Summarize vendor and customer payments in bank transactions

• 10 minutes

When a journal posts to a Bank account type, the system creates a bank transaction in the bank subledger. Each bank transaction should have a transaction type, which is often defaulted from the journal name. The transaction type is one field that the system uses to match entries from the bank statement in advanced bank reconciliation to the actual transactions that you record in the bank subledger.

An account type of Customer or Vendor creates a customer or vendor payment transaction because money was deposited to or disbursed from a bank account. Often, you receive a customer payment or make a vendor payment that covers multiple invoices. Depending on your setup, you might get a separate bank transaction for each voucher in the customer or vendor payment journal, or you can get a summarized transaction. Summarized transactions are useful for advanced bank reconciliation. Many banks provide only a single entry for electronic payments each day, and you need a corresponding summarized transaction in Finance to match the transaction in the bank statement. The summarized transactions feature for vendor and customer payments provides the summarized transactions. When bank transactions aren’t summarized in the bank subledger, the process to reconcile the statement is manual for all summarized transactions in the bank statement.

Certain conditions block the ability to summarize transactions, such as:

• You can’t summarize checks. Each transaction must be unique and include the check number.
• You can’t summarize transactions with deposit slips. Each transaction must be unique and include the deposit slip number. The Deposit slip checkbox is unavailable for journal names that use summarized bank transactions.

Setup to summarize bank transactions for payments

The setup to summarize bank transactions requires settings in three places:

• Feature management - Turn on the Ability to post detailed vendor and customer payments, but summarize amounts to bank account feature in the Feature management workspace. This feature is turned on by default from application version 10.0.36.
• Number sequences - You need to specify a unique number sequence for summarized bank transactions on the Number sequences tab of Cash and bank management parameters.
• Journal names - Set the journal name that you plan to use for a payment journal to summarize amounts in bank transactions. The New voucher setting can’t be Manual or One voucher only.

Cash and bank parameters number sequences

A number sequence is required to summarize bank transactions. You can set number sequences for the Cash and bank management module in Cash and bank management > Setup > Cash and bank management parameters. Select the Number sequences tab and then add a number sequence for the Bank transaction summarization ID reference. Transactions that match the summarized criteria create a single transaction that a value from the number sequence references. Each detail transaction links to the summarized transaction.

Journal names

The setup that allows summarized bank transactions for payments is in General ledger > Journal setup > Journal names. Two fields in the Bank group determine whether and how the bank transactions are summarized. To have the transactions summarized, you first need to set the Summarize amounts in bank account toggle to Yes, which turns on the Summarization criteria dropdown list. Then, you can select from one of the following options:

• Do not summarize - The system doesn't summarize bank transactions.
• Default criteria - The system summarizes bank transactions with the same bank account, method of payment, currency code, main account type (customer or vendor), and transaction date.
• Default criteria with document number - The system summarizes bank transactions with the same bank account, method of payment, currency code, main account type (customer or vendor), transaction date, and document number (such as invoice number).
• Default criteria with payment reference - The system summarizes bank transactions with the same bank account, method of payment, currency code, main account type (customer or vendor), transaction date, and payment reference.

Vendor payment example

For the following example, two customer payment journal names are set up:

• VendPay - Non-summarized bank transactions. The Summarize amounts in bank account toggle is set to No.
• APPAYSUM - Summarized bank transactions. The Summarize amounts in bank account toggle is set to Yes.

Other than the two summarize fields, these journal names are set up the same way.

Non-summarized transactions

When transactions aren’t summarized, each unique voucher in the vendor payment journal has a unique bank transaction. The system can create a single voucher for each vendor or a voucher for each invoice; it’s up to the user to decide how they want it done.

• The method of payment that the user applies on the invoices and the later payment drives whether the system combines multiple invoices into a single payment voucher when the user creates a payment proposal. The user can set the Period option on the method of payment to Invoice, Date, Week, or Total. When the user selects Invoice, each invoice has its own payment voucher. The other options combine multiple invoices into a single payment. Each payment voucher has a corresponding bank transaction.
• If the user manually creates the payment journal, they can pay multiple invoices by the same payment from the Settle tab on the payment journal line to indicate the invoices. The user can also specify a single invoice for each payment line and have a payment line for each invoice. Setting the journal name New voucher to One voucher number creates a single payment voucher for all invoice lines that are included in the journal. In this case, a single bank transaction occurs.

If the user has multiple payment vouchers in a payment journal, the system creates multiple bank transactions depending on the process that the user decides on when creating the payment journal.

For this example, the user selects the VendPay payment journal, which has the Summarize amounts in bank account toggle set to No. Then, the system creates and posts a journal with two lines, each a unique voucher and each paying a single invoice for a vendor.

The system creates a bank transaction for each voucher (which, in this case, corresponds to each invoice) that the user pays.

When the user combines multiple invoices into a single line in the payment journal, the system generates a single payment voucher.

The multiple invoices are visible before posting if the user selects the View marked transactions menu item while selecting the voucher line in the journal. After the user posts the transaction, they can review the invoices that the payment journal paid from All vendors > Invoice > Settle > Undo settlement or in the Vendor posted payment journal report.

This payment journal only has a single bank transaction because the journal only has one payment voucher.

Summarized transactions

In this example, the journal name is set up to summarize amounts in bank accounts, and the summarize criteria is the default criteria. This example uses the journal name APPAYSUM, as previously mentioned. This example uses similar journals as previously described: one with multiple payment vouchers for the same vendor because the vendor was given a separate payment for each invoice individually, and another that has all invoices paid with a single combined payment to the vendor.

For the summarized examples, the method of payment is electronic. This first example journal has two invoices, each paid by a separate payment voucher, and two payment vouchers.

The journal only has a single bank transaction; however, two unique payments with separate vouchers are in the journal. The Summarize option completes this task.

In a more complex example, you might have a single payment journal that’s paying multiple invoices for multiple vendors. Assume that three separate payment vouchers exist for two different vendors. In this case, you still get a single summarized bank transaction if the method of payment is electronic.

The journal contains a single bank transaction that includes all three payments.

Customer payment example

Customer payments work the same way as vendor payments, even if the money is received into the bank account versus disbursed from the bank account. Rather than repeating the same examples as shown for accounts payable and vendors, this section only covers one example. In this example, multiple customers pay multiple invoices, where they pay each invoice individually with separate vouchers for each.

Non-summarized transactions

In this first example, the Summarize amounts in bank account toggle is set to No in the Journal name. The system receives payments from three different customers and multiple payments from one customer. Each payment pays a single invoice.

The customer payment journal has four invoices and four vouchers.

With summarization turned off, the journal displays four bank transactions, one for each voucher.

Summarized transactions

In this example, the Summarize option is turned on for the journal name and the summarize criteria is the default criteria. Like the previous example, multiple customers pay multiple invoices, and each invoice has its own voucher. The required payment method and other fields for summarization are the same, and the system creates a single bank transaction.

The customer payment journal has four invoices and four vouchers for two different customers.

With summarization turned on, the system creates a single bank transaction that encompasses all vouchers.

Like summarization restrictions when you’re generating checks for vendors, summarization for receipts isn’t supported if you’re using deposit slips. Each deposit slip must have its own bank transaction.

Review the summarized transactions for the example

If you review the summarized bank transactions, notice that the Voucher number column has an asterisk (*) and a generated number in the Bank transaction summarization ID column. This notion is true for customer payments and vendor payments.

Select the View summarized bank transactions menu item to review the individual payment transactions that the single bank transaction includes. The system activates this feature when you select a summarized transaction in the grid. From the grid, you can go to the voucher, the bank transaction, and the invoice.