Understanding Payments and Deposits

This topic provides an overview of payments and deposits and discusses:

Bilateral netting
Payment status

In PeopleSoft Receivables, a deposit consists of all payments that you are processing or that the bank processes. You can apply a payment to multiple items for a single customer or to multiple items for different customers, even across business units.

You can enter payments into PeopleSoft Receivables using these methods:

Method	Description
Regular deposit	This is the standard method for online payment entry. Use regular deposit when you have customer information but lack item IDs.
Express deposit	If you have an item ID, use express deposit so that you can enter deposits and apply payments at the same time. You do not need customer information to use express deposit.
Excel Spreadsheet	Cash and remittance information can be entered into a preformatted Microsoft Excel spreadsheet and loaded into PeopleSoft Receivables.
Lockbox	Electronic payments that are deposited automatically in the background from a bank file.
Electronic Data Interchange (EDI)	A process that receives payments in both the European and U.S. EDI formats.
Cash drawer receipts	Payments and deposits that you enter as cash drawer receipts for counter sales in PeopleSoft Order Management.
Bank statement	Bank statement deposits are a source of payments through the entry of reconciled deposits to the receivables system.
Bilateral netting	Netting deposits are the result of a net of payables and receivables transactions.
Credit card	The PeopleSoft system provides a tool to obtain credit card authorization and to process credit card payments.
(JPN) Electronic Funds Transfer (EFT)	A process receives payments in an EFT file.

Depending on your business, you can use one or more of these methods. The method of payment entry that you use does not limit your cash application options. After you enter payments, you can apply them to items by using either a payment worksheet or the Payment Predictor Application Engine process (ARPREDCT), which automatically applies payments. After you apply the payments, run the Receivables Update Application Engine process (ARUPDATE) to post the payments, create accounting entries, and update the customers' balances.

You journal cash to the general ledger by using direct journaling or the cash control accounting method.

Direct journaling bypasses payment application and sends cash directly to the general ledger—a method suited to payments that do not pay accounts receivable items.
The cash control accounting method journals cash to a control account upon receipt or when reconciled on a bank statement, depending on the cash control methods used.
If you do not use cash control, the system updates the cash account after you apply the payment.

Netting deposits are the result of a net of payable and receivable transactions. If your organization uses both PeopleSoft Payables and PeopleSoft Receivables, you can offset open items in PeopleSoft Receivables with open vouchers in PeopleSoft Payables by using bilateral netting. This function is useful when some of your customers are also suppliers from whom you purchase goods or services.

You need to set up a contractual arrangement with your trading partners who want to participate in the netting process. You specify which supplier IDs and customer IDs participate in each netting selection and the system nets the open vouchers and items for those customers and suppliers. You also specify rules for selecting the vouchers and items and for the order in which the system matches the items. For example, you can specify that you want the process to match the smallest items or largest items first.

Note: If you do not want to include an item in the netting process, deselect the Available for Netting check box on the View/Update Item Details - Detail 1 page.

The netting process uses a netting bank account, which is a virtual bank, for the exchange of funds. No exchange of actual funds occurs, but the process creates a deposit that uses this bank account.

In some cases, when you net transactions, the total of the receivable items and the payable vouchers is not equal. If the receivables are greater than the payables, the process selects the items to net based on the netting rules and then partially nets one item. For example, suppose that you have two items in a netting selection: one for 100.00 and one for 50.00. You have two vouchers in a netting selection: one for 75.00 and one for 50.00. The total of the vouchers is 125.00 and the total of the items is 150.00. Your netting rules specify that you net the largest item first. So the process would net both vouchers, the 100.00 item, and 25.00 of the second item.

When you close the netting selection using Pay Cycle Manager, the system creates a deposit with one payment for the total amount of the net. In this example, the deposit would be for 125.00. The deposit uses the netting reference ID for the payment ID. The closing process creates a payment worksheet for the deposit and sets its posting status to Batch Standard.

Warning! If you change the item selections on the payment worksheet, the accounting entries for the net will be out of balance.

The closing process changes the due date and payment method for all of the items in the netting selection that were not paid (including the item that the net partially paid) to the same due date and payment method based on the PeopleSoft Receivables receipt settlement instructions. It also assigns the netting reference ID to each item to facilitate payment application.

If the payables are greater than the receivables, the process is essentially the same, except that all items in the netting selection are paid in full by the netting deposit.

A payment's status changes as the payment moves through the system. The status determines which payment information you can change and which menu options are available to work with the payment.

This table lists payment status and provides a description for each status:

Payment Status	Description
Unidentified	A payment was entered through a regular or express deposit or electronically by lockbox, EDI, bank statement, or a cash drawer receipt. A payment ID was entered but no customer or payment reference information was provided. You can change all payment information.
Identified	Payment reference information or a customer identifier was provided upon entry. This occurs for regular deposits on the Regular Deposit - Payments page or on the Worksheet Selection page. The system identifies electronic payments by magnetic ink character recognition (MICR) ID, a customer ID, or any of the payment references. If you delete a worksheet, the payment status reverts to Identified.
Identified - Express	Item or payment reference information was provided on the Express Deposit - Payments page. The payment is linked to an item or items, but not set to post. You can change all payment information.
Directly Journaled	The payment was entered in a regular deposit and marked for direct journaling. The status changes when you mark accounting entries complete after entering the user-defined line on the Accounting Entries page.
Unposted DJ (Unposted Direct Journal)	The directly journaled payment is unposted and the accounting entries are reversed.
Worksheet	The payment has a saved worksheet that is not set to post. If any payment in a deposit has this status, you cannot change any deposit information, payment amounts, dates, or IDs. If accounting entries have not been created, you can change identifying information for the payment.
Applied	The payment has been applied, and either accounting entries were created online or the payment is set to post on the Worksheet Action page. If any payment in a deposit has this status, you cannot change any deposit or payment information.
Complete	The Receivables Update process has successfully posted the payment. After a payment has been marked Complete, you can only inquire on it. To change it, you must unpost the payment group.

Understanding Payments and Deposits

Bilateral Netting

Payment Status