RSS

Blog

Payment schedules in Mirosoft Dynamics AX

Payment schedules allow you to define custom rules that govern the payments being maintained in the system. In order to use the payment schedules you must create payment schedules, attach these schedules to Purchase orders and/or Vendor Invoices.

When running the payment proposal for the vendor invoices using invoice journals the system automatically considers the payment schedule at the invoice and suggests the payments accordingly. If you are using Vendor Invoice document at the time of posting the system automatically considers the payment schedule.

To create a Payment Schedule navigate to Accounts Payable à Setup à Payment à Payment Schedule.

In this example I will create 3 types of Payment schedule & see the impact on the payment entries.

When the Payment entries are to be distributed on a monthly basis & based on some %. For instance, 10% in 1st month, 20% in 2nd month, 50% 3rd month and 20% on the 4th month.

In the above setup, the payments are to be made on a monthly basis and on specific percentage.

When creating a Purchase order or Vendor Invoice the payment schedule is defined at the Header. Create a Payment Journal and on the lines select payment proposal

Assuming you choose a proper vendor whom for which you have selected the payment schedule for and there are no other invoices and the total invoice amount is 100 USD the system will propose the Payment entries as below.

When the Payment entries are to be distributed on a monthly basis and on fixed amount

When creating a Purchase order or Vendor Invoice the payment schedule is defined at the Header. Create a Payment Journal and on the lines select payment proposal

Assuming you choose a proper vendor whom for which you have selected the payment schedule for and there are no other invoices and the total invoice amount is 100 USD the system will propose the Payment entries as below.

When the Payment entries are to be allocated on Total

When creating a Purchase order or Vendor Invoice the payment schedule is defined at the Header. Create a Payment Journal and on the lines select payment proposal

Assuming you choose a proper vendor whom for which you have selected the payment schedule for and there are no other invoices and the total invoice amount is 120 USD the system will propose the Payment entries as below.

 

Regarding Statistic Transactions Journal type

As I have mentioned before, I recommend using the cost accounting module instead of using the "Statistic Transactions" journal type. Since statistic transactions journal type was once part of the "old" outdated cost accounting module and cannot be used anymore.
Please refer to https://technet.microsoft.com/en-us/library/aa585226.aspx and you notice even though Microsoft has not removed the old journal type there isn't any form that you can use this type of a journal as of version 2012.

Started from AX 4.0 There is no need to use a special journal. Starting from AX 4 you can simply have a zero value General Journal, so long as a Quantity is entered on the General tab. As a reminder you would need to add quantity field to be added to the journal by using personalized option.

Letter of credit or import collection for the import of items in Dynamics AX 2012 R3 CU9

Letters of credit are used for international transactions to ensure that payments will be made. A letter of credit is an agreement that is issued by a bank, in which the bank agrees to ensure payment on behalf of the buyer, if the terms of the agreement between the buyer and seller are met. Note that a letter of credit is also referred to as a documentary credit (DC).

For an import letter of credit, the legal entity is the buyer or the applicant for the letter of credit. For an export letter of credit, the legal entity is the seller or the beneficiary of the letter of credit. The following parties are involved with a letter of credit:

  • The applicant (buyer) who intends to pay for the goods.

  • The beneficiary (seller) who will receive the payment.

  • The issuing bank that issues the letter of credit.

  • The advising bank that carries out the transaction on behalf of the applicant.

The letter of credit includes a description of the goods, any required documents, the date of shipment, and the expiration date after which payment will not be made. The issuing bank collects a margin for the letter of credit.

A letter of credit can be Revocable or Irrevocable. The nature of a letter of credit can be Transferable, Non transferable, or Revolving. Typically, a letter of credit is an irrevocable and confirmed agreement that payment will be made to a specific beneficiary upon submission of complete and accurate shipping documentation.

A letter of credit allows you to:

  • Generate a report of the bank facilities and their uses.

  • Generate the entries for the letter of credit.

