Setting Up and Maintaining Line of Credit Accounts

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1 Setting Up and Maintaining Line of Credit Accounts INTRODUCTION SuccessWare 21 has a feature that allows the creation and use of register accounts designed specifically for tracking transactions on a credit card account or line of credit. This type of register account must be assigned to a liability account, rather than an asset (cash) account. Note that the Cash balance reported in the SnapShot form will not include credit card type register balances. SETUP Register Account Setup has an option for Credit Card accounts that can be used to track Line of Credit transactions. When a new account is set up as a Credit Card account, the associated general ledger account must be selected from the Current Liabilities section of the balance sheet. Cash Boxes and Bank Accounts require a cash-based G/L account. Note: Before you begin, go to G/L Setup and make sure you have an appropriate G/L account set up for the register. The account must be in the Current Liabilities section of the Chart of Accounts. It is recommended that you use an account in the Other Current Liabilities section of the balance sheet. Creating a Line of Credit Account To set up a new line of credit register account: 1. Open the Account Register 2. Choose Select an Account to get a list of your current registers. 3. Press CTRL+Enter to modify register accounts (or right click, and select Modify Mode). 4. Enter a Register Acct# and Description. 5. Select the Credit Card Account Type option. 6. Select the G/L Account you have created to represent the Line of Credit account. SuccessWare21, Inc. 1

2 Entering a Beginning Balance Beginning Balance for an Existing Line Of Credit If you are creating this account as part of your opening balance entries, the account in the General Ledger will already have a balance but the newly created account will not have a balance. You will make an adjustment directly against the new Line of Credit account to create its initial balance. To enter a beginning balance adjustment: 2. Use the SELECT AN ACCOUNT drop down list to select the new Line of Credit account. 3. Click the ADJUST button at the bottom of the ACCOUNT REGISTER (or press Alt+3.) SuccessWare21, Inc. 2

3 4. Enter the Date of the transaction. 5. Select the INCREASE BALANCE DUE radio button and tab to the AMOUNT field where you will enter the balance. 6. Enter a reference in the REFERENCE field. (You may choose to enter the authorization number or the transaction date.) 7. Use the drop-down arrow to select an Adjust code to use for the transaction. Select a code that will post to the same liability account as the register. Doing so will create a washing entry that will not affect the balance in general ledger. Be sure to deactivate the adjust code after using it for the beginning balance. 8. Enter 00 in the DEPT field. (Liability accounts are not departmentalized.) 9. Enter any Comments that you wish and select Post to complete the transaction. Beginning Balance for a New Line Of Credit You will enter a transfer in the Line of Credit register account to record the transfer from your Line of Credit into the bank account. The transfer will post the correct general ledger entries to record the transaction (credit to Line of Credit and debit to Cash.) To enter a beginning balance transfer: 2. Use the SELECT AN ACCOUNT drop down list to select the new Line of Credit account. 3. Click the Transfer button at the bottom of the Account Register (or press Alt+4.) SuccessWare21, Inc. 3

4 4. WITHDRAW FUNDS FROM ACCOUNT should default to the Line of Credit account. Tab to the next field. 5. Use the drop-down window to select the appropriate account in Deposit funds to account and tab to DATE. 6. Enter the DATE, AMOUNT and REFERENCE, then select Post to post the transaction. PROCESSING A LINE OF CREDIT ACCOUNT The day-to-day processing of your Line of Credit consists of: Recording transfers from your Line of Credit into your bank account Recording accumulated Interest Reconciling Paying down the Line of Credit Recording Transfers from the Line Of Credit Into Your Bank Account You will use the Transfer option to record deposits from your Line of Credit into your bank account. This will increase your bank balance and create a balance due on the line of credit. To record the transfer: 2. Use the SELECT AN ACCOUNT drop down list to select the appropriate Line of Credit account. 3. Click the Transfer button at the bottom of the Account Register (or press Alt+4.) 4. Withdraw funds from account should default to the Line of Credit account. Tab to the next field. 5. Use the drop-down window to select the appropriate account in Deposit funds to account and tab to Date. 6. Enter the Date, Amount and Reference, then select Post to post the transaction. SuccessWare21, Inc. 4

5 Recording Interest You will enter adjustments to your line of credit register account as you accumulate interest on your Line of Credit. These interest entries can also be entered at the time you reconcile the account. To add interest to the Line of Credit: 2. Use the SELECT AN ACCOUNT drop down list to select the appropriate Line of Credit account. 3. Click the Adjust button at the bottom of the Account Register (or press Alt+3.) 4. Enter the DATE of the transaction. 5. Select the Increase balance due radio button and tab to the AMOUNT field where you will enter the balance. 6. Enter a reference in the REFERENCE field. SuccessWare21, Inc. 5

