Payment processing is how money actually moves: receiving from customers and issuing to vendors and others, through your financial accounts. A single receipt or payment can settle many documents at once, and posts straight to the bank and the ledger in one action.
- How a payment knocks off the documents it settles
- What the receipt and payment screens capture
- The difference between recording and clearance
- How receipts and payments post to the ledger
Anatomy of the screen
Receive and issue mirror each other. Reading down a receipt:
- Party – who is paying: a customer, vendor or director. On the issue side the payee can also be a payroll batch or an employee.
- Documents knocked off – the invoices, bills or notes this payment settles; pick several and the amount is their sum.
- Payment sources – the financial account(s) the money lands in, or is drawn from.
- Transaction fees – a fee preset, an amount, and the expense ledger the fee posts to (bank charges, for instance).
- Clearance status – Pending or Cleared, with a clearance date for when the money truly settled.
- Notes and attachments.
How it behaves
Knock-off
A receipt is linked explicitly to the invoices it pays, so each invoice's status moves to part-paid or paid and the customer's subledger clears by exactly that amount. The link is the point: money is always tied to what it settled, never floating unattached.
What it posts
A receipt debits the bank and credits receivables; a payment does the reverse. Any fee posts to its expense ledger. Because the posting is automatic, recording the payment and updating the books are the same act.
Recording versus clearance
Recording a cheque today and it clearing next week are two different dates. The clearance status tracks that gap, so your ledger can show the payment while reconciliation still treats it as uncleared until the bank confirms it.
Worked example
A customer sends one transfer covering three invoices. You open a receipt, knock off all three, add a 5.00 bank fee against bank charges, and post. The bank ledger rises by the net, the three invoices flip to paid, and the customer's balance clears, from a single document.
Edge cases and good practice
- Use clearance for uncleared cheques so reconciliation stays honest.
- Knock off many at once when a customer pays in a lump sum, rather than splitting into several receipts.
- Director-settled costs – choose the director as the source when an expense was paid personally.
Related
- How to: Receive a payment and Issue a payment
- Reference: Cash and Bank Accounts
- Reference: Reconciliation