  • Print the letter of credit application form.

  • Enter the letter of credit details.

  • Amend the letter of credit.

  • Record letter of credit margin payments.

  • Allocate a margin amount to shipments.

  • Associate a packing slip in a purchase order with the letter of credit shipment details.

  • Process a payment for the invoice.

  • View the cash flow forecast according to the letter of credit.

  • Print various reports and inquiries related to the letter of credit.

  • Generate a vendor statement.

You must activate the letter of credit as a bank document before you initiate transactions that involve letters of credit.

  1. Click Cash and Bank Management > SetupCash and Bank Management parameters.

  2. On the Ledger link, click the Bank document FastTab.

  3. Select the Enable import letter of credit check box to activate the letter of credit.

  4. Close the form to save your changes.

You can set up bank facility types and bank facility groups in the Bank facilities form. After the bank posting profile is set up, you can create facility agreements.

  1. Click Cash and bank management > Setup > Bank documents > Bank facilities.

  2. On the Facility groups link, click New to create a new bank facility group.

  3. In the Facility group and Description fields, enter the bank facility group name and description.

  4. Click the Facility types link, and then click New to create a new facility type.

  5. Enter a unique code in the Facility type field, and then in the Facility group and Facility nature fields, select the group and nature of the bank facility.

  6. Close the form to save your changes.

  7. Click Cash and bank management > Setup > Bank documents > Bank documents posting profile.

  8. In the Settle account field, select the main account for settlement. This account is used when calculating the cash flow forecast.

  9. In the Charges account field, select the account for expense transactions.

  10. In the Margin account field, select the account for the margin transaction. This account is debited when the opening margin is posted and credited when the payment is posted. A margin is an advance payment to the bank that is adjusted by the bank when the final settlement is made by the buyer.  

  11. Close the form to save your changes.

You must create bank facility agreements that record various facilities provided by the bank. Bank documents can be used in transactions only after facility agreements are created. The bank assigns a limit for the letter of credit, which is recalculated every time a letter of credit transaction is recorded.

When a facility agreement ends, you can create a new version of the agreement, with new starting and ending dates, by extending the old agreement.

  1. Click Cash and bank management > Setup > Bank documents > Bank facility agreements.

  2. Press CTRL+N to create a new line.

  3. In the Agreement number, Bank account, Start date, and End date fields, enter the agreement number according to the agreement with the bank, the account number at the issuing bank, and the validity period of the agreement.

  4. On the General FastTab, click Add line. Facility agreements cannot have overlapping dates. For example, if an agreement extends from January 01, 2015 to August 31, 2015, you cannot create another facility agreement that begins or ends within that period.

  5. In the Facility type and Limit fields, select the facility type, and then enter the facility amount that was negotiated with the bank. The Amount used field displays the amount that is currently used for the letter of credit.

  6. Close the form to save your changes.

  7. In the Bank facility agreements form, select the facility agreement that is no longer active, and then click Extend to extend the term of the agreement.

  8. In the New agreement number and End date fields, enter the new agreement number as assigned by the bank and the desired ending date of the agreement, and then click Extend. The value in the Start date field of the extended agreement is the day after the selected agreement’s end date. The Amount used field is set to zero because this is a newly created agreement.

  9. Close the form to save your changes.

Vendor bank accounts must be specified for the letter of credit transactions to be recorded appropriately.

  1. Click Accounts payable > Common > Vendors > All vendors. Select a vendor, and then on the Vendor tab, in the Setup group, click Bank accounts.

  2. In the Vendor bank accounts form, enter the Bank account and Bank account number information, along with any other details.

  3. Close the form to save your changes.

Create a purchase order and enter the letter of credit details

A letter of credit is associated with a purchase order to process vendor transactions with minimal manual intervention. The involved parties are the buyer (applicant), the seller (beneficiary), the issuing bank (buyer’s bank), and the advising bank (beneficiary’s bank). When a company is both the buyer and applicant for the letter of credit, the letter of credit is called an import letter of credit. Purchase orders that are associated with letters of credit are not considered for summary invoicing.

