Understanding Draft Collection

After the settlement process occurs successfully, you can generate drafts for receivables due from the credit card company's bank. After you write drafts, you can close the draft by entering manual journal entries or by running the A/R Draft Collection program (R03B680).

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 show that it has been collected.

Some companies prefer to close the draft on the settlement date, while others wait until the payment appears on their bank statement. Depending on company policy, use the A/R Draft Collection program (R03B680) to run:

The Sales Order Speed Status Update program (P42040) with Journal Entries on the draft due dates to create journal entries.
The P42040 program 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 the P42040 with Journal Entries.

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

You can run this batch process in either proof or final mode:

Mode	Description of Process
Proof	In proof mode, the system: Selects drafts with a remitted to bank status. That is, the system selects drafts that have been remitted but not yet collected. Prints a report that displays the drafts to be updated. The report displays all drafts that have a payment status of G (draft deposited not due) with a due date that you specify in a processing option.
Final	In final mode, the system works in the same way as proof mode, with these exceptions: The system changes the pay status of drafts to P (paid) or to another value that you select. After you collect drafts, you approve and post journal entries to the general ledger. You must run the program using this option to close drafts. The system creates a journal entry to debit a cash account and credit drafts remitted. If the draft was created with a contingent liability, the system clears that account.

Mode

Description of Process

Proof

In proof mode, the system:

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

Final

In final mode, the system works in the same way as proof mode, with these exceptions:

The system changes the pay status of drafts to P (paid) or to another value that you select.
After you collect drafts, you approve and post journal entries to the general ledger.
You must run the program using this option to close drafts. The system creates a journal entry to debit a cash account and credit drafts remitted.
If the draft was created with a contingent liability, the system clears that account.

This process creates records in the Receipts Detail table (F03B14) and updates records in the Customer Ledger table (F03B11).