Cash close with holding accounts

Historically, cash receipts have hit the bank G/L at the time that they are entered.   Some boards have indicated a preference to have the receipts hit the bank G/L at the same time that the funds are actually deposited. The following has been developed to accommodate this preference.  If a board wishes to continue with the original design, there is no need to do anything.

To implement:

  1. Identify G/L accounts to be used as Cash Holding accounts – create new ones if necessary.  These accounts will be debited when entering cash receipts instead of debiting the bank directly.  It is recommended that as many cash holding accounts be created as there are bank accounts in the Revenue Category setting. 
  2. All cash receipts must be closed before proceeding with implementation – therefore, close all open cash receipts.
  3. Go to System à Settings à Accounts Receivable   à Revenue Category.  Click Edit and then enter the cash holding accounts identified above in the appropriate column.  It is recommended to maintain consistency between bank G/Ls and holding G/Ls, meaning each unique bank G/L in the setting should be associated with a unique holding G/L.   Add a note and save.
  4. Go to System à Settings à Accounts Receivable    à A/R Master.   Click Edit and respond to the following prompts:
    1. Prepayment Cash Holding G/L Account: whenever there is an overpayment in A/R receipts and holding accounts are in use, the overpayment debit will be made to this holding account.  It is recommended to enter the most commonly used cash holding account. 
    2.  Default Jv Batch Code for Cash Close: when a cash close is finalized, the system will prepare a journal voucher for use in transferring the funds from the holding account to the bank account.  The batch code to be used in preparing the journal voucher will be the batch code identified here.
    3. Default Jv Approver for Cash Close: when the journal voucher mentioned above is created, it will be forwarded for approval to the user identified here.

Once these steps have been followed, you are now ready to resume receiving payments, which will now be posted first to the cash holding account(s); when the cash close is finalized and the resulting batch is approved, the funds will be moved from the cash holding G/L to the Bank G/L.