  1. Click Procurement and sourcing > Common > Purchase orders > All purchase orders.

  2. Click Purchase order to create a new purchase order.

  3. In the Create purchase order form, select the vendor account in the Vendor account field.

  4. In the Bank document type field, select Letter of credit, and then click OK. When the Bank document type field is set as Letter of credit, the purchase order is displayed in the list of letters of credit in the Cash and bank management module. Because the letter of credit details have not yet been added, the Require update check box on the Cash and bank management > Common > Letters of credit > Import letter of credit/import collection list page is selected.

  5. Click Cash and bank management > Common > Letters of credit > Import letter of credit/import collection. Double-click the order number associated with the letter of credit to be updated.

    -or-

    In the Purchase order form, click the Manage tab, and then click Letter of credit / import collection.

  6. Click the General FastTab, and in the Bank account field, select the bank that assigns the letter of credit. In the Bank document number field, enter the document number specified by the bank.

  7. Click the Lines FastTab, and then click Add line to add shipment details. Enter the necessary values in the Amount, Expected maturity date, Actual maturity date, and Document status fields. Click Fetch purchase order shipments to view the shipment details that are already specified in the purchase order lines or delivery schedule. Click Shipment margin transactions to open the Shipment margin form to view the shipment margin transactions for the selected shipment.

  8. Optional: Click the Bank document FastTab, and then specify details in the Documentary credit type, Documentary credit nature, and Expiration date fields. A letter of credit can be either Irrevocable or Revocable. It can be Non transferable, Transferable, or Revolving in nature.

  9. Optional: Click the Bank details FastTab, and then enter the advising bank details in the Advising bank and Date of issue fields.

  10. Optional: Click the Terms FastTab, and then specify the shipment terms and payment terms for the letter of credit.

  11. Optional: Click the Insurance FastTab to specify details of the insurance request submitted by the vendor in the Insurance status, Insurance vendor number, and Insurance number fields.

  12. Click Confirm to confirm the letter of credit. The Facility balance field is updated based on the value in the LC / IC Amount field. The Amount used field in the Bank facility agreement details form is updated with the letter of credit amount.

    The letter of credit details are confirmed only if the line amounts total equals the LC / IC Amount and it does not exceed the amount available for the particular facility type.

  13. Click Print application to print the letter of credit application form to be submitted to the bank.

If the purchase order details change, you must update the letter of credit details before you invoice the purchase order completely. You can modify a confirmed letter of credit only when the letter of credit has a Confirmed status. The bank may charge a fee for amending an existing letter of credit.

  1. Click Cash and bank management > Common > Letters of credit > Import letter of credit/import collection. Double-click the import letter of credit or import collection to be amended.

    –or–

    Click Procurement and sourcing > Common > Purchase orders > All purchase orders. Select a purchase order, and then on the Manage tab, click Letter of credit / import collection.

  2. Click Amend, and then amend the letter of credit details. You can change the letter of credit amount or number of shipments, if required. You can edit the shipment details only if the packing slip or invoice is not posted. If you delete a shipment line detail for which the margin was already allocated, the allocated amount is reversed to an unallocated amount in the Letter of credit margin transactions form.

     
  3. Click Confirm to confirm the changes made to the letter of credit. Changes must be confirmed to be saved as amendments. Each confirmed amendment results in a new version of the letter of credit. This helps to track the revision history of the letter of credit. If shipment line details are changed, the letter of credit details are confirmed only if the total shipment amount does not exceed the letter of credit amount.

  4. Click Inquiries to open the Letter of credit/import collection history form, and then view the amendment history of the letter of credit.

  5. Close the forms to save your changes.

When you receive letter of credit advice from the bank, you can check the margin collected by the bank and post it in a General journal of the type Daily. To post the transaction against the appropriate posting profile, the Transaction type field must be selected as Margin.

