Payments and Receipts — Complete User Guide — Two Accounts Web

Comprehensive guide for managing payments to suppliers and receipts from customers, including LC-related payment and receipt workflows, bank account clearing, and financial reporting

Table of Contents

1. Overview
   • Payments vs Receipts
   • Standard vs LC Transactions
2. Enabling the Tabs via Customize Menu
3. Field-by-Field Guide — Payment
   • Payment Header Fields
   • Payment Line Fields
4. Field-by-Field Guide — Receipt
   • Receipt Header Fields
   • Receipt Line Fields
5. Creating Standard Payments
6. Creating Standard Receipts
7. LC-Related Payments and Receipts
   • Import LC Payment
   • Export LC Receipt
   • Report Treatment
8. Accounting Impact
   • GL Posting — Payment
   • GL Posting — Receipt
   • Cash Flow Statement
9. Opening Balances
10. Reports
    • Payments and Receipts Listing
    • Bank Account Summary
    • Receipts and Payments Summary
    • Customer Summary and Supplier Summary
    • Cash Flow Statement
11. Sample Data and Report Output
    • Setup
    • Standard Payment Sample
    • Standard Receipt Sample
    • LC Payment Sample
12. Accounting Regulation Compliance

1. Overview

1.1 Payments vs Receipts

1.2 Standard vs LC Transactions

2. Enabling the Tabs via Customize Menu

Payments and Receipts are sub-tabs that depend on other tabs being enabled:

Payments — requires Suppliers tab to be visible. Once Suppliers is enabled:

1. Open Customize Menu
2. Find "Payments" in the list
3. Toggle to Visible and click Save

Receipts — requires Customers tab to be visible. Same process as above.

Once enabled, you will also have access to:

• Payment Rules / Receipt Rules (under Settings) — configure auto-splitting rules for recurring payment/receipt patterns
• Payment Footers / Receipt Footers (under Settings) — create reusable footer text for documents
• Recurring Payments / Recurring Receipts (under Settings) — configure periodic payment/receipt templates
• Email Templates (under Settings) — configure email templates for Payment and Receipt documents

3. Field-by-Field Guide — Payment

3.1 Payment Header Fields

3.2 Payment Line Fields

4. Field-by-Field Guide — Receipt

4.1 Receipt Header Fields

Receipts share most of the same structure as Payments with mirror semantics:

4.2 Receipt Line Fields

Receipt lines mirror Payment lines with these key differences:

• Uses Sales Unit Price instead of Purchase Unit Price
• Has Cost of Goods Sold and Cost of Goods Sold Amount fields for tracking inventory cost
• Has Export Letter of Credit field (hidden, for Export LC integration) instead of Letter of Credit
• No Withholding Tax Payable Supplier field

5. Creating Standard Payments

1. Go to Payments > New Payment
2. Select the bank account in Paid From
3. Select the Payee type and the specific Supplier or Customer
4. Add lines:
   • Select an Item or Account
   • If paying a Purchase Invoice, select Accounts Payable Supplier and the specific Purchase Invoice
   • Enter the Amount
5. Set the Cleared status and Bank Clear Date if the payment is pending
6. Add a Description
7. Configure Theme, Title, and Footers if needed
8. Save

Creating an LC Payment from an Import LC

1. Go to the Letter of Credit view
2. Click the New Payment button
3. The system pre-populates two lines:
   • AP portion — the margin portion still unpaid (Accounts Payable)
   • LC Payable portion — the financed portion still unpaid (Letter of Credit Payable)
4. Both lines have the Letter of Credit field set automatically
5. Adjust amounts if making a partial payment
6. Save

6. Creating Standard Receipts

1. Go to Receipts > New Receipt
2. Select the bank account in Received In
3. Select the Paid By type and the specific Customer
4. Add lines:
   • Select an Item or Account
   • If receiving payment for a Sales Invoice, select Accounts Receivable Customer and the specific Sales Invoice
   • Enter the Amount
5. Set the Cleared status if pending
6. Save

Creating an Export LC Receipt

There are three ways to record Export LC proceeds:

Method 1 — Via Export LC Receipt (recommended):

1. Go to the Export Letter of Credit view
2. Click Receive Payment
3. The system pre-fills the amount as the net receivable (LC amount minus fees)
4. Save — this creates an Export LC Receipt document that clears all related accounts

Method 2 — Via Receipt form:

