AR Balance Types

A/R Customer Balance Types

Overview		A 'Customer Balance Type' determines how a customer's balances are to be maintained and/or aged. A 'Customer Balance Type' is a required field found in the 'Customer File' (under File Maintenance.) All your customers may have the same 'Balance Type' or you may choose to use multiple 'Balance Types' depending on the type of account or statement information desired for different groups of customers. Only one 'Balance Type' may be used at one time per each customer. The following are definitions of the three 'Balance Types' that are available to you:

'A'-Aged Balance Forward		As each month is closed, open transactions are summarized into a monthly total amount, which is then aged as of the last calendar day of that month. (Multiple monthly balances may exist for each customer.) After the month is closed, the transaction detail is not kept on file. This kind of balance type is therefore useful for those customers for whom it is not necessary to keep a transaction by transaction level of detail on file.

'B'-Balance Forward		At month close, all open transactions and the ending balance from the previous month are summarized into a single amount which is then aged as current. This means that all unpaid balances roll forward as a single amount at the beginning of each month with no aging occurring. No transaction detail is therefore kept on file once the month is closed.

'O'-Open Item		At month close, the system only deletes those transactions with a zero balance; the rest are aged accordingly by either invoice transaction date or invoice due date (this is set in page 2 in the Parameters File in File Maintenance.) Detail is kept on file for each open transaction (i.e.: unpaid invoice or an advance deposit.) This 'Customer Balance Type' is the most common due to the level of detail that is kept on file.

Setting the Balance Type		From the Accounts Receivable main menu, select ‘File Maintenance’ - ‘Customers’. For both new and existing customers, the "Balance Type" field is found on Screen 2 of 2 in the Customer's profile. Enter either <O> for open item, <A> for aged balance forward or <B> for balance forward. Press <F1> -5.x sites or <F2> - 6.x sites until the next customer profile appears.

Entering Receipts and Deposits:		When entering in cash receipts, you are given four different types of transactions from which to choose: 'Apply on account', 'Deposit', 'Apply to Invoice', and 'Suspense'. For 'Open Item Balance Types', the system defaults to the third option: 'Apply to Invoice' as this is the most common type of receipt entry for this 'Balance Type'. (Payment is most likely to be applied against a particular invoice.) However, this can be changed to one of the other transaction types particularly if it is 'cash on account' -in other words payment is to be applied to a customer balance rather than a particular invoice. In this case, the first option 'Apply on account' would be selected, and the invoices would be paid from the oldest to the most recent until the amount of the cash receipt has been exhausted. There are cases where this type of cash receipt entry is selected, and the remainder of the cash receipt is not enough to cover an invoice (i.e.: Resulting in a partial payment.) The amount of the cash receipt what is being applied to the invoice is left on file as is the invoice against which it has been applied even after the month is closed (as all open transactions for this 'Customer Balance Type' remain on file until they reach a zero balance.)

		For the other two Balance types: 'Balance Forward' and 'Aged Balanced Forward', the first option 'Apply on account' is the default. For 'Aged Balance Forward', the payment is then applied to the oldest monthly balance. For 'Balance Forward', payment is, of course, applied to the current balance. However, if the third option is chosen for either of these two 'Balance Types', payment can be applied against a particular invoice if it is for an invoice posted during the current month (as transaction detail is not kept on file after the month is closed.)

		Advance deposits are kept on file for each customer 'Balance Type' and are aged as current until they have been fully applied against either an open invoice or a customer’s account balance. It follows that any transactions relating to the advance deposits are also kept on file (even after the month has been closed) until the advance deposit has bee fully applied. Similarly, credit balances are also kept on file for each 'Customer Balance Type' and are rolled forward at month close (with no aging occurring). Any debit transactions that are incurred in the new month are then applied against it. If no new debit transactions are incurred, the balance is carried forward again at the next month close.
Customer Statement Of Accounts

Open Item:		'Advance Deposits' that have yet to be fully applied against any debit transactions are listed first. These are followed by any debit transactions that have applied parts of the advance deposit against open invoices. Any other open transactions are listed in detail in order dependent upon the type of customer statement format that is being applied to that invoice appears on the 'Customer Statement' followed by the invoice itself (as these are both considered open transactions.)

Balance Forward		'Advance Deposits' that have yet to be fully applied appear first, and if the customer has a credit balance, this appears as the previous balance against which any new debit transactions are applied. If the customer has open debit transactions, these (along with the customer’s ending balance) are summed into one amount at month close, and appear on the 'Customer Statement' as one single invoice (i.e.: Balance Forward, Inv. #: BF940930001 – September being the last month that was closed.)

Aged Balance Forward:		Similar to the above 'Balance Type', any 'Advance Deposits' appear first on the 'Customer Statement' followed by any transactions that relate to that deposit, If a credit balance is all that remains on a 'Customer Statement' at month close, it is listed as a previous balance against which any new debit transaction (or charges) are applied in the new month. At month close, any open transactions posted during that month are summed into a single amount, which is then listed on the 'Customer Statement' as an invoice. These invoices then appear in chronological order, (i.e.; oldest monthly balance appears first). The invoice number (or reference number) is the actual date (inverted) of the lst day of the month to which the transactions were posted – i.e.; transactions from July 1994 appear as Balance Forward July, Inv. # BF940731001 The following are some examples of 'Customer Statements' of Account before and after the month of October has been closed comparing 'Open Advance' deposits are kept on file for each customer 'Balance Type' and are aged as current until they have been fully applied against either an open invoice or an account balance. 'Balance Forward', and 'Aged Balance Forward' 'Customer Balance Types'. (Custom statement format "alternate format 1 is being used.
*** * OPEN ITEM * ***
(Prior to Month Close for October)
SUMMARY OF ACCOUNT

