Speed Up Bank Deposits in Microsoft Dynamics AX 2012 With Bridging Accounts

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BDO

When companies use an external credit card service, there is often a time lag between the time that the customer pays for the goods or services and the time that the funds are actually deposited into the appropriate bank account. The problem is that while the customer knows that they have paid for the goods and services and want the transaction reflected in their account immediately, the seller does not want the funds reflected in their bank account until the funds actually transfer, so there are no issues with the bank reconciliation process.

Microsoft Dynamics AX 2012 has an elegant solution to satisfy the needs of all affected players in this process. By using Bridging Accounts, the seller can realize the following benefits:

  • The customers’ accounts update as soon as the credit card transaction processes.
    • Account statements reflect the proper balances.
    • Credit limit room is freed up for additional sales.
  • The sellers’ bank accounts do not update until the funds transfer to the bank account.
    • Bank reconciliations are simplified as there is no cash in transit to account for.
    • The balance sheet reflects the bridging account receivable as an asset.
    • Accounts receivables personnel are not chasing amounts that the customer has already paid.
    • Credit limit issues reduce as the customer account is relieved immediately.

Setup in Microsoft Dynamics AX 2012

1. Add a new “Main account” for Bridging Account Receivable. This is the account which will hold the balance until the funds transfer into the bank account. The “Main account” category could be Cash, Cash Equivalents or AR depending on where you want to keep it in your Balance Sheet.
speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-12. Create a Method of Payment for Bridging Transactions by going to Accounts Receivable → Setup → Payment → Methods of payment.

  • In the General section, check off the Bridging posting check box and enter the Main account number that was created for Bridging transactions.
  • If the customer always pays by credit card, deselect “Create and post draw journal automatically when posting invoices” and select the “Journal name” in the “File formats” section. This automatically clears the invoice as paid, as soon as an invoice is issued when the Bridging Method of Payment is set as the default for the customer. If this is not the default Method of Payment for the customer, use a Payment Journal.

speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-23. When posting an Accounts Receivable Payment journal, select the Bridging Method of Payment.

speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-3

Note that the Offset account is the Bridging GL account.

speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-44. When the funds are received in the bank account, create a General Journal.

  • Choose Functions → Select bridged transactions.

speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-5

  • Select the deposited payments and click Accept.

speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-6

Note that the Offset account is the Bank Account. Select “Use a deposit slip” to aggregate all the selected payments to one line in the bank reconciliation. If automatic credit card fees are set up, the fees will apply when the funds deposit into the bank account.

speed-up-bank-deposits-in-microsoft-dynamics-ax-2012-with-bridging-accounts-6

Bridging accounts provide a two-step process for applying payments. The customer record updates and the bank account updates when the funds transfer. This satisfies the needs of all parties in this process.

For other ways Microsoft Dynamics AX can help your organization streamline its processes, read more or contact us.


microsoft-dynamics-ax-road-map
For more information on the ins and outs of Microsoft Dynamics AX 2012, download our road map here.

 

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