what financial documents are included in a sales transaction made on credit?
- credit note
- customer statement
what does the invoice set out?
- the date
- the sales price and any discount given and VAT added
- the total due
- the date when payment is required
what does the credit note do?
- this is used if any refund is due because of a faulty item etc and can be deducted from the amount owed to the seller
what does the customer statement do?
- sets out all the invoices and credit notes issued
- sets out any payments received over a set period
- results in the final amount due
what is remittance advice?
- an advice received from a customer telling the seller that a payment has been made
how can remittance advice be delivered?
- posted, faxed, emailed
- it states that a certain amount of money has been sent by a credit customer in settlement of account
what is remittance advice used for?
- to advise the sending of a payment direct to a sellers bank account
- to accompany a cheque
what is BACS payment?
- Bankers Automate Clearing Services (an electronic bank transfer system which makes payment direct from one bank account to another)- often used for bulk payments
what is faster payment?
- an electronic bank transfer system which makes payment direct from one bank account to another (often used for individual payments)
what is a cheque?
- an order to a bank to pay a stated amount from the drawer’s account, written on a specially printed form
what checks need to be made on the remittance advice for faster payments?
- needs to be checked against sales documentation and sales ledger account of the customer paying
why do the checks need to be made on the advice for faster payments?
- to make sure there’s no errors or discrepancies
- makes sure the right amount has been sent for the right transactions
what checks need to be made on the remittance advice for cheques?
- its in writing and signed by the person/organisation paying the money
- details are accurate and correct
- name after ‘pay’ is correct
- the cheque is in date
- the amounts in words & figures are the same
why do the checks need to be made on the advice for cheques?
- ensures the cheque can be an acceptable payment method
when can discrepancies occur on remittance advice?
- if there’s an underpayment
- if there’s an over-payment
- if the buyer has made a mistake deducting PPD
what is an underpayment?
- not enough money has been sent to the seller
what is an overpayment?
- too much money has been sent to the seller
what is prompt payment discount?
- an early payment discount, where a seller allows a customer to deduct a percentage discount from the invoice total if payment is made within a specific time