DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Cheques module


#1

So, I entered a couple of cheques today. I tagged these to a checking account (perhaps the bank account field should be a required field?). They showed up correctly in Supplier credits (on account Payment) and unpresented cheques. Looks very promising. Thank you.

Could you please explain the process for clearing these. There wasn’t an obvious way to ‘tick them off’ when cleared in the cheques module nor during bank reconciliation (I am not importing statements).It seemed I could go in an ‘spend money’ against unpresented cheques and then pick the cheque numbers but that seemed like a long way around for a short-cut. Would be great if there was a way to ‘tick them off’ and have those ‘clearing’ entries created systematically.

One further observation is that the unpresented cheques account appears as a liability in the summary. I tend to consider it a 'cash/bank account from a balance sheet caption perspective since the funds are spent. Would it (i) make sense to move this to the ‘Cash at Bank’ section of the summary page and (ii) on the classified balance sheet I can only select groups that are liabilities to put it under on the balance sheet, again I’d really like to be able to include it under my Cash group (which is an asset). Would like to hear other people thoughts as to the appropriate reporting caption for unpresented cheques, liabilties vs. cash. I’ve always preferred putting it under cash/bank caption.

Thanks.


New customization scheme and cheques
#2

An unpresented check is definitely not an asset. In accrual accounting, it should be recorded once written. That check will represent a liability of your company until presented, when it can be cleared to the appropriate expense account. Even if the recipient never presents the check, you can’t spend the same money on something else because you are liable to pay it to the recipient if and when they present it.

Cash and bank accounts, on the other hand, are definitely assets. You can do things with them. The only exception to this rule would be if you create a bank account to represent a credit card. That account is then a “contra” account, meaning you expect an opposite-from-usual balance until it is cleared by paying the statement. (That would normally be done be a transfer from another traditional bank account to the credit card account. Now we can do that by cheque.)


#3

I now understand the use of the cheque. But how can i change the status from unrepresented to presented.through a journal entry ? @Tut


#4

Tut - In no way am I saying that ‘unpresented cheques’ are an asset! However, as you rightly point out in accrual accounting systems one deducts the payment from bank when the cheque is issued., e.g. if paying suppliers Dr AP / Cr Bank.

However many systems allow for cash clearing accounting (unpresented cheques) and deposits in transit.

Most folks, in my experience would include the unpresented cheques (liability) account in the Cash ‘Caption’ of their balance sheet ‘offsetting’ essentially subtracting this from the corresponding bank (asset) accounts. In this manner the caption nets the two accounts so that one can see the ‘Cash at Bank available’, i.e. this is how one makes sure that the cash at bank ‘caption’ as a whole is kept on an accrual basis (i.e. payment issued) and not solely on a cash basis (payment cleared).

So, in summary, no argument it’s not an asset, but I would like to offset it against the bank account to get to the net cash available/unspent on an accrual basis. I actually feel that by leaving the account in liabilities next to Accounts Payable that what that actually does is leaves both my total liability unchanged and bank cash asset unchanged when the payment is made. They then only both get reduced when the payment clears, which to me at least is a little inadvertent cash basis accounting when you look at from a financial statement perspective.

Anyway, I predict I’m not alone in this thinking and would still appreciate (i) if consideration could be given to including the unpresented accout in the Bank section of the summary thereby reducing the total overall Bank asset and (ii) being able to do so in the balance sheet categories too.

Good discussion, hope the clarification helps. Thank you gentlemen.


#5

My philosophy is that any transaction entered under Bank accounts tab should be entered exactly as it is presented on bank statement. This makes bank reconciliation very straightforward.

Of course there is an issue of unpresented cheques and uncleared deposits which are transactions dated before they usually appear on bank statement. So to be consistent, when you create a cheque, it is basically a payment which will credit Unpresented cheques liability account. When cheque is presented, it will appear on your bank statement, so when you are categorizing bank payment, all you have to do is select Unpresented cheques liability account and then select a cheque.

This makes it particularly easy when you are importing bank statements, all you have to do is to keep categorizing transactions. If you are using bank rules, it will be possible to automate everything. No need to keep track or think what’s unpresented or undeposited. Manager will tell you based on how you have categorized your bank statement lines. And you can’t just mark cheque being presented, it needs to be justified. There needs to be bank payment debiting that unpresented cheque in order to show as presented. It works essentially the same as invoices. Invoice cannot be marked as paid, there needs to be transactions justifying it being paid.

This brings one issue @alasdair brought up and that is unpresented cheques don’t offset bank balance. They have their own control account. This is in conflict with accounting standard which says bank balance on balance sheet must include unpresented cheques and uncleared deposits. It must not be shown separately. I’m going to tackle this issue by simply adding option to balance sheet where you will be able to simply merge these balances. This is to comply with accounting standard. Keep in mind, it is just a standard which is always subject to change (and not required to be strictly followed) unlike double-entry accounting principles which are immutable (and required to be strictly followed). My implementation doesn’t break double-entry accounting principles, only standard which can be turned on to comply if you care about that.

As per @alasdair complain that he doesn’t import bank statements and therefore “simple ticking off” process would be more appropriate. I’m going to add a button which will automatically create payment entry under your bank account so you don’t have to make this entry manually. But this is only appropriate if you are not importing bank statements. If you are importing, you would just categorize the bank payment appropriately.

Anyway, the whole point of my implementation is to make unpresented cheques part of double-entry equation rather than something that is left to “reconciliation” process which can be very messy and difficult especially if you have hundreds of transactions to reconcile and many cheques unpresented.


#6

@Lobos - As always, many thanks. We are entirely on the same page. I agree 100% with the separation of the unpresented checks into a separate account. I just need as you point out to be able to include this ‘special purpose’ control account in the Bank caption/category of my categorized balance sheet. I would also love to see it as a separate account under the Bank section on the summary page rather than down in liabilities. I don’t think you need to build anything clever to combine the balances just allow the Unpresented account to be chosen in the ‘categories’ of either liabilities or bank on the categorized balance sheet.

As always many thanks. I am very happy to have found Manager and it is incredible to see the pace of development. You have far more energy than I sir. Thank you.


#7

@alasdair, after reading your second, lengthier explanation, I can go back a read your first again and see what you meant. You are just thinking of Unpresented cheques as a contra account. I can certainly see your perspective, and would not disagree.

I think the standard @lubos mentioned is important, whether one is actually bound by it or not. I definitely think that to be true to the underlying concept of accrual accounting, a cheque must immediately decrease the bank balance. Think about it. Until this new module was introduced, that’s what we had to do. When we spent money (whether by cash or cheque) the available bank balance declined.

Don’t forget, Manager must accommodate users who don’t use the Cheques module. If spending transactions are entered directly into the bank account, as now, the balance must decline. If they are entered as cheques, the net balance must decline, even if the bank balance does not. That requirement supports @alasdair’s point that Unpresented cheques should be listed in the bank account section. If uncleared deposits exist, they should somehow be treated the same way. Then @lubos’s standard will be satisfied.

It will be interesting to see others’ reactions, especially users in businesses that write a lot of cheques. Personally, I write only a few per month. And those are all done online, with my bank actually sending the cheque (or depositing funds directly to big accounts, like utility companies). Since I’m online with the bank when I create the cheque anyway, it’s probably going to be easier to keep using Spend Money from the bank account. Reconciliation, for me, is easy. Some months, there is no float when the bank statement is released. I tried importing once, and it just made for more work.

Once again, a new capability points out how glad I am we can enable only the modules we want.

Keep up the good work, @lubos.


#8

@Tut, exactly it is a contra account.

@Lobos, one additional thought I did mention was that the bank account field should be mandatory when writing a cheque. But, hand in hand with that I’m wondering whether it should really be a Tab in it’s own right (as it is now) or a button under the bank account, no different than Spend Money, Transfer Money, Receive Money, ‘Write Cheque’.

Perhaps the bank Accounts summary screen could eventually reflect that by adding additional columns to the Balance column, e.g. Balance Column, Unpresented Cheques, Available (calculated field);

You don’t have separate tabs for ‘accumulated depreciation’ or for ‘spend money’. Under customers and suppliers you already summarize multiple control accounts to calculate a net position - e.g. payable and supplier credits.

So, just a though - Should this be a Tab in it’s own right, or a function (button) under the ‘Banking Tab/Module’? In my head it would be nice to have all my Bank Account related functions under Bank Accounts.

Thank you both for putting up with me thinking aloud here. Manager constantly continues to get better on what seems like an almost daily basis! Thank you for that and for this great collaborative forum that lets us participate in that.

Regards,
Alasdair


#9

I really, really, really like @alasdair’s idea. His suggested approach seems so much more intuitive than splitting the process of disbursing money from a checking account between two modules.

For that matter, one almost asks why not turn the Spend Money button into a Write Cheque button. The reason not to is that many checking accounts also feature debit card transaction capability. That would also mean creating entirely different code for different types of bank accounts. A few minutes of thought might generate other examples, as well.

When @lubos first mentioned a forthcoming Cheques module, I assumed he meant a module that would actually allow one to print the documents, not just record them. If you weren’t going to have Manager print checks, you would not enable the module. Perhaps that is still on the horizon, with the printed cheque occupying a similar place and function as a payment receipt. But what is currently available is closer to an enhanced reconciliation capability, and as such seems to belong in the Bank Accounts tab. It is difficult to imagine a business having a checking account and not wanting to use this capability. So why make it a separate tab that must be enabled?

Last point: some of us, at least in the US, write checks rather than cheques. Would it be possible to have the spelling difference handled when the language preference is set to English (US)?


#10

Heh @Tut, I’ve been in the US almost 20 years now and I still refuse to spell cheque check. I think Manager could become a part of my master strategy… I’ll make everyone use it just so that they have to accept the ‘proper’ spelling. OK, I gotta go, I have a cheque run to check on :wink:


#11

@lubos The addition of the uncleared deposits and unpresented cheques on the Bank Account summary is very nice.

I still think it would be cleaner just to add buttons to the Bank accounts for Cheques and Deposits next to Receive Money, Spend Money etc. That way you could also default in the bank account based upon the bank account that you created it from.

I understand what you have done but I’m feeling a little worried about the process flow:

For example:
I’m in Sales Invoices and click Receive Money (I have a cheque from my customer in hand), but not yet deposited. So, I’d like from that receipt uncleared, Hmm. goes straight to Bank if I use receive money from the Invoice.

Likewise, I’m on a purchase invoice and I want to pay it, by writting a cheque, so I’d click on Spend money, but that will hit the bank account. Hmm, but my supplier hasn’t presented my cheque yet.

Basically, the modules have the accounting correct for deposits and unpresented cheques, but I feel there is work to be done yet on the process flow:

e.g.: Purchase Invoice > Spend Money (if payment method = Cheque) > Unpresented
Manual tick off or match to Imported statement Unpresented > Bank

   Sales Invoice > receive Money (if payment method = Cheque) > Uncleared Receipt
  Manual tick off or match to Imported statement Uncleared > Bank

In summary, the accounting is correct but it’s a little disjointed to me at the moment. Do we really need spend money and Write check, do we really need receive money and bank deposits (unless it groups receipts into deposits).

The imported bank statement lines then become the clearing transactions that can be matched or ticked off to the payment/receipt triggering the move from unpresented/Uncleared to Bank.

Anyway, perhaps you could comment on how you see the process flows. Thanks. Should there perhaps be a beta release so that folks don’t get too far down the road doing transactions if things change?

Sorry if I’m missing something, appreciate your clarficiation of how you see the process.


#12

I’m planning to make those columns under Bank accounts tab clickable which will give you to the list of unpresented cheques or deposits for that particular bank account. Clicking on “new” button will have bank account pre-selected.

These loose ends will be tied up. Manager will ask you for payment method to determine what type of transaction should be created.


#13

great … look forward for these …thanks


#14

Thanks @lubos

If Manager asks for the payment method when ‘Spending Money’ then that comes back to @Tut 's comment “For that matter, one almost asks why not turn the Spend Money button into a Write Cheque button”. I’m still feeling like the separate tab thing is un-needed.

So what if >

  • Spend Money just either for everything or if you prefer just for
    ’Payment Method = check" simply Credited Unpresented checks
  • Instead of having a whole separate tab, we just click on the number
    in the unpresented cheques column in the bank account form to get to
    the unpresented checks list from where we can tick them off. (This is
    no different than how you get to deprecation for fixed assets, there
    is no separate tab for depreciation);
  • In this way you have all your functionality but keep it contained
    within the bank tab/module;
  • You don’t need to add more buttons to where Spend Money already
    is/redo invoice forms etc. Spend Money simply asks for payment
    method.
  • ticking off or matching to bank statement lines makes the Entry (Cr Bank/Dr Unpresented) to move from unpresented to Bank, we just get to the list from the ‘underlined value’ in the unpresented column against the bank account rather than from a separate tab.

Again, sorry for the diatribe, just thinking out loud and apologies if I’m getting carried away.

Regards,
Alasdair

P.S. In some systems in settings when you look at ‘payment methods’ you can choose whether than method should be ‘automatically’ or ‘manually’ cleared, i.e. whether to pass it through unpresented (payment clearing) or not.


#15

I like your ideas. I REALLY need a manual process. There has been a lot of discussion of cheques, deposits, and several tabs all just to spend money from the same account. However, it is not at all uncommon for me to have uncleared debit or credit transactions from a given period. It looks like we will continue reconciling with pen and paper for a while longer.


#16

Both @alasdair and @roth make excellent points. I strongly support the idea that if the Bank Accounts tab is enabled, you should have all the features you need to handle a bank account: checks, deposits, debit cards, manual reconciliation, statement importing, current balance, available balance, etc.

The potential for trouble if you have to enable and bounce around between multiple tabs is too great. So far, the Cheques and Bank Deposits tabs are more trouble than they are worth. I would prefer to live with the float of uncleared transactions. In the good old days, I ran a business with a paper check register and monthly statements in the mail–and did just fine. But that situation shared something with what several of us are suggesting. Everything you needed and could do was in one place.


#17

I agree with @roth and @Tut & @alasdair

Cheques shouldnt be on a separate tab they should be under bank account.

I also have many debit card transactions (nearly all) that are not taken from the bank that day, so for me to use the reconciliation i have to keep checking the bank account to find out when the money was actually taken then enter the transaction after the event.

I need manual ticking off plus if they could be re-ordered (drag & drop) to mirror my bank statement that would really help!

Many thanks


#18

Cheque printing too would be a good feature to add on to Manager


#20

I agree with you too, its gonna be better if cheque and bank deposit is under the bank account and represent cheques by just click the unpresented cheque, its a lil bit difficult for me if I have to enter the numbers too (because when I select the unpresented cheque in spend money the nominal/numbers are not automatically entered) or maybe you can keep the cheque tab but make it like an invoice tab which have spend money button…
I am looking forward about this, thanks :smile:


#21

In the latest version, Cheques and Bank Deposits have been removed as tabs and functionality moved under Bank Accounts tab.

Ability to post bank deposits is automatically enabled on each bank account since it is a feature that makes always sense. Cheque facility doesn’t make sense for every bank account so that is an option to enable when you edit specific bank account.

There are several columns under Bank Accounts tab.

Each column is clickable (except for Actual balance column which represents total of previous columns)

  • Statement balance
  • This is where you record or import only bank transactions as per bank statement)
  • Uncleared deposits
    • If you want to record a deposit in bank account which might “clear” or be processed by the bank at future date, you can enter this transaction there.
    • For example, the customer sends you proof of payment, so you might want to enter it as a bank deposit so in Manager customer doesn’t owe you money anymore but at the same time you can reconcile the “statement balance”.
    • Or if customer pay cash and you don’t want to bother with Cash accounts as all money you receive are banked anyway
  • Unpresented cheques
    • This is where you enter all cheques you write to suppliers and other payees
    • The column will be hidden if none of your bank accounts have cheque facility enabled

There is still more work to do in order to satisfy all workflows.

  • Better reconciliation process if you don’t import bank statements (just to clarify, I’m not implementing a “ticking” process but something pretty close to it).
  • Better bank rules implementation (if you are importing bank statements, you can set up your rules so your statement transactions can be automatically categorized)
  • Ability to categorize statement transactions as transfers (this is not currently possible)

I hope to wrap this all up by end of this week.