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Documentation > MAC-PAC Reference Library > Financials > Accounts Payable > Key Concepts and Procedures > Draft Processing

Draft Processing

 

A draft is a form of payment that can be used by either the vendor or the customer.  In the Accounts Payable module, the customer can issue bills of order to the vendor or can approve bills of exchange that are received from vendors.

Creating a Draft in Accounts Payable

In the Accounts Payable module, a draft is not physically created until payment creation time.  However, you can enter a bill of order or bill of exchange as the default payment type for the open item on the Invoice, DR/CR Memo Entry with a bill of exchange payment type.

The figure below shows the Invoice, DR/CR Memo Entry with a bill of exchange payment type.

 

WILLIAMS                       ACCOUNTS PAYABLE                        1/25/93

 DSP01                      INVOICE DR/CR MEMO ENTRY                     HEADER

                                                                                

 Vendor        BCA00001              BCA MANUFACTURING             

 Paying Co/Loc 001 BRU          Orig Co/Loc    001 BRU                         

 Document      IN 111101010101  Document Date  03 18 93         Batch          

 Fiscal Flag Y  Fiscal Number                                                  

 Gross Amt                 100  Disc Amt               .00      Lines          

 Quantity          .000         VAT Amt                .00      VAT included  N

                                                                                

 Currency   USD         Exchange Rate                Book Code      AP         

 Line Def   Y           VAT Code         R1          Inv Fmt        G          

 Acct Date  03 18 93    Due Date         04 17 93    Disc Date      03 28 93   

 Pay Date   04 17 93    Payment Type     BE                                    

 AP Code    AP          Stnd Dist                    Buyer          A          

 Bank Code  B1          Separate Pmt     N           Disc Always    Y          

 Hold Code  N           Turn Around Doc  Y                                     

 Taxpayer ID                        Authorization Number AAA                   

 Credit Terms C1    3.00 % if paid IN  10 EOM Disc N  Due  30  EOM Due N       

 VAT Delay    N            FDO 2  Delay  0    3% 10 30                         

                                                                               

 F4=Prompt           F12=Comments        F13=Cancel Trans    F15=Rekey Data    

                                                                               

 

 Invoice DR/CR Memo Entry

 

Upon completing this transaction and pressing the Enter key, an open item will be created.  If draft payment type (bill of exchange or bill of order) is entered as the payment type, draft processing must be allowed on Reference File category 200.  This payment type must also exist on Reference File category 240.

Although a draft payment type has been selected for the open item, the draft will not be physically created until payment creation time.  At this time, you can either manually enter a draft payment type for the open item or you can select the Automatic Payment Selection program to generate draft payments for the open items.

Recording Manual Payments

If you perform manual payment processing through the Recording Manual Payment conversation, the invoice and its payment are recorded at the same time.  The invoice is marked as paid and the draft payment becomes outstanding.  An outstanding payment is a payment listed in the system, but has not yet been cleared through the Cleared Payment Entry conversation (AP220E).  After the payment has been recorded, you are now ready to either print the payment form or create the bank tape.  If the payment is a bill of order, it can be printed on a bank form or sent magnetically on a bank tape.  Since the vendor creates the document for a bill of exchange, you can neither print this type of payment on a form nor can you create a tape.

Automatic Payment Selection

The Automatic Payment Selection screen (AP400S01) is used to pay open items that were entered during the Invoice, DR/CR Memo Entry conversation.  If a draft payment type was entered for the open item, then a draft payment will be generated for the open item.  Once the Automatic Payment Selection is run, print the Selected Items List and review this report to ensure that you wish to create payments for all of the selected items.  If there are items that you wish to deselect, run the Payment Deselection Program (AP400E) to deselect any items and repeat the process until you have selected exactly the items you want to pay.

Payment Creation

The Payment Creation transaction is then run to create payment records for the open items that have been selected and update the Open Items records to a Paid status.  If a bill of exchange was the payment type, a draft will automatically be created and an external payment number (draft number) will be assigned from the Bank Definition conversation (CF210S01).  This number will be incremented by one each time a new draft is automatically created.  If you look at the Accounts Payable Inquiry for the payment, the bill of exchange is marked as outstanding.  To record these payments to the vendor, enter these through the Cleared Payment Entry conversation (AP220S01).  A bill of exchange cannot be printed on a bank form or sent magnetically.  For a bill of order, the open item will be marked as paid, but will not have a payment number assigned to it.  You must continue with the payment cycle to get the external payment number assigned to this payment.  Either print forms for the bill of order or create the bank tape.  For more information. see the Payment Forms Creation and Create Bank Tape screens in the Accounts Payable screens section.

At the time the draft is issued or approved, the draft amount is moved from Accounts Payable into Drafts Payable.  On the draft due date, this amount is moved from Drafts Payable into Cash (if the due date generation flag on Reference File category 240 is 'Y').