--- title: "Receivables Terminology" canonical: "https://kb.myframeworks.com.au/space/FRAM/28377252/Receivables%20Terminology" format: markdown --- # Overview This page covers terminology used within Frameworks related to its Accounts Receivable (AR) module. # Accommodation Charge Interest is added to an invoice if the customer does not pay on time. Suppose the Accommodation Charge system flag is enabled for the customer. In that case, the Frameworks system automatically calculates the amount of charge applicable for each invoice based on the percentage value set in the Amounts System Setting value **SOPAccChg**. When payment is received, you can choose whether or not to subtract the charge as a discount if the customer has not paid within their trading terms. --- # Account Type Are used internally by an organisation to validate transactions made by that debtor. > ❌ If the **Account Type** for the Customer is set to** Hire Purchase **(**H**), no credit checking is performed in Point Of Sale or Sales Orders. In Frameworks, a debtor account may be set up as: > Macro (excerpt) > > - **A - Standard Debtor: **A standard customer with credit terms - most commonly used. > - **C - Cash Card Holder: **A customer with an account but must pay cash for goods - most commonly used. > - **D - COD Account: **Similar to a Cash Card Holder customer but a new account is generated during the sale to manage the deposit and eventual delivery of goods. NOTE - Frameworks just uses Cash customers for this. > - **F - Interest Free:** > - **H - Hire Purchase: **Hire purchase is an arrangement for buying consumer goods, where the buyer makes an initial down payment and pays the balance plus interest in instalments. > - **I - Insurance Claim: **Information only if subject to an insurance claim. Not an active customer. > - **L - Good on Loan: ** > - **M - Miscellaneous:** > - **R - Debt Reduction: **Information only if subject to an insurance claim. Not an active customer. > - **S- Shareholder: **Similar to a standard debtor but is also taking part in a shareholder arrangement with the business/co-op. --- # Attributes **Attributes** are user-defined fields that can be added to customers, suppliers and products. An example of a customer attribute could be their 'birthdate' or their 'favourite football team'. --- # Bad Debt Part of a debt for which the debtor defaults payment. This amount must be transferred from the debtor's account to a Bad Debt Account. --- # Balance Forward Accounting Not used in Frameworks, however, Frameworks allows for balance forward style statements. Frameworks uses [Open Item Accounting](#Open-Item-Accounting). > ℹ️ For your information, **Balance Forward Accounting **maintains the amount owing at any one point in time, only recording the current month's transactions while keeping the previous month's transactions as a balance total. This amount increases when sales are made to the debtor and decreases when payments are received from that debtor. The alternate form of customer accounting is **Open Item**. --- # Balance Sheet Discloses the financial position in terms of proprietorship, assets and liabilities at a particular point in time. --- # Casual Account A casual account is set up to allow customers, such as owner builders, to have a temporary account while building. Casual accounts are automatically deleted once the account has a zero balance and there has been no activity on the account for a specified number of days, as defined by the Numeric System Setting **RecCusDel**, from the last month-end. --- # Cash Sale Docket Records the receipt of monies and information relating to what was sold and not concerned as to who paid the money. --- # Cash Sale Receipt Records the receipt of monies and information relating to what the cash was for and who paid the money because the initial debt to the business has already been recorded in the book of accounts. --- # Credit Age > Macro (excerpt) > > A credit age (0, 30, 60, 90 & 120 days) may be allocated to a customer in order to restrict them from placing orders when they have old debts outstanding.   > > If you attempt to type an order in **Point of Sale** or **Sales Orders** for a customer who has exceeded their allowed age, credit approval is required.  > > > ℹ️ **Zero (0)** in the field indicates that this type of credit checking is not active for this customer. --- # Credit Limit > Macro (excerpt) > > A credit limit may be allocated to a customer and, once the customer account reaches this limit, credit approval is required for any additional orders in **Point of Sale** or **Sales Orders**. This is similar to having an automatically applied account suspension. Leave this field blank if this is a special account that you do not want to place a credit limit on. --- # Credit Manager > Macro (excerpt) > > A Credit Manager is a user who reviews and approves orders that require credit approval. All credit approvals go to the credit manager. > > A company can operate with or without a central Credit Manager. > > - If the field Remote **Credit Manager** in the company definition is set to **'Yes'**. Orders that require credit