or system generates each classification. The following sections provide more details on the processes that generate each transaction. 

Debit and Credit Classifications

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Invoices

Invoices are used to debit customer accounts and can be generated by system processes or manually by the user.

System processes and entities which generate invoices

• The normal billing run generates invoices when executed, charging customers for goods and services rented or purchased through subscriptions and jobs.
• The wallet funds prepaid subscriptions and redeems awards for reward participants. 
  • When a credit transaction takes place in the wallet, an invoice can be created to reflect a debit in the associated account.  
  • When a debit wallet transaction is voided, crediting the wallet, an invoice can be created to debit the account.
• Quick Sale (a process used to swiftly sell physical goods to customers) generates invoices that charge customer accounts.

User actions that generate invoices

Invoices can be created by using the New > Invoice action available from the financial transactions Summary page.

Invoice fields

The table describes the sections of the Invoice Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

Main Information
Number: The transaction number is automatically generated on posting the invoice.  Reference Number: Automatically generated by creating the invoice (before posting). Accounts Receivable (for which the invoice is created) Type: Select most suitable for the particular invoice. Life Cycle State (set by the system and depends on whether the user selected 'Save as Draft', 'Save', 'Reject' or ' Write off') A 'Draft' transaction can be posted, rejected and edited and does not affect the balance. A 'Posted' transaction is permanent, cannot be edited and affects the balance. A 'Rejected' transaction cannot be edited and does not affect the balance. A 'Written Off' transaction cannot be edited and affects the balance (Invoice debit and write-off credit amounts are taken into consideration). Rejection Reason  Category (Only 'Allowed' can be applied) Issued On (date/time) Posted On (set by the system) Due On: The date on which the credit period for a 'Posted' invoice ends. If not defined, it is automatically set by the system based on the credit period allowed for the account. If defined, it is validated against the credit period set on the account. Back Office Code: Set a code for use by external systems to refer to a specific financial transaction. The code is not mandatory but should be unique if specified.
Items
Individual line items in the invoice (at least one must be provided). The following aggregated amounts are calculated dynamically: Net Discount VAT Tax Total Outstanding (available after saving) Unsettled (available after saving) The Currency in which amounts are expressed is set on the accounts receivable. Once the transaction is saved, a 'View Applied Tax Rates' link becomes available in the items section, which displays the tax rates that were applied to each item. Financial Transaction Line Applied Taxes Details: A list of applied taxes for each item. Only applicable for taxes applied by a third-party taxation service that is integrated with CRM.COM. The following applied tax detail fields retrieved by the taxation service are kept in CRM.COM in XML: Tax name Tax code Taxed amount Tax rate percentage Tax details (any other details sent by the taxation service)
Log Information
Shared Notes: Notes regarding the invoice can be entered here. Each time the notes are amended, the user and the date are logged.

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Credit Notes

Credit notes are used to credit customer accounts and can be generated by system processes or manually by the user.

System processes and entities which generate credit notes

• The normal billing run generates credit notes when executed for periods that were erroneously charged or regretted. 
• The wallet funds prepaid subscriptions and redeems awards for reward participants.  
  • When a wallet is canceled the associated accounts receivable is reimbursed and wallet funds are preserved.  
  • When a credit wallet transaction is voided, debiting the wallet, a credit note can be created to credit the account

User actions that generate credit notes

Credit notes can be created manually:

• To credit customers for returned physical goods. 
• To refund services that do not meet customer expectations.
• As a discount for marketing purposes.

Create a credit note by using the New > Credit Note action, available from the financial transactions Summary page.

Credit note fields

The table describes the sections of the Credit Note Data Entry page and explains how the fields in the page are used.