1. Go to Receipts > New Receipt
2. The system warns if the Sales Invoice is linked to an Export LC with outstanding balance
3. Create a line with the Export LC Receivable account and set the Export Letter of Credit field
4. Save — this only clears the receivable, not the clearing account

Method 3 — Via Journal Entry:

1. Go to Journal Entries > New Journal Entry
2. Check Is Export LC Adjustment = Yes
3. Select the Export Letter of Credit
4. Enter lines using the same 4-entry pattern as the Export LC Receipt (Credit Export LC Receivable, Debit Export LC AR Clearing, Credit Accounts Receivable, Debit Cash)
5. Save — this fully clears all Export LC-related accounts

Method 1 is recommended as it creates a complete set of GL entries clearing all Export LC-related accounts in a single document designed for this purpose.

7. LC-Related Payments and Receipts

7.1 Import LC Payment

When you make a payment against an Import Letter of Credit, the system splits the payment into two portions:

• Accounts Payable portion — the margin amount you must pay directly to the supplier. This is recorded as a standard AP payment.
• Letter of Credit Payable portion — the financed portion you repay to the bank. This is recorded against the LC Payable account.

The system calculates the outstanding amounts by:

1. Querying the LC's GL transactions to find the original AP and LCP balances
2. Subtracting any amounts already paid via prior Payments or Journal Entries linked to this LC
3. Pre-filling the remaining amounts as payment lines

GL entries for an LC Payment:

For the AP portion:
    Dr  Accounts Payable (Supplier)             Margin Amount
        Cr  Cash at Bank                                    Margin Amount

For the LC Payable portion:
    Dr  Letter of Credit Payable (Bank)         Financed Amount
        Cr  Cash at Bank                                    Financed Amount

Both lines reduce cash and clear the respective liabilities.

7.2 Export LC Receipt

When the bank pays against an Export Letter of Credit, the recommended approach is to use the Export LC Receipt form, which creates four GL entries:

Entry 1 — Clear Export LC Receivable:
    Cr  Export LC Receivable                    Net Receivable Amount

Entry 2 — Clear Export LC AR Clearing:
    Dr  Export LC AR Clearing                   Net Receivable Amount

Entry 3 — Clear Customer's Sales Invoice:
    Cr  Accounts Receivable (Customer)           Net Receivable Amount

Entry 4 — Record Cash Received:
    Dr  Cash at Bank (Receiving Account)         Net Receivable Amount

All four entries are linked to the Export Letter of Credit for tracking.

If the Export LC has fees, the net receivable equals the LC amount minus fees. The Export LC AR Clearing account may retain a residual balance equal to the fees — this can be cleared via a Journal Entry with the Is Export LC Adjustment flag.

7.3 Report Treatment

LC-linked payments and receipts are treated differently in reports:

8. Accounting Impact

8.1 GL Posting — Payment

Each Payment line creates a GL transaction. The system then creates a balancing entry to the bank account as a contra entry.

For a payment against a Purchase Invoice (AP):
    Line entry:
        Dr  Expense / Asset            (line amount)
            Cr  Accounts Payable                  (line amount)  [reverseSign: false]

    Balancing entry:
        Dr  Accounts Payable (total)   (sum of all line amounts)
            Cr  Cash at Bank                        (total amount)

For a payment to an Employee (clearing):
    Line entry:
        Dr  Employee Clearing           (line amount)
            Cr  Cash at Bank                        (line amount)

The system uses reverseSign = false — positive line amounts create
debit entries to expense/asset accounts.

8.2 GL Posting — Receipt

For a receipt against a Sales Invoice (AR):
    Line entry:
        Dr  Accounts Receivable         (line amount)
            Cr  Revenue / Income                    (line amount)  [reverseSign: true]

    Balancing entry:
        Dr  Cash at Bank (total)       (sum of all line amounts)
            Cr  Accounts Receivable                  (total amount)

For a receipt from a customer (direct payment):
    Line entry:
        Dr  Cash at Bank                (line amount)
            Cr  Accounts Receivable                  (line amount)

The system uses reverseSign = true — positive line amounts create
credit entries to income/revenue accounts.

8.3 Cash Flow Statement

Both Payments and Receipts appear in the Cash Flow Statement under Operating Activities (unless they relate to Investing or Financing accounts). The Cash Transaction for CFS Purposes flag on Journal Entries is not applicable to Payments and Receipts — they are always treated as cash transactions.

