Category: Accounting V1

Cash discounts are an incentive (usually a small percentage) that you offer to customers in return for paying a bill owed before the scheduled due date. If used properly, cash discounts improve the Days Sales Outstanding aspect of a business’s cash conversion cycle.

 

For example, a typical cash discount would be: you offer a 2% discount on an invoice due in 30 days if the customer were to pay within the first 5 days of receiving the invoice.

→ Payment terms

In order to manage cash discounts, we will use the payment terms concept of Kiu (From the Accounting module, go to Configuration ‣ Management ‣ Payment terms ‣ Create).

Let’s start with the above example: a 2% discount on an invoice due in 30 days if the customer were to pay within the first 5 days.

A typical payment term of 30 days would have only one installment: balance in 30 days. But, in order to configure the cash discount, you can configure the payment term with two installments:

• 98% within 5 days
• balance within 30 days

To make it clear that it’s not a payment term but a cash discount, don’t forget to set a clear description that will appear on the invoice: Invoice is due within 30 days, but you can benefit from a 2% cash discount if you pay within 5 days.

→ Bank reconciliation model

In order to speed up the bank reconciliation process, we can create a model of entry for all cash discounts. To do that, from the Accounting module dashboard, click on the “More” link on the bank and choose the option “Reconciliation Models”.

Create a new model for cash discounts as follow:

• Button Label: Cash Discount
• Account: Cash Discount (according to your country)
• Amount Type: Percentage
• Amount: 100%

• Taxes: depending on your country, you may put a tax on the cash discount if taxes have to be deduced

Even if it’s a 2% cash discount, set a 100% amount on the reconciliation model as it means 100% of the remaining balance (the 2%). You can use the same reconciliation model for all your cash discount. No need to create a model per payment term.

→ Creating an invoice with a cash discount

When you create a customer invoice, set the right payment term “30 days, 2% cash discount” right after having selected the customer.

Once the invoice is validated, Kiu will automatically split the account receivable part of the journal entry with two installments having a different due date: 98% within 5 days, 2% within 30 days.

→ Paying the invoice with a cash discount

If the customer pays with a cash discount, when processing the bank statement, you will match the payment (98%) with the related line in the journal entry.

As you can see in the above screenshot, when selecting the customer, you also see the 2% remaining of 3,630 VND. If you want to accept the cash discount (if the customer paid within the 5 days), you can click on this line with 2%, click on “Open Balance”, and select your “Cash Discount” reconciliation model. That way, the invoice is marked as fully paid.

→ Paying the invoice in full

If the customer pays the invoice fully, without benefiting from the cash discount, you will reconcile the payment (in full) with the two lines from the invoice (98% and 2%). Just click on the two lines to match them with the payment.

Similar to the way manually matching payment & bill. See how to do it here.

→ How to register a payment for a Customer Invoice

You can refer to the instruction for Vendor Bills here.

→ How to register batch payments for Invoices from a Customer

You can refer to the instruction for Vendor Bills here.

→ How to register batch payments for Invoices from different Customers

You can refer to the instruction for Vendor Bills here.

There are two ways to invoice the shipping costs:

1. Agree with the customer over a cost and seal it down in the sale order
2. Invoice the real cost of the shipping.

→ Invoice the price set on sale order

In Sales Module ‣ Sales order 

On your sale order, choose the carrier that will be used. Click on Delivery Method to choose the right one.

The price is computed when you save the sales order or when you click on Set price.

To invoice the price of the delivery charge on the sale order, click on Set price, it will add a line with the name of the delivery method as a product. It may vary from the real price.

When you create the invoice, it will take the price set on the sales order.

→ Invoice the real shipping costs

On your sale order, choose the carrier that will be used. Click on Delivery Method to choose the right one.

Edit the cost set automatically by KIU to real cost ‣ Save

Go back to the sale order, the real cost is now added to the sale order.

Draft invoices can be manually generated from other documents such as Sales Orders, Purchase Orders,etc. Although you can create a draft invoice directly if you would like.

An invoice must be provided to the customer with the necessary information in order for them to pay for the goods and services ordered and delivered. It must also include other information needed to pay the invoice in a timely and precise manner.

To create invoice directly, open Accounting module ‣ Sales ‣ Customer invoices ‣ Create

The document is composed of three parts:

• the top of the invoice, with customer information,
• the main body of the invoice, with detailed invoice lines,
• the bottom of the page, with detail about the taxes, and the totals.

→  Payable Ledger for a particular partner

Open Contact module ‣ Choose a particular partner ‣ Action ‣ Click on type of partner ledger: payable/receivable

→  Payable Ledger for all partners

Go to Accounting module ‣ Reports ‣ Partner ledger, you can see all transactions relating to partners.