approval are placed in a queue for the Credit Manager to review and approve where they think fit. The credit approval queue can be viewed by clicking options **'Transaction Processing'** and then** 'Order Credit Approval'**. > - If the field **'Credit Manager'** in the company definition is set to **'No'**, then once the customer account reaches this limit, a warning is issued in the SOP and POS and JOB programs and the order has to be authorised before the order can be printed or released to invoice. The Over Credit Limit report lists all customers that have exceeded this permitted credit limit. > > The user security defines the user's credit control abilities: the fields** 'Credit Approval'** (yes/no) and **'Credit Approval Limit'** ($ figure). Related System Settings Flags - SOPAppPwd: Password required for Credit Manager approvals --- # Credit Note Is issued by sellers when goods bought on credit by customers are returned by mutual agreement, or a price adjustment is necessary because of damage, overcharging, short delivery and so on. --- # Credit Status One of three valid codes that can be attached to a customer record to evoke specific action/s if a transaction is made to that customer. > Macro (excerpt) > > - **Active: **The customer is permitted to trade within the agreed limits. > - **Suspended: **If a user tries to create an order or invoice for a suspended customer, the system issues a warning. This warning may be ignored and the order can be created. However, the order will require the authorisation of a POS Supervisor with the necessary credit authority to be printed or released to invoice. > - **Hold:** If a customer is held, you can not create or action an order or invoice. > Macro (excerpt) > > Where accounts are on Hold, there are additional options to indicate the type of hold by selecting the **Hold Status**. > > - **General**: If the Hold Status is **General**, users can raise quotes or orders, but transactions **must be approved via Order Credit Approval**. When the user is creating the transaction, a warning is displayed, but they can continue to create the order. > - **Permanent Stop**: If the Hold Status is **Permanent,** users are **not** allowed to raise quotes or orders, nor release orders to invoicing. > - **Legal**: Where the Hold Status is **Legal**, the account is temporarily 'closed' and referred for Legal Action. Users are **not** allowed to raise quotes or orders, nor release orders to invoicing. > ✅ A customer's **Credit Stats **is defined under the **Credit Data **tab in **Customer Maintenance.** --- # Credit Grace A dollar (**$**) amount is defined by which customers may exceed their credit limit before orders require credit approval. > Macro (excerpt) > > This also serves as the maximum $ that a customer can have in ages greater than their 'Credit Age' before they are considered outside their terms and are treated as though suspended. That is, how much can a customer short-pay their account, before being considered outside terms. > > > For example, for a standard credit check: > > > > - Customer 1's account has a credit limit of $1,000 and a Credit Grace of $50. Their balance due is $1,035. Grace dictates they don't go on Suspend as they haven't gone over $1,050 (Credit Limit + Grace). > > > > - Customer 2's account is 30 Days and they have a limit of $500 with a grace of $50. Their balance owing is only $25, however, it's due in 90 days. Grace applies here again. That is, the customer can have up to $50 outside the agreed terms before they don't go on Suspend. --- # Customers - Cash and Account **Account customers** are the ones to whom credit is offered. **Cash customers** pay for goods via cash. Both cash and account customers may have their goods delivered. Refer to Introduction to Customer Credit for further information about extending credit to account customers. --- # Customer Groups Customer groups are used mainly for promotional purposes and are defined as Customer Groups. A Customer Group is a way of grouping similar customers together. For example, builders, plumbers and so on. --- # Debtor A debtor is someone that owes your organisation money. Customers (debtors) have been granted credit to trade with your organisation. This area is vital to the functioning of an organisation as failure to manage debtor's credit can cause substantial losses. --- # Diary Note A** diary note** is a short message about the customer that is held on file. It is usually a reminder to take some action against a customer if they fail to pay an overdue account by an agreed date, however it may be used for anything that you need to be reminded about for a particular customer. For example, a reminder that you have phoned a customer seeking payment of an invoice. Depending on the logged-in user's security settings you may have access to both **Secured Diary Notes** and **General Diary Notes**. The messages displayed depend on your security access settings defined via the checkbox** Secure Diary Access?