 Mandatory   Configurable

Main Information
Number: The transaction number is automatically generated on posting the credit note. Reference Number: Automatically generated by creating the credit note (before posting). Accounts Receivable (for which the credit note is created) Type: Select most suitable for the particular credit note. Life Cycle State (set by the system and depends on whether the user selected 'Save as Draft', 'Save' or 'Reject')  A 'Draft' transaction can be posted, rejected and edited and does not affect the balance. A 'Posted' transaction is permanent, cannot be edited and affects the balance. A 'Rejected' transaction cannot be edited and does not affect the balance.   Rejection Reason Category (Only 'Allowed' can be applied) Issued On (date/time) Issue Reason Posted On (set by the system) Back Office Code: Set a code for use by external systems to refer to a specific financial transaction. The code is not mandatory but should be unique if specified.
Items
Individual line items in the invoice (at least one must be provided). The following aggregated amounts are calculated dynamically: Net Discount VAT Tax Total The Currency in which amounts are expressed is set on the accounts receivable. Once the transaction is saved, a 'View Applied Tax Rates' link becomes available in the items section, which displays the tax rates that were applied to each item. Financial Transaction Line Applied Taxes Details: A list of applied taxes for each item. Only applicable for taxes applied by a third-party taxation service that is integrated with CRM.COM. The following applied tax detail fields retrieved by the taxation service are kept in CRM.COM in XML: Tax name Tax code Taxed amount Tax rate percentage Tax details (any other details sent by the taxation service)
Invoices to Credit
If the allocation principle is set to 'Against Item & FIFO', invoices added here will be allocated against the credit note. If the invoices were previously settled by credit notes or payments then the particular credit notes and payments will be de-allocated. If the allocation principle is set to FIFO, invoices added in this section are ignored. Refer to the Allocations section for information on how CRM.COM handles allocations.
Log Information
Shared Notes: Notes regarding the credit note can be entered here. Each time the notes are amended, the user and the date are logged.

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Payments

Payments are used to credit the customer accounts. They can be generated by system processes or manually by the user.

System processes and entities which generate payments

• Vouchers used in CRM.COM generate payments that credit the recipient account with an equivalent amount.
• Settling bills through an automated process (daily, weekly, monthly) using credit cards registered with Stripe or other payment gateways creates a payment transaction in CRM.COM.  Customer credit cards are identified by their number and used to settle bills.
  
  • Payments effected through Stripe are created and posted directly.
  • Payments effected through other payment gateways remain in a 'Pending Verification' life cycle state; the state must be updated manually or through a WEB API, once the gateway confirms that the payment has been successfully processed. 
    Refer to Making payments and refunding customers through online accounts for more information.

User actions that generate payments

Payments to credit a customer account can be created manually, by using the New > Payment action available from the financial transactions Summary page.

Payment fields

The table describes the sections of the Payment Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

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Refunds

Refunds are used to return money to customers. A refund debits customer accounts.

System processes and entities which generate refunds

Instant discounts earned from reward offers can be applied through 'back-end reduction', a process where the customer pays the regular price at the point of sale and is refunded by CRM.COM (through a payment gateway).  Funds are returned to the customer's bank or online account (e.g., PayPal).

Refer to Instant discount refunds for more information.

User actions that generate refunds

Refunds to debit a customer account can be created by using the New > Refund action available from the financial transactions Summary page.

Refund fields

 The table describes the sections of the Refund Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

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Write-offs

Write-offs are used to cancel a bad debt and deduct the total unsettled amount of an invoice from the account balance. 

User actions that generate write-offs

Write-offs are created against unsettled invoices.  Access the Invoice Data Entry page and click Write Off from the Actions menu. 

Write-off fields

The table describes the sections of the Write Off Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

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Invoice cancellations

Invoices can be canceled in case of an error or change of mind, for example when an item is returned.

Invoice cancellations credit the customer's account and can be generated by the system or the user.

System processes that generate invoice cancelations

When a credit wallet transaction (which resulted in the generation of an invoice in the accounts receivable) is voided, an invoice cancellation transaction is created to cancel the debited amount.

User actions that generate invoice cancellations

Invoices can be canceled by using the Cancel action available on the invoice's Data Entry page. 

Invoice cancellation fields

The table describes the sections of the Invoice Cancellation Data Entry page and explains how the fields in the page are used.

 Mandatory   Configurable

Main Information
Number: The transaction number is automatically generated on saving the cancellation action. Reference Number: Automatically generated on saving the cancellation action. Accounts Receivable (for which the invoice cancellation is created) The Currency in which amounts are expressed is set on the accounts receivable. Type: Select most suitable for the particular invoice cancellation. Life Cycle State: Can only be 'Posted'. Transactions are permanent, cannot be edited and affect the account's balance). Category (Only 'Allowed' can be applied) Issue Reason: The reason that the invoice was canceled, provided when canceling the invoice. Issued On (date/time) Posted On (set by the system) Cancelled Invoice (set by the system) Back Office Code: Set a code for use by external systems to refer to a specific financial transaction. The code is not mandatory but should be unique if specified.
Items
Individual line items in the canceled invoice. Financial Transaction Line Applied Taxes Details: A list of applied taxes for each item. Only applicable for taxes applied by a third-party taxation service that is integrated with CRM.COM. The following applied tax detail fields retrieved by the taxation service are kept in CRM.COM in XML: Tax name Tax code Taxed amount Tax rate percentage Tax details (any other details sent by the taxation service)
Log Information
Shared Notes: Notes regarding the invoice cancellation can be entered here. Each time the notes are amended, the user and the date are logged.

