CBA Example: Payment w/o Invoice Reference (Payment on Account)

Scenario

This scenario deals with unassigned payments, also called payments on account, which must go through both of the following:

  • They are posted into the Cash Ledger (CL) in advance, as long as the real invoice is not known.

  • They are reassigned to the correct account assignment after they have been cleared by the posting of an invoice.

The graphic below illustrates the process:

Cash-Basis Accounting: Payment without Invoice Reference (Payment on Account) - Overview

This example assumes that the new general ledger (G/L), document split and Cash-Basis Accounting (CBA) have been configured in full. The scenario described below refers only to one G/L entity - Revenue/Expense Account (RE_ACCOUNT ). However, since all other G/L entities can also be used in CBA, the updating mechanisms considered are valid for them as well.

  1. To update the information on available cash to the cash ledger (CL) as quickly as possible, you first post a bank statement as a payment on account – bank account against the bank clearing account. Since you have no further information on the payment, the posting in the CL must be to the advance expense account maintained in Customizing for unassigned processes. The posting results in the following FI document:

    Account

    Debit

    Credit

    Bank (Cash-Relevant)

    100

    Bank Clearing Account

    100

    This generates the following CL document, where the bank clearing account is replaced by the advanced expense account:

    Account

    Debit

    Credit

    Revenue/Expense Account (RE_ACCOUNT)

    Bank (Cash-Relevant)

    100

    Advanced Expense

    Default Revenue Account

    100

    Advanced Expense

  1. Next, the vendor invoice is posted. Within the meaning of CBA , the invoice is not cash-relevant and no CL document is created in the system. The invoice posting looks like this:

    E n try View - Invoice

    Account

    Debit

    Credit

    Vendor

    100

    Expense 1

    60

    Expense 2

    40

    100

    The split looks like this:

    Document Split View

    Account

    Debit

    Credit

    Revenue/Expense Account (RE_ACCOUNT)

    Vendor

    60

    Expense 1

    Vendor

    40

    Expense 2

    Expense 1

    60

    Expense 1

    Expense 2

    40

    Expense 2

    As no cash-relevant accounts are involved in these postings, there is no update to the CL.

  2. In this step, the payment of the invoice is made from the bank clearing account. According to the concept of the Cash-Basis Accounting, bank clearing accounts are not cash-relevant. Consequently this document is not updated in the cash ledger. The posting results in the following entry view:

    Payment: Entry View

    Account

    Debit

    Credit

    Bank Clearing Account

    100

    Vendor

    100

    However, the inheritance mechanism causes the information about the causing expense accounts to be transmitted into the payment document, so that the split version of the document looks like this:

    Document Split

    Account

    Debit

    Credit

    Revenue/Expense Account (RE_ACCOUNT)

    Bank Clearing Accountt

    60

    Expense 1

    Bank Clearing Accountt

    40

    Expense 2

    Vendor

    60

    Expense 1

    Vendor

    40

    Expense 2

  1. Finally, both open items – the bank statement from step 1 above and the payment from step 3 are cleared against each other on the bank clearing account . Since these items are assigned to different expense accounts and the respective account assignment (RE_ACCOUNT) is defined as a balancing G/L entity, additional document line items are generated in the clearing document to provide a zero balance with respect to all expense accounts involved. The split view of the clearing document looks as presented below:

    Bank Clearing

    Account

    Debit

    Credit

    Revenue/Expense Account (RE_ACCOUNT)

    Bank Clearing Account

    100

    Advanced Expense

    Bank Clearing Account

    60

    Expense 1

    Bank Clearing Account

    40

    Expense 2

    Clearing Account

    100

    Advanced Expense

    Clearing Account

    60

    Expense 1

    Clearing Account

    40

    Expense 2

The clearing items, created automatically, reflect the payment information correction made to the bank account in respect of the expenses involved. For this reason, the clearing account is replaced by the cash-relevant bank account in the CL document.

CL Document

Account

Debit

Credit

Revenue/Expense Account (RE_ACCOUNT)

Advanced Expense

100

Advanced Expense

Bank (Cash-Relevant)

100

Advanced Expense

Bank (Cash-Relevant

60

Expense 1

Bank (Cash-Relevant

40

Expense 2

Expense 1

60

Expense 1

Expense 2

40

Expense 2

The cash is thus reassigned in the cash ledger from advanced expense to the real expense accounts.