Statement Date:		October 15, 1998
Customer Name:			Customer "X"
DATE			REF. NO
9/10/98	12345			LIST OF CHARGES & CREDITS	CHARGES	CREDITS
9/21/98	12345			Advance Deposit		250.00 CR
9/30/98	29548			Apply Dep: Rooms for 9/18	200.00
10/05/98	32194			Three Night Stay	250.00
10/06/98	4563			Two nights-weekend rate	175.00
10/10/98	35698			Cash on Account – 10/6		300.00 CR
10/15/98	145			Five Night Stay	500.00
				Cash receipt for #35698		500.00 CR
				Previous Balance: $0.00	Total Charges $1125.00	Total Credits 1050.00 CR
				New Balance: $75.00

(After to Month Close for October)
SUMMARY OF ACCOUNT

Statement Date:			October 15, 1998
Customer Name:			Customer "X"
DATE	REF. NO			LIST OF CHARGES & CREDITS	CHARGES	CREDITS
09/10/98	12345			Advance Room Deposit		250.00 CR
09/21/98	12345			Apply Dep.: Rooms for 9/18	200.00
10/06/98	4563			Cash on Account – 10/6		50.00 CR
10/05/98	32194			Two nights- weekend rate	175.00
10/12/98	1112			Two night stay-11/05-11/07	200.00
				Previous Balance: $0.00	Total Charges $575.00	Total Credits 300.00 CR
				New Balance: $275.00

*** * BALANCE FORWARD * ***
(Prior to Month Close for October)
SUMMARY OF ACCOUNT

Statement Date:		October 15, 1998
Customer Name:		Customer "Y"
DATE	REF. NO			LIST OF CHARGES & CREDITS	CHARGES	CREDITS
09/20/98	1012			Advance Deposit: 9/10-9/14		600.00 CR
0925/98	1012			Apply Dep.: Rooms for 9/10-9/14	500.00
09/30/98	BF940930001			BALANCE FORWARD	1550.00
10/02/98	41678			INV-3 Room night	300.00
10/10/98	10001			Cash-Apply on Account		750.00 CR
10/14/98	42798			INV-1 Room night-Suite	150.00
				Previous Balance: $0.00	Total Charges 2500.00	Total Credits 1350.00 CR
				New Balance: $1150.00

(After Month Close for October)

SUMMARY OF ACCOUNT

Statement Date:		October 15, 1998
Customer Name:		Customer "Y"
DATE	REF. NO		LIST OF CHARGES & CREDITS	CHARGES	CREDITS
09/20/98	1012		Advance Deposit: 9/10-9/14		600.00 CR
09/25/98	1012		Apply Dep.: Rooms for 9/10-9/14	500.00
10/31/98	BF941031001		BALANCE FORWARD	1250.00
11/05/98	42597		INV-Two Room night	200.00
10/10/98	46394		INV-Three room nights	300.00
10/14/98	10063		Cash Receipt-Apply on Account		600.00 cr
			Previous Balance: $0.00	Total Charges 2200.00	Total Credits 1200.00 CR
			New Balance: $1050.00

*** * AGED BALANCE FORWARD * ***
(Prior to Month Close for October)
SUMMARY OF ACCOUNT

Statement Date:		October 15, 1998
Customer Name:		Customer "Y"
DATE	REF. NO		LIST OF CHARGES & CREDITS	CHARGES	CREDITS
09/10/98	12345		Advance Room Deposit:		250.00 CR
09/15/98	12345		Apply Deposit-2 nights	200.00
09/30/98	BF940930001		BALANCE FORWARD-September	1550.50
10/09/98	022563		INV-5 Room night	300.00
10/12/98	145		Cash-Apply on Account		1000.00 CR
10/15/98	101250		Use of Board Room-10/13	750.00
			Previous Balance: $0.00	Total Charges 3000.50	Total Credits 1250.00 CR
			New Balance: $1750.50

After Month Close for October:

SUMMARY OF ACCOUNT

Statement Date:		October 15, 1998
Customer Name:		Customer "Y"
DATE	REF. NO		LIST OF CHARGES & CREDITS	CHARGES	CREDITS
09/10/98	12345		Advance Room Deposit:		250.00 CR
09/15/98	12345		Apply Deposit-2 nights	200.00
09/30/98	BF940930001		BALANCE FORWARD-September	550.50
10/31/98	BF941031002		BALANCE FORWARD-October	1250.00
			Previous Balance: $0.00	Total Charges 2000.50	Total Credits 250.00 CR
			New Balance: $1750.50

COMPLETION:

Summary:

Based on the information given in this Technical Note, you can now determine which kind of 'Customer Balance Type' will best serve you and your customers. The two main issues that would shape your decision are: 1) The amount of transaction detail that is necessary to be kept on file for each customer and 2) The desired presentation of a 'Customer Statement of Account'. If a customized 'Statement of Account' format is required, please

call your authorized Support Representative.

The Open item 'Customer Balance Type' keeps the highest level of transaction detail on file, and aging occurs based on each invoice transaction date (or invoice due date.) The other two Balance types: 'Balance Forward' and 'Aged Balance Forward' only keep transaction detail on file until the month is closed. The difference between the two lies in the aging: none occurs for the former 'Customer Balance' type while for the latter, at month close, all transactions are summed into a single monthly balance which is then aged as of the last calendar day of that month.