Understanding the Process of Running the A/R Draft Collection for Prepayments Program

From the Prepayment Processing menu (G1726), select A/R Draft Collection for Prepayments.

After the settlement process occurs successfully, you can generate drafts for receivables from the credit card company's bank.

The bank collects the funds for the draft from the credit card company's bank on the due date of the draft. On or after the due date, both you and the credit card company recognize the transfer of cash. You update the status of the draft to record that it has been collected.

Some companies prefer to close the draft on the settlement date while others wait until the payment appears on the bank statement. Depending on the company policy, use the AR Draft Collection for Prepayments to:

Run Status Update with Journal Entries on the draft due dates to create journal entries.
Run Status Update without Journal Entries on the draft due dates, using a pay status code of something other than P (paid).
After you verify that payments have been collected, run Status Update with Journal Entries.

Additionally, the credit card company might assess fees for authorizations. You account for all fees by creating a separate journal entry in the Journal Entries program (P0911).

This table describes how you can run the batch process in either proof or final mode:

Mode	Description
Proof mode	In proof mode, the system: Selects drafts with a remitted to bank status, that is, drafts that have been remitted but not yet collected. Prints a report that displays the drafts to be updated. It displays all drafts that have a payment status of G (drafts deposited not due) with a due date that you specify in a processing option.
Final mode	In final mode, the system works in the same way as proof mode except that it also: Changes the pay status of drafts to P (paid) or to another value that you select. Closes the drafts and creates a journal entry to debit a cash account and credit drafts remitted. Clears the account of drafts that were created with a contingent liability.

Mode

Description

Proof mode

In proof mode, the system:

Selects drafts with a remitted to bank status, that is, drafts that have been remitted but not yet collected.
Prints a report that displays the drafts to be updated. It displays all drafts that have a payment status of G (drafts deposited not due) with a due date that you specify in a processing option.

Final mode

In final mode, the system works in the same way as proof mode except that it also:

Changes the pay status of drafts to P (paid) or to another value that you select.
Closes the drafts and creates a journal entry to debit a cash account and credit drafts remitted.
Clears the account of drafts that were created with a contingent liability.

The process updates records in the Accounts Receivable Ledger (F03B11), Receipts Register, and Receipts Application Detail tables; and creates records in the Receipts Application Detail table.