Payment by Check and Bill of Exchange 

You can post the payment by check manually or using the payment program. The bill of exchange itself can only be posted manually.

If the payment program makes the payment, the bill of exchange is printed but not posted. The payment program only supplies the data for printing the bill of exchange. Posting the bill of exchange is generally not necessary, as you first send it to the vendor together with the check and wait for it to be returned.

The following example shows the postings that are necessary for payment by check/bill of exchange:

  1. A payable is shown on the vendor account and the corresponding reconciliation account in the sum of 11,400 DEM.
  2. The payment program pays the payable by check. To do this, it posts the amount to an outgoing checks account and to the vendor account, as well as to the respective reconciliation account. As a result, the payable is cleared.
  3. If the drawing-up of the bill of exchange is to be displayed in accounts, you must also post the bill of exchange amount to the vendor account manually. The system automatically posts to the special G/L account for contingent liability from checks/bills of exchange and makes the offsetting entry on a clearing account.

Although a check/bill of exchange in Accounts Payable is referred to as a special G/L transaction, you only need a special G/L account for these bills of exchange in exceptional cases, namely when you want to display the contingent liabilities from the bill of exchange posting in accounts.