→  Aged payable report

Go to Accounting module ‣ Reports ‣ Aged Payable 

The accounts payable aging report categorizes payables to suppliers based on time buckets. The report is typically set up with 30-day time buckets, so that each successive column in the report lists supplier invoices that are:

• 0 to 30 days old
• 31 to 60 days old
• 61 to 90 days old
• 91 to 120 days old
• Older than 120 days

The intent of the report is to give the user a visual aid in determining which invoices are overdue for payment.

Sometimes in business, you may receive a payment in advance from a customer, or    you may have to pay an advance to your vendors before you place an order. As soon   as you receive the payment in the bank, create a bank statement and reconcile it, as it is a payment in advance from the customer; don’t select the counterpart at reconciliation.

When you have a partner linked to the entry without a counterpart, you will get the    VALIDATE button instead of the RECONCILE button. Click on the VALIDATE button to    process those entries; that will be considered as an advance from the customer or to    the vendors.

After issuing invoices to customers, you can match this prepayment with invoices through Manual payment and invoice matching tab in Accounting module.

You can also use this function in case you process payments via Payments in Sales/Purchases tab.

After reconciliation, system will generate matching numbers for reconciled transactions, which help you keep tracks of all receivable and payable transactions with payments.

→ How to register a payment for a Vendor Bill

To create a payment for an open vendor bill directly, you can click on Register a Payment at the top of the form.

From there, please select the payment method (i.e. Checking account, credit card, check, etc…) and the amount you wish to pay. By default, KIU will propose the entire remaining balance on the bill for payment. In the memo field, we recommend you set the vendor invoice number as a reference (KIU will auto fill this field from the vendor bill if set it correctly).

You can also register a payment to a vendor directly without applying it to a vendor bill. To do that, go to Purchases ‣ Payments. Then, from the vendor bill you will be able to reconcile this payment with directly.

→ How to register batch payments for Bills from a Vendor

 You can pay multiple bills from a vendor in Accounting module. Go to Purchases ‣ Vendor bills. Make sure all bills come from the same vendor.

Insert the details of the payment. The system calculated the total amount for both bills, but you can modify it freely. Click on Validate.

→ How to register batch payments for Bills from different Vendors

In case of payment for different vendors, you select vendors that you would like to pay ‣ Actions ‣ Batch Payments ‣ Make payments. 

→ How to record a new vendor bill

When a vendor bill is received, you can record it from Purchases ‣ Vendor Bills in the Accounting module. As a shortcut, you can also use the New Bill feature on the accounting dashboard.

To register a new vendor bill, start by selecting a vendor and inputting their invoice as the Vendor Reference, then add and confirm the product lines, making sure to have the right product quantities, taxes and prices.

Save the invoice to update the pre tax and tax amounts at the bottom of the screen. You will most likely need to configure the prices of your products without taxes as KIU will compute the tax for you.

→ How to validate The Vendor Bill

Once the vendor bill is validated, a journal entry will be generated based on the configuration on the invoice. This journal entry may differ depending on the accounting package you choose to use.

For most European countries, the journal entry will use the following accounts:

• Accounts Payable: defined on the vendor form
• Taxes: defined on the products and per line
• Expenses: defined on the line item product used

For Anglo-Saxon (US) accounting, the journal entry will use the following accounts:

• Accounts Payable: defined on the vendor form
• Taxes: defined on the products and per line
• Goods Received: defined on the product form

You can check your Profit & Loss or the Balance Sheet reports after having validated a couple of vendor bills to see the impact on your general ledger.

Every transaction is recorded in the default currency of the company. For transactions occurring in another currency, KIU stores both the value in the currency of the company and the value in the currency of the transaction. KIU can generate currencies gains and losses after the reconciliation of the journal items.

In the accounting module, Go to Configuration ‣ Settings and flag Allow multi currencies and set journal for foreign exchange difference, then click on Apply.

→ View or edit currency rate being used

You can manually configure the currency rates in Configuration ‣ Currencies. Open the currencies you want to use in KIU and edit it. Make sure the currency is active.

Click on View Rates to edit it and to see the history :

Click on Create to add the rate. Fill in the date and the rate. Click on Save when you are done.

→ Configure your charts of account

In the accounting module, go to Adviser ‣ Charts of Accounts. On each account, you can set a currency. It will force all moves for this account to have the account currency.

If you leave it empty, it means that it can handle all currencies that are Active.

→ Configure your journals

In order to register payments in other currencies, you have to remove the currency constraint on the journal. Go to the Accounting module, Click on Configuration ‣ Journals.