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I would like to discuss the concept of postdated checks. The idea here is if you are going to discuss a term with your vendor and the accounts payable, you have to create a specific method of payments that does accept the postdated checks. By going through the Cash and bank management and selecting the parameters form, there is a link tab called Postdated checks. By default, when I created the legal entity, based on any country, this is not enabled because it may not be as popular as it is in certain countries. And speaking of which, the idea of a postdated checks is either you issue a check to a vendor based on the agreed terms for the future date and depending on the country you reside, for example, like Canada or India, the check cannot be deposited or withdrawn from your account until that date comes. Some other countries such as Brazil, they may even penalize the vendor if they cash the check earlier than agreed term based on the future date. In United States, you have a capability to use this specific tracking. But the way you deal with the postdated checks, it would be as type negotiable instruments, so it is part of setup of a check. You have nonnegotiable, which could not be deposited to anybody else's account, but negotiable check would be as an example of a postdated check that you could perhaps deposit earlier than the due date so there would be no penalty on it. And let us say, I would like to enable this postdated checks. By just selecting this option and saving it, you enabled having that specific feature to be available within your entire company. You cannot choose the postdated checks for a specific vendor. Here, as you see, there is a specific entry that you have to make because just enabling it is not necessarily completing the whole work, and you need to keep track of how much money you have paid to the vendor and is supposed to be paid off in the future. And in case you are receiving the postdated checks from a customer, you have to keep track of that specific balance against the customer account. So if you do not necessarily set anything up at this stage, if I switch back to the previous form on the method of payment, if I refresh it, there is a Postdated checks clearing posting is turned on. Just turning this option on, it gives you the capability in order to accept the postdated checks. So, of course, you could either modify an existing method of payment or you could just simply create a brand new method of payments type postdated checks, which is a best practice. You do not want to change the method of payments just because you want to pay one of your vendors as a postdated check. So what I do, I create a brand new one, and I call it postdated check. It could be based on the total that would be postdated check. And again, it would be a check obviously, but the account type is going to be the bank, which bank are you going to pay. However, pay attention, there are couple of options here, one is Bridging posting as part of general ledger daily procedures, you see postdated checks clearing posting. This is as type of bridging posting. As a matter of fact, if I turn this on, automatically, it turns on the bridging posting. If I turn off the bridging posting, you cannot use postdated check clearing posting. However, the difference here is, for the postdated checks clearing posting, when you turn it on, you need to have a bridging account, and usually, as a best practice, this account should be different from your own specific bridging accounts that you have created for any other purpose or you could use the same account. It really depends on the discretion of the customer. So what happens when you use this method of payment, you are generating a payment as usual, and you change the date to be indeed in the future, and then you send it to a vendor, and you keep track of it. And you make sure, when the time comes, you can progress this. Now close this. If you wanted to turn on the tracking within the source retailers, you have to have a general journal for the clearing account, which could be a daily type. You have to be able to pay your vendors. And then you have to have withholding tax clearing accounts in case the future is subjected to be paid, therefore, the taxes would be paid then, but you have to make sure you keep track of that information as well. Of course, you have two separate accounts, one for issued checks that you give to the vendor and one for receiving checks from the customer. Now let us take a look at pre-ready environment that I have already set up here. I am in different company, USMF, if I go to the postdated checks, so as you notice, there is an account called Issued PDC or postdated checks that you are giving to the vendor, but you have to keep track of it at what stage that amount is going to get out of your bank. The clearing accounts for received checks however is the monetary value that you are getting from a customer in the future. So of course, this has to be enabled, and you have to be able to have the system to automatically post certain journals for you, the created, the posted, or perhaps the created and then somebody else will post it depending on the policies, workflows, et cetera. Transfer a postdated checks to this specific vendor is going to be done via this payment journal and there is a withholding clearing account for the tax for the postdated checks. You see the separate account is the best practice to do so. This is a setup that you have to have, and these are the accounts, one for payable, one for receivable, and one for tax calculation.

Video Details

Duration: 5 minutes and 30 seconds
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Language: English
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Views: 4
Posted by: jmladero on Feb 25, 2019

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