When setting up your customer accounts, the statement type you specify for each customer in AR Customers determines what type of account they will have, how the statements will be processed, and how payments are generally posted to the account.
There are two statement types available in Accounts Receivable: Open Item and Balance Forward.
Invoices interfaced from Job Billing or Material Sales cannot be edited in AR. They must be edited from within the module in which they were created. You can make changes to the balance of an invoice by applying adjustments or credit memos.
Balance Forward accounts are used when the statement is to show the beginning balance for the period and all of the activity for the current period. This type of account is typically used in situations where a large number of invoices are generated each month, and it is easier and less time-consuming to apply payments to the account balance rather than to individual invoices. For example, companies that supply sand and gravel, asphalt, or other materials that are sold and hauled by the truckload, might use this type of account for their customers. (If you are using the Material Sales module, you will probably find this type of account more useful.)
Although payments are typically applied to the account balance, there may be circumstances that require all or part of a payment to be applied to a specific invoice. In this case, payments can be recorded on an open item basis, even though the statement works on a balance forward basis. The AR Cash Receipts program allows you the flexibility to apply payments on account or to specific invoices for a Balance Forward account.
When posting a payment on account, you may choose to break it down into items. The items will not appear separately on the statement; rather they will be combined together and appear as one item on the statement for the total amount of the payment.
Although retainage and discounts are not generally used for this type of account, they can be applied to invoices and payments if desired. If retainage is released, it will appear on the statement as Released Ret, but payment may still applied to the account balance. Discounts can be taken when posting payments, and will appear as part of the payment amount. For example, if the check was for $500.00 and the discount amount was $75.00, the payment appears on the statement as $575.00, even though the check amount was actually $500.00. This is because invoice amounts that appear on the statement do not reflect offered discount amounts, therefore the payment amounts must include the discount amount in order to balance with the invoice amounts.
Finance/Service charges assessed for Balance Forward accounts will be applied to any portion of the account balance that is overdue. They will not be applied to individual invoices associated with the account.
When running statements for this type of account, the statement begins with the balance forwarded from the last statement date. Then, each transaction that has occurred since that date is listed in transaction date order. Listed transactions will include all payments, finance/service charges, and released retainage that have occurred up to the cutoff date specified. Totals are displayed at the bottom in an aging format, showing the amounts overdue in 30-day increments. A retainage column displays unpaid retainage amounts, and a Balance Due column displays the total of all columns.