Key CFS behavior:

• Direct Method: Both payments and receipts appear in the operating section under their respective bank accounts
• Indirect Method: The changes in AR and AP from receipts and payments are reflected in the "Changes in Working Capital" section
• Export LC accounts: Export LC Receivable and Export LC AR Clearing are excluded from the CFS (they represent bank financing, not operating cash)

9. Opening Balances

Payments and Receipts themselves do not have opening balances. However, opening balances can affect the same accounts:

• Accounts Receivable opening balance — set via Settings > Opening Balances for AR accounts with Customer reference. Future Receipts will reduce this balance.
• Accounts Payable opening balance — set via Settings > Opening Balances for AP accounts with Supplier reference. Future Payments will reduce this balance.
• Cash at Bank opening balance — set via Settings > Opening Balances for bank accounts. This establishes the starting cash balance from which payments and receipts increase or decrease.

Opening balances for AR and AP with foreign currencies are auto-populated from the Customer or Supplier's currency setting. Ensure the opening balance currency matches the entity's currency for consistent reporting.

10. Reports

10.1 Payments and Receipts Listing

Both listing pages show: Date, Cleared status, Reference, Bank Account, Description, Payee/Payer, Accounts, Amount. Uncategorized payments/receipts (those posted to Suspense) show an alert banner at the top.

10.2 Bank Account Summary

The Bank Account Summary report shows standard payments and receipts in the main Inflows/Outflows section. LC-linked payments and Export LC receipts are shown in separate rows:

• Import LC Payments — LC-linked payment transactions are grouped separately from standard payments
• Export LC Receipts — Export LC Receipt transactions appear in their own row

These separate rows only appear when there is a non-zero amount in at least one column period.

10.3 Receipts and Payments Summary

Same structure as Bank Account Summary — standard receipts/payments in the main section, LC transactions in separate rows. This report also includes Inter-Account Transfers and Expense Claims in its main query.

10.4 Customer Summary and Supplier Summary

• Customer Summary: Receipts appear in the "Receipts" column (cash received from customers). Payments to customers appear in the "Refunds" column.
• Supplier Summary: Payments appear in the "Payments" column (cash paid to suppliers). Receipts from suppliers appear in the "Refunds" column.
• LC-linked transactions are NOT specifically identified in these reports — they appear together with standard transactions.

10.5 Cash Flow Statement

• Payments and Receipts are included in the operating activities section
• LC payments and receipts are included in the same section (the LC-specific accounts like Export LC Receivable are excluded from CFS as they represent financing, not operating cash)
• The Direct Method shows actual cash movements; the Indirect Method adjusts net profit for changes in AR/AP balances

11. Sample Data and Report Output

11.1 Setup

11.2 Standard Payment Sample

GL Transactions Created

Line entry (AP):
    Dr  Accounts Payable (XYZ Trading Co)          100,000.00

Balancing entry (Bank):
        Cr  Cash at Bank (Main Account)                         100,000.00

Verification:
    Debit:  100,000.00
    Credit: 100,000.00
    DR = CR: 100,000.00 − 100,000.00 = 0.00 ✓

Impact: AP reduced by 100,000. Cash reduced by 100,000.

11.3 Standard Receipt Sample

GL Transactions Created

Line entry (AR):
    Cr  Accounts Receivable (ABC Retail Ltd)                    50,000.00

Balancing entry (Bank):
    Dr  Cash at Bank (Main Account)               50,000.00

Verification:
    Debit:  50,000.00
    Credit: 50,000.00
    DR = CR: 50,000.00 − 50,000.00 = 0.00 ✓

Impact: AR reduced by 50,000. Cash increased by 50,000.

11.4 LC Payment Sample

GL Transactions Created

Line 1 — Dr Accounts Payable                        30,000.00
Line 2 — Dr Letter of Credit Payable                70,000.00

Balancing entry:
        Cr  Cash at Bank                                       100,000.00

Verification:
    Total Debits:  30,000.00 + 70,000.00 = 100,000.00
    Total Credits: 100,000.00
    DR = CR: 100,000.00 − 100,000.00 = 0.00 ✓

Impact on Bank Account Summary

This LC payment appears in a separate "Import LC Payments" row rather than in the main Outflows section. The Bank Account Summary report separates LC-financed payments from standard trade payments.