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Payment cancellations

Payments can be canceled in case of an error.  Payment cancellations debit the customer's account for the total amount of the payment and can only be generated by the user.

User actions that generate payment cancellations

Cancel a payment by using the Cancel action available from the payment's Data Entry page.

Payment cancellation fields

The table describes the sections of the Payment Cancellation Data Entry page and explains how the fields on the page are used.

 Mandatory   Configurable

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Creating and processing financial transactions

Selecting and creating financial transactions

Specify the criteria that match the financial transactions you are interested in or click on NEW from the Actions menu to create a new transaction. Provide the mandatory information and SAVE.

Modifying a financial transaction

Transactions can be edited until they are posted.  Enter EDIT mode from the Actions menu.

Rejecting a financial transaction

A transaction that is not posted (still in 'Draft' state) can be rejected and not taken into account by financial processes. 

Click on REJECT from the Actions menu of the Data Entry page, selecting a reason from the drop-down list.

Posting a draft financial transaction

Draft transactions can be posted at any time and thus taken into account by financial processes, by using POST from the Actions menu of the transaction's Data Entry page.

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Canceling an invoice 

Invoices that were posted by error can be canceled. The action results in a new transaction of classification invoice cancellation, which credits the associated account with the total amount of the invoice.

Click on CANCEL from the Actions menu of the invoice's Data Entry page.

Canceling a payment

Payments that were posted by error can be canceled. The action results in a new transaction of classification payment cancellation, which debits the account with the total amount of the payment.

Click on CANCEL from the Actions menu of the payment's Data Entry page.

Making a payment for specific services or bills and invoices (mostly used for prepaid subscriptions)

Payments can be made against specific bills and invoices, or used to settle either all or specific subscription services.

Moving a payment between accounts

Funds can be transferred between accounts belonging to different customers or the system.  For example, if the system cannot identify a destination account while processing a bank payment, it can temporarily move the funds to a suspense account.

Click on MOVE TO ACCOUNT from the Actions menu of the payment's Data Entry page. Select the destination accounts receivable and click SAVE. 

Writing off an unsettled invoice

Unpaid invoices can be written off (to avoid taxation).

Click on WRITE OFF from the Actions menu of the invoice's Data Entry page. Select a type of write-off (mandatory) and issue reason (optional) and SAVE. 

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Paying an invoice using Quick Pay

The Quick Pay process supplements transaction payments and is used to swiftly settle outstanding invoice amounts.

Access QUICK PAY from the Actions menu of the Data Entry page of the invoice you wish to settle.  Modify information as necessary (amount cannot be changed) and click on SAVE.  

Allocation of financial transactions

Allocations are used by the system to settle the outstanding balance of an account, by assigning credit financial transactions (customer payments or credit notes) towards debit transactions.

Allocations follow the FIFO (First-In, First-Out) or Against Item & FIFO principle, as specified on the accounts receivable definition, and take place automatically when a financial transaction is posted.

• If FIFO is selected then a specific invoice should be not defined when creating a credit transaction. 
• If FIFO & Against Item is selected and a specific invoice(s) is defined when the credit transaction is created, then the credit is allocated towards the invoice(s). 
  
  • If the invoice is already allocated by another credit transaction then allocation works as FIFO.

FIFO

All un-allocated transactions (e.g. payments, credit notes), regardless of the one currently being posted, are taken into consideration.  The credit transaction with the earliest posting date is allocated against the invoice with the earliest due date.

• If an invoice is canceled, then
  • 'Against Item' allocation takes place (i.e., the invoice cancellation transaction is allocated against the canceled invoice)

• If a payment was allocated against an invoice and then canceled, then

  • The payment is de-allocated

  • The invoice is re-allocated by a credit financial transaction following the same principle.  

FIFO & Against Item

Against Item allocation takes place when the credit financial transaction (e.g. payment, credit note) addresses a specific invoice. If the credit financial transaction (payment) addresses more than one invoice, then consequent allocations are made with FIFO. 

