Collection of a Bill of Exchange 

Purpose

This process describes how you record the collection of a bill of exchange by a bank.

Prerequisites

You have already entered the bill of exchange receivable, and the system has created the following document:

Process Flow

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       1.      In the system, you specify which bills you want to send to the bank (see Presenting a Bill of Exchange to a Bank).

The system creates an accounting document to record that the bill is now on the interim account – and therefore cannot be used for any other purpose – and that you have a contingent liability:

The system also prints out a transaction record, which you file away for future reference, and generates an electronic file with the details of the bills to be presented to the bank.

You send the bills and the electronic file to the bank.

       2.      When the bank receives the bill, it puts it in safekeeping. On the due date, it clears the bill, transfers the money to your account (less any collection charges), and notifies you accordingly (but see also When a Bill Bounces at a Bank).

       3.      When you receive the bank’s notification, you record the transaction in the system (see Clearing a Bill of Exchange Presented to a Bank).

The system creates two accounting documents to post the bill:

¡        One document to remove the bill from the interim account and debit it to your bank account, as follows:

¡        One document to remove the contingent liability from the liability account and the bill from the bills of exchange receivable account: