Posting A/R Draft Payments

Draft payments cannot be directly posted to a cash account like you would post a check or a wire payment. When you first post the draft payment, the draft status is changed to Posted and the usual journal transactions are created. However, the transaction does not yet impact the Cash account in the General Ledger, but instead it impacts the Draft Receivable account found in the Accounts Receivable Parameters form.

Next, based on the due date of the draft and when you wish to receive the cash (at due date or before the due date), perform a draft remittance using the A/R Posting Draft Remittance form.

Note: The bank charges an additional discount fee when you want to receive the cash before the due date.

After the draft remittance, post the draft. Posting the draft changes the status of the draft to Remitted and creates a journal entry from the Draft Receivable account to either the Draft Remitted account or the Draft Discounted account identified in the Bank Address form.

Posting prepares entries for the AR DIST journal as shown here.

These journal entries are created with the A/R Posting Draft Remittance form:

Debit: Drafts Remitted
Credit: Drafts Receivable

For discounted drafts, these journal entries are created:

Debit: Drafts Remitted
Credit: Draft Discounted Receivable

When the bank tells you it has given you the money, use the Bank Reconciliations form to perform a draft deposit. The deposit updates the draft status to its final value of Paid and creates the new journal entry that finally impacts the Cash account.

These journal entries are created when you reconcile draft payment deposits in the Bank Reconciliations form:

Debit: Cash
Credit: Drafts Remitted