DR = CR Verification Summary

Standard Payment PMT-001:
    Dr  Accounts Payable          100,000.00
        Cr  Cash at Bank                      100,000.00
    DR = CR: 100,000.00 − 100,000.00 = 0.00 ✓

Standard Receipt RCPT-001:
    Dr  Cash at Bank               50,000.00
        Cr  Accounts Receivable                 50,000.00
    DR = CR: 50,000.00 − 50,000.00 = 0.00 ✓

LC Payment PMT-LC-001:
    Dr  Accounts Payable           30,000.00
    Dr  LC Payable                 70,000.00
        Cr  Cash at Bank                      100,000.00
    DR = CR: 100,000.00 − 100,000.00 = 0.00 ✓

12. Accounting Regulation Compliance

12.1 IAS 7 — Statement of Cash Flows

Requirement (§7): Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the entity.

How this system complies: Payments to suppliers and receipts from customers are classified as Operating Activities in the Cash Flow Statement. The Direct Method shows actual cash movements through bank accounts. The Indirect Method adjusts net profit for changes in AR and AP balances. LC-related transactions are correctly separated — Export LC Receivable and Export LC AR Clearing accounts are excluded from CFS as they represent bank financing rather than operating cash.

12.2 IAS 21 — The Effects of Changes in Foreign Exchange Rates

Requirement (§23): Foreign currency monetary items (including AR and AP) are translated at the closing rate. Exchange differences are recognized in profit or loss.

How this system complies: Payments and Receipts in foreign currencies use the exchange rate on the document date. The bank account's currency determines the transaction currency, and the system converts amounts using the exchange rate. Period-end revaluation of AR and AP is handled separately by the automated FX revaluation process.

12.3 IFRS 9 — Financial Instruments

Requirement (§5.1.1): Financial assets are initially measured at fair value. Financial liabilities (AP, LC Payable) are subsequently measured at amortized cost.

How this system complies: Payments reduce financial liabilities (AP, LC Payable) at the carrying amount. The Import LC Payment correctly splits the settlement into the AP portion (trade liability) and the LC Payable portion (bank financing), ensuring proper classification of financial liabilities.

12.4 IAS 32 — Financial Instruments: Presentation

Requirement (§42): A financial liability is derecognized when the obligation is discharged, cancelled, or expires.

How this system complies: When a Payment is made, the corresponding AP or LC Payable is reduced via the balancing GL entry. The financial liability is derecognized to the extent of the payment amount. For LC transactions, the AP and LC Payable portions are derecognized separately, reflecting the different creditor (supplier vs. bank).

12.5 IAS 1 — Presentation of Financial Statements

Requirement (§54): Trade and other payables, and cash and cash equivalents must be presented on the face of the Balance Sheet.

How this system complies: Payments reduce Cash at Bank and reduce Accounts Payable or Letter of Credit Payable on the Balance Sheet. Receipts increase Cash at Bank and reduce Accounts Receivable. Separate bank accounts are tracked individually, and the pending/cleared status provides additional detail on the timing of cash movements.

12.6 DR = CR Verification

Standard Payment:
Dr  Accounts Payable (liability decrease)    100,000.00
Cr  Cash at Bank (asset decrease)             100,000.00
DR = CR: 100,000.00 − 100,000.00 = 0.00 ✓

Standard Receipt:
Dr  Cash at Bank (asset increase)             50,000.00
Cr  Accounts Receivable (asset decrease)       50,000.00
DR = CR: 50,000.00 − 50,000.00 = 0.00 ✓

LC Payment (AP portion):
Dr  Accounts Payable                          30,000.00
Cr  Cash at Bank                               30,000.00
DR = CR: 30,000.00 − 30,000.00 = 0.00 ✓

LC Payment (LCP portion):
Dr  Letter of Credit Payable                  70,000.00
Cr  Cash at Bank                               70,000.00
DR = CR: 70,000.00 − 70,000.00 = 0.00 ✓

12.7 Relevant but Not Applicable

• IFRS 15 (Revenue): Receipts represent cash collection against previously recognized revenue. The revenue was recognized when the Sales Invoice was created, not when the Receipt is recorded.
• IFRS 16 (Leases): Standard payments follow the same pattern regardless of whether the expense is a lease payment or a trade payment.
• IAS 2 (Inventories): Payments for inventory items are recorded as reductions of AP, not as inventory adjustments. The inventory cost was recorded when the Purchase Invoice was processed.

End of Payments and Receipts Guide