Paid-by Customer

If the customer's corporate structure contains many bill-to customers, you may wish to define an interim level for applying payments.  For example,  the customer may have regional centers that pay the bills for all locations within their regions.  When a payment is received from a regional center, you would like to view only the locations within that region during payment application.  However, you would still like to do corporate credit checking across all regions.  The Paid-by Customer feature handles this situation.

Consider the situation shown in the following figure.  The corporate structure is similar to the one shown in XX.  In this case, however, customer 002, 003, and 004 represent three regions,  each of which has 2 stores.  Each store receives its own invoices to verify the information before passing them along to the regional office for payment.  Consequently, each store is defined as a bill-to location.  When a payment is received from a regional office, it could be applied to any of the stores within the region.  However, the regional office never pays invoices for stores outside the region.  In addition, the corporate entity (001) does not pay invoices for any of the stores.

Paid-by Customer Structure

To handle this situation:

1.   Define 001 as a bill-to customer.  The Corporate Customer field should be 001.  The Credit Check Type field should indicate corporate credit checking.

2    Define 002, 003, and 004 as bill-to companies, with 001 as the corporate customer.  The Credit Check Type field should indicate corporate credit checking.

3.   Define Store 1 and Store 2 as bill-to companies, with 001 as the corporate customer and 002 as the paid-by customer.  Note that the stores must be set up as bill-to locations because invoices are sent to the stores before being forwarded to the regional office.  Specify 003 as the paid-by customer for stores 3 and 4; specify 004 as the paid-by customer for stores 5 and 6.

4.   When entering sales orders for a store, specify the store as both the ship-to and bill-to location.  (Both the goods and invoices will be sent to the store.)

In this example, there are no separate ship-to customers.  However, it would be possible to extend this example one level further.  For example, suppose shipments were to be routed to individual docks at each store.  You could then set up the docks as ship-to locations and the central receiving/accounting department for each store as the bill-to location.

During corporate payment application, you would enter the appropriate region in the Paid-by Customer field.  Only the bill-to locations associated with the indicated paid-by customer would be displayed on the detail screen for payment application.

Because the all entities are still part of the same overall corporate structure, credit checking would still be performed across all stores associated with customer 001.

Note:    In the example, the paid-by customers are defined as bill-to customers in the system.  However, paid-by does not have to be defined as a customer.  For example, you could have entered "RegionA" in the Paid-by Customer field for stores 1 and 2 without defining RegionA as a customer.  You would then enter RegionA in the Paid-by Customer field during corporate payment application to view information for those stores.  Because RegionA is not a customer, no account balances will be stored at the regional level.