• If an amount to be allocated towards an invoice is greater than the un-allocated amount (of the invoice) AND other credit transactions are already allocated against the invoice using FIFO, then 
  
  • The credit transactions are de-allocated and re-allocated on other invoices (using FIFO). 
    
  • If the amount to be allocated is still greater than the un-allocated amount of the invoice, the remaining amount is allocated on other invoices (using FIFO). 
• If the credit transaction does not address specific invoices, then

  • Allocation takes place using FIFO. 

• If an already allocated invoice is canceled, then

  • The credit transactions are de-allocated and allocated again using FIFO, 
  • The invoice is allocated by the invoice cancellation.
• If an already allocated payment is canceled, then

  • The payment is de-allocated and the invoice is allocated again using FIFO

  • The payment is allocated against the payment cancellation.
    

Working with invoice due dates

What are invoice due dates?

The due date is the day by which an invoice must be settled. The due date is mandatory and can be entered by the user or calculated and set by the system.  In either case, when a financial transaction is saved, the due date is validated against the credit period of the account.  If the user does not specify a due date when posting an invoice, the credit period is calculated following the due date rules of the accounts receivable definition.

How is the due date calculated?

Depending on the value of the credit period field, the system sets the due date either on a fixed number of days after the posted date or on the 'n^th day, X months after the Posted Date'.  If the rule allows a proximity range and a credit period is set on the corresponding accounts receivable, then the due date is set a specific number of days before or after the calculated due date, depending on the credit period.

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Applying business flows on financial transactions

Financial Transaction Analytics

Segmenting financial transactions

Transactions with common characteristics (e.g., which occurred in a specific period) can be grouped together.  The resulting segments can be used in system business processes, such as for notifying customers regarding payments or for simple statistical calculations. 
For more information on segmentation and how you can create financial transaction lists refer to Segmentation.

Dashboards 

Dashboards make information on key performance indicators available from a single integrated view. Dashboards are made up of components, such as charts and summary tables. Refer to Dashboards for information on their use and set-up.

Dashboard components

Average Product Revenue per Unit

The component displays the average product revenue from various products in a specific period, in a bar chart, grouped by product. If a date range is not supplied, the component uses data from the current month. The products can be selected through the settings () accessed from the top right corner of the component.  Only 'Posted' transactions are used and taxes are not included in calculations. 

Receipts per Month 

The component displays the receipts from the last 12 months, in a vertical bar chart, grouped by month.  Only 'Posted' transactions are used in calculations.

• Receipts = total payments - total payment cancellations - total refunds

Revenue per Month 

The component displays monthly revenue for the last 12 months, in a vertical bar chart.  Only 'Posted' transactions are used and taxes are not included in calculations.   

• Revenue = total invoiced amount - total credited amount - total invoice cancellation amount 
   

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Reports

Information on financial transactions can be extracted in a structured format for analysis. The fields displayed in a report and the included transactions are selected and grouped based on user-defined criteria. Refer to Reports for more information.

Financial Revenue List

The report displays a list of all invoices, credit notes and invoices cancellations that were posted within a specific period of time. 

Financial Summary by Accounting Type

The report displays revenue totals, grouped by transaction type, including net, VAT, discount and total amount without VAT, as well as receipts by payment type.

Financial Transactions List

The report displays a list of all financial transactions that were posted within a specific period of time. 

Monthly Recurring Revenue (MRR) and MRR Growth

The report displays the MRR and MRR Growth for all subscriptions in the last 12 months.

The report is generated by executing the MRR utility, which calculates existing and growth revenue per month, taking into consideration rated termed services up until the last day of the previous month.

To execute the utility, navigate to Foundation > Analytics > Run Reports.  Under Finance Application > Financial Transactions locate an Update link on the right of Monthly Recurring Revenue. Click to update the information in the report to be extracted.

Once the update is completed the option to update the report will disappear. Access and extract the report.

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Printouts

Printouts display all the information contained in a financial transaction. They are available through the financial transactions Data Entry page, in one of the following formats: HTML, XLS, CSV, RTF, and PDF.

Refer to Printouts for information on how they can be created, printed and sent.

Find examples of financial transaction printouts below:

A Credit Note Details Printout displays information on a selected Credit Note.

An Invoice Details Printout displays information on a selected Invoice.

An Invoice Cancellation Details Printout displays information on a selected Invoice Cancellation.

A Payment Details Printout displays information on a selected Payment.

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Financial Transactions Business Examples

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