** in **User Maintenance**. --- # Discount Group A **discount group** is a way of grouping customers who attract the same level of discount. > For example, plumbers may attract a 2.5% discount while builders may attract 5%. Multiple Discount Groups can be assigned to a Customer Group to allow flexible discounting. --- # Dishonoured Cheque A cheque received from a customer that is not paid when presented to the customer's bank for payment. > For Example: > > - It is not correctly prepared. > > - An endorsement is incorrect. > > - The customer requested that the bank did not pay the cheque. > > - There are insufficient funds in the customers bank account. --- # General Ledger A centralised listing of all financial transactions of a business. It includes all transactions that have been listed in more specialised sub-ledgers devoted to particular types of transactions. --- # Hold (also referred to as Stop Credit)  A general term used within any industry to describe a customer who is outside of their Trading Terms and a physical stop has been put on trading with that Customer until the issue has been resolved. > ✅ Refer to the [Credit Status](#Credit-Status) above for more information. --- # Invoice A record of the detail of goods sold on credit to individual purchasers, originated by the seller of the goods. --- # Master Account The head office customer number to which a customer's monthly statements are to be forwarded as some larger businesses prefer their monthly statements to go to one location. - When the Accounts Receivable data is created, it is created for the master account with a reference to the sub-account in order to be able to link back to the original transaction for A/R enquiries such as Invoice Enquiry. - Sales enquiries at the master level remain at the master level and do not show sub-account customer sales. They stay against the customer they were created against. - All payments must be conducted at the master level; a sub-account is blocked from having payments made to it. There is an enquiry to list the sub-accounts of a master account. - There is validation to prevent a master account from being deleted if there are still sub-accounts pointing to it, and validation to prevent a master account from being a sub-account of another master account. --- # Open Item Accounting Keeps details of all invoices sent to a debtor and when that debtor makes a payment, it is applied specifically to a particular unpaid invoice. Unpaid invoices are called open items and the total of the open items per debtor is the balance owed to the business. The alternative form of customer accounting is [Balance Forward Accounting](#Balance-Forward-Accounting) which is not used in Frameworks --- # Payment Terms > Macro (excerpt) > > The number of days from the statement date until payment is due from the customer. > > A list of payment terms is defined in the **Payment Terms Maintenance** window and is customised to suit your business’s needs. --- # Personal Data The personal data stored against a customer is for keeping details about a customer of a more personal nature. They can be useful for establishing and maintaining a friendly relationship with the customer. For example, you may wish to enter such details as the name of the customer's partner, birthdays and hobbies. --- # POS Docket A counter sale docket (receipt) is used when goods are sold over the counter, both for cash and account transactions. --- # Post The process of entering a transaction in a Sub-Ledger and General Ledger to provide a permanent record that anyone can refer to in order to understand the transaction. --- # Settlement Discount Applied when an account is paid and is conditional upon the buyer paying for goods within a prescribed time. If payment is late, a discount is not allowed. A settlement discount is a mechanism whereby, for prompt or immediate payment, the customer is able to deduct an agreed percentage of the total invoice. Generally, this approach requires particular attention as: 1. Your credit control system needs to be even more efficient to ensure that discounts are not taken outside of the stated terms. 2. You are effectively giving away part of your profit. A 3% reduction for cash discount does not affect your operating costs or cost of sale. It will, however, reduce your profit by 3% of the sale price less the possible saving on finance costs. 3. You need to carefully evaluate the actual cash effect of giving discounts and the potential savings on interest costs. --- # Statement Provides details in respect of unpaid amounts from the last period purchases for this period including credit notes issued and payments received. --- # Sub-Account For customer accounts that have their statements and debtor transactions forwarded to a [Master Account](#Master-Account). --- # (Sales) Territory A sales** territory **is another way in which customers from the same geographic area are grouped together for the purpose of sales reporting. --- # Trade Discount Is *unconditional* and is given at the time of sale usually to good customers or to customers buying in quantity. --- # Unallocated Payment Payments that have been typed through the **Customer Payments** option in the **Receivables** module which has not yet been allocated to an invoice.