6 7. Use the drop-down arrow to select an ADJUST CODE to use for the transaction. Select a code that will post to the appropriate interest expense general ledger account. 8. Enter the department to which you wish to post the interest expense. 9. Enter any COMMENTS that you wish and select Post to complete the transaction. Line of Credit Account Reconciliation The reconciliation of your Line of Credit account will follow the same procedures as reconciling a Credit Card account. You will reconcile the account using the statement that you receive from your financial institution and clear it against listed transactions in the register account. To reconcile the line of credit account: 2. Use the SELECT AN ACCOUNT drop down list to select the Line of Credit account. 3. Use the SELECT AN ACTIVITY drop down list to select Account Reconciliation. 4. Enter the statement date and ending statement balance in the appropriate fields in the top left section of the ACCOUNT REGISTER. NOTE: The Statement Ending Balance for the Line of Credit Account MUST BE entered as a negative value. SuccessWare21, Inc. 6

7 5. Enter the STATEMENT DUE DATE and the MINIMUM AMOUNT DUE in the appropriate fields. These fields will be used when paying the Line of Credit account through Accounts Payable. 6. Enter adjustments for any service charges, interest or other items that appear on the statement and do not already appear in the account. 7. Mark the items that appear on the statement as cleared. Use the right-click menu or the appropriate keystrokes to mark the items. Keystroke Spacebar Ctrl+A Result Clear or unclear the selected transaction Clear all items Ctrl+D 8. Click Finish when you are done. Paying Down the Line Of Credit Unclear all items There are two methods for paying down the Line of Credit Through the Account Register Through the Payables Manager The simplest and easiest way to pay down the Line of Credit is through the Account Register. However, if you want to process your payments through Accounts Payable you will process your payments through the Payables Manager. Making Payments to Your Line Of Credit Account in the Account Register Payments can be made to your line of credit account through the payment option in the Account Register screen. When making payments to the line of credit account you can make the payment as a check or a direct debit payment. Additionally, you can make a payment to line of credit from a credit card account. Note: Line of Credit accounts can also have payments applied to them through the Payables Manager, by selecting the Pay Bills button and choosing Credit Card. SuccessWare21, Inc. 7

8 To Make a Payment to your Line of Credit Account: 2. Use the SELECT AN ACCOUNT drop down list to select the appropriate Register Account from which you will be making the payment to the Line of Credit account 3. Click the Payment button at the bottom of the Account Register (or press Alt+2.) 4. Select Register Acct (or press Alt+3) for the type of payment being made. When this selection is made a To Reg # option is displayed that allows you to choose the register account to which you want to apply the payment. In the To Reg # drop down select the Line of Credit account to which you are applying a payment. The balance on the account will be displayed next to the account name. 5. Use the Pay to options to indicate whether you are writing a check to make the payment or if you are making a debit (transfer of funds) payment to the account 6. Enter the payment information including the payment date as well as the amount. Additionally you will want to add a description of the transaction in the DESCRIPTION field. This will display with the payment in the Register Account. 7. If you are making the payment as a check, Enter the check number, if you have chosen to make a debit payment, enter a value in the REFERENCE field such as the transaction number or the approval code. 8. Print the check and post the payment as normal. An entry is made showing the payment to the line of credit account, in addition to the entry decreasing your bank account (or increasing the balance on another credit card account if you are paying the line of credit with a credit card). SuccessWare21, Inc. 8

9 Paying the Line Of Credit as A Payable SuccessWare 21 allows you to pay down your line of credit as a payable. The Line of Credit account must be reconciled through the ACCOUNT REGISTER before you apply a payment to the account through Payables. To Pay the Line of Credit Account through Payables 1. Open the PAYABLES MANAGER. 2. Click the Pay Bills button at the bottom of the window and select the Credit Card option. 3. Each credit card type register account will be displayed with its Payment due date as well as the minimum balance due. Additionally, any payments that have not yet been reconciled will be totaled in the OUTSTANDINGPMTS column. 4. Use the appropriate keystrokes or right-click options in the open item grid to select items you wish to pay. SuccessWare21, Inc. 9

10 Option Edit amount/discount Tag/untag for payment Tag for Minimum Payment Tag all Untag all Report Checks Close Effect To make changes to the payment amount (i.e. partial payment) or the amount of the discount you are taking. The keystroke for this option is Enter. This option toggles. If the item has been marked for payment it will un-mark it. If the item has not been marked for payment, it will mark it. The keystroke for this option is Spacebar. This option will tag the item for payment and use the minimum payment amount as entered during reconciliation as the amount for the payment. Use this option to mark all displayed items for payment. If you are paying most invoices, you may wish to tag all then un-mark the ones you do not wish to pay. The keystroke for this option is Ctrl+A. Use this option to un-mark all items that have been tagged for payment. The keystroke for this option is Ctrl+U. Use this option to print the grid report. Opens the check queue. To close the pay bills screen. Keystroke is Esc. Note: If you select to tag an account that has an outstanding, unreconciled payment, you will be notified and asked to confirm that you wish to make another payment to the account. 5. Click the Checks button to generate the checks for payment to the credit card accounts. SuccessWare21, Inc. 10