  1. Click General ledger > Journals > General journal.

  2. Press CTRL+N to create a new journal.

  3. In the Name field, select a daily journal, and then click Lines to open the Journal voucher form.

  4. In the Debit field, enter the margin amount collected by the bank.

  5. Click the Payment tab, and then in the Transaction type field, select Margin. The values in the Account type, Account, Offset account type, and Offset account fields are displayed according to the posting profile.

  6. In the Letter of credit / import collection field, select the bank document number associated with the letter of credit.

  7. Click Post > Post to post the journal.

  8. Close the form to save your changes. The margin amount for the letter of credit is recorded in the Letter of credit margin transactions form.

To adjust the margin amount at the time of invoicing (partially or completely), the margin amount must be allocated to each shipment. You can use the Letter of credit margin transactions form to allocate the margin amount across shipments for a letter of credit.

  1. Click Cash and bank management > Common > Letters of credit > Import letter of credit/import collection. Double-click the import letter of credit or import collection for which the margin amount must be allocated to the shipment.

  2. Click Bank document margin to open the Letter of credit margin transactions form.

  3. Select the margin amount line to be allocated, and then click Allocate to shipment to open the Allocate on drop dialog.

  4. In the Allocation type field, select Dedicated to allocate the margin amount to a particular shipment or select Distributed to allocate the margin amount proportionally among all shipments that are not invoiced. Select the shipment number in the Shipment number field.

    You can allocate margin amounts only if the value in the Balance field is greater than zero and the shipment that you are allocating to is not already invoiced. If you select Distributed in the Allocation type field, the shipment share of the margin amount is calculated as following:

    Shipment Share = Margin amount multiplied by (Shipment amount/Letter of credit amount).

  5. Click OK to return to the Letter of credit margin transactions form. The Allocated field is updated with the margin amount that was allocated, and the status is updated as Posted.

  6. Close the form to save your changes.

  7. In the Letter of credit / import collection form, click the Lines FastTab, and then click Shipment margin transactions to open the Shipment margin form and view the margin amount allocated to a shipment.

After the margin is allocated to the shipment, you can post a packing slip and register an invoice for the purchase order. When you post a packing slip, you can specify the shipment number to map the shipment with the delivery. You cannot post the invoice or update a packing slip unless the letter of credit shipment line amount either equals the invoice amount or the shipment variation is within the tolerance limit specified in the Tolerance percentage field in the Letter of credit / import collection form.

  1. Click Procurement and sourcing > Common > Purchase orders > All purchase orders.

  2. Select the purchase order for the letter of credit that must be invoiced, and then double-click the purchase line to open the Purchase order form.

  3. Click the Receive tab, and then click Product receipt to open the Posting product receipt form. Select the shipment number in the Shipment number field, and then click OK to post the packing slip.

  4. Click the Invoice tab, and then click Invoice to open the Vendor invoice form. Select the shipment number in the Shipment number field, and then click OK to post the invoice. The invoice amount must be equal to the shipment amount. The shipment status is set as Invoiced.

  5. Close the forms to save your changes.

After the purchase order is invoiced, you can make the payment and settle the accounts. The payment for the letter of credit must be equal to the amount due minus the margin amount because the margin amount is already collected by the bank. The payment must be within the tolerance limit for the letter of credit.

  1. Click General ledger > Journals > General journal.

  2. Press CTRL+N to create a new journal.

  3. In the Name field, select a daily journal, and then click Lines to open the Journal voucher form.

  4. Enter the required information.

  5. Click the Payment tab, and then in the Transaction type field, select Settlement.

  6. In the Letter of credit / import collection and Shipment number fields, select the bank document number associated with the letter of credit and the shipment number.

  7. Click Post > Post to post the journal. After the settlement invoice is posted, the letter of credit status is set as Closed. The bank account is credited with the amount. The shipment status is set as Paid. You can close a letter of credit only after all the lines are settled against payments.