Course 80534:

Finance Essentials in
Microsoft Dynamics® NAV 2013

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 Table of Contents

Introduction
Microsoft Dynamics Courseware Overview…………………………………………………….....0-3

Student Objectives…………………………………………………………………………………………….0-4

Module 1: FINANCIAL MANAGEMENT SETUP

Lesson 1: General Ledger Setup ...............................................................................................................1-2

Lesson 2: Accounting Periods ................................................................................................................. 1-10

Lab 1.1: Accounting Periods .................................................................................................................... 1-14

Module 2: CHART OF ACCOUNTS

Lesson 1: Chart of Accounts Overview ...................................................................................................2-2

Lesson 2: G/L Account Card .......................................................................................................................2-2

Lesson 3: G/L Account Card Ribbon .......................................................................................................2-8

Lab 2.1: Create a Revenue Account ...................................................................................................... 2-11

Lesson 4: Chart of Accounts .................................................................................................................... 2-13

Lab 2.2: Assign a Dimension to Multiple Accounts ........................................................................ 2-16

Module 3: GENERAL JOURNALS

Lesson 1: Creating and Posting Journal Entries ..................................................................................3-2

Lab 3.1: Create a Journal Entry ..................................................................................................................3-9

Lesson 2: Standard Journals .................................................................................................................... 3-11

Lesson 3: Recurring Journals ................................................................................................................... 3-15

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Finance Essentials in Microsoft Dynamics® NAV 2013
Lesson 4: Processing Recurring Journals ............................................................................................ 3-22

Lab 3.2: Create and Post a Recurring Journal ................................................................................... 3-31

Lesson 5: Reversals and Corrections .................................................................................................... 3-32

Module 4: CASH MANAGEMENT – RECEIVABLES AND PAYABLES

Lesson 1: Bank Account Overview ...........................................................................................................4-3

Lab 4.1: Create a Bank Account ................................................................................................................4-9

Lesson 2: Customer Overview................................................................................................................. 4-10

Lesson 3: Vendor Overview ..................................................................................................................... 4-15

Lesson 4: Cash Receipt Journal and Payment Journal Overview .............................................. 4-17

Lab 4.2: Apply and Post Cash Receipts ............................................................................................... 4-25

Lab 4.3: Enter and Post Manual Checks .............................................................................................. 4-28

Lesson 5: Suggest Vendor Payments ................................................................................................... 4-29

Lab 4.4: Suggest Vendor Payments for a Single Vendor .............................................................. 4-37

Lesson 6: Print and Post Payables Checks.......................................................................................... 4-39

Lesson 7: Voiding Checks ......................................................................................................................... 4-48

Lab 4.5: Financially Void a Check .......................................................................................................... 4-52

Lab 4.6: Void a Check ................................................................................................................................ 4-54

Lesson 8: Applying Payments ................................................................................................................. 4-56

Lesson 9: Unapply Customer and Vendor Ledger Entries ........................................................... 4-61

Lab 4.7: Unapply Posted Ledger Entries ............................................................................................. 4-63

Lesson 10: Reversal of Posted Journals ............................................................................................... 4-65

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 Table of Contents
Module 5: CASH MANAGEMENT
Lesson 1: Bank Reconciliation....................................................................................................................5-2

Lesson 2: Demonstration: Complete a Bank Reconciliation...........................................................5-7

Module 6: RECEIVABLES AND PAYABLES MANAGEMENT:

PAYMENT DISCOUNT AND PAYMENT TOLERANCE
Lesson 1: Set Up Payment Discounts ......................................................................................................6-2

Lesson 2: Process Sales Payment Discounts ...................................................................................... 6-13

Lab 6.1: Post a Customer Payment with a Discount ...................................................................... 6-22

Lab 6.2: Apply Posted Partial Customer Payments with Discounts .......................................... 6-24

Lesson 3: Process Purchase Payment Discounts .............................................................................. 6-25

Lesson 4: Set Up a Payment Discount Tolerance and a Payment Tolerance........................ 6-31

Lesson 5: Set Up a Payment Discount Tolerance ............................................................................ 6-35

Lesson 6: Process the Payment Discount Tolerance ...................................................................... 6-37

Lesson 7: Set Up a Payment Tolerance ............................................................................................... 6-40

Lab 6.3: Set Up a Payment Tolerance .................................................................................................. 6-43

Lesson 8: Process a Payment Tolerance.............................................................................................. 6-44

Lab 6.4: Process a Customer Payment Tolerance ............................................................................ 6-50

Lab 6.5: Adjust the Vendor Payment Discount Amount .............................................................. 6-52

Lesson 9: Review the Posted Payment Discount Tolerance and

the Payment Tolerance Entries................................................................................................................ 6-53

Lesson 10: Review Customer and Vendor Statistics ....................................................................... 6-56

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Finance Essentials in Microsoft Dynamics® NAV 2013
Module 7: RECEIVABLES MANAGEMENT: REMINDERS AND
FINANCE CHARGE MEMOS
Lesson 1: Set Up and Assign Reminder Terms ....................................................................................7-2

Lab 7.1: Set Up and Assign a Reminder Term .................................................................................. 7-13

Lesson 2: Set Up and Assign Number Series for Reminders and Issued Reminders.......... 7-14

Lesson 3: Create and Issue Reminders ................................................................................................ 7-15

Lab 7.2: Create and Issue Reminders ................................................................................................... 7-23

Lesson 4: Set Up and Assign Finance Charge Terms ..................................................................... 7-24

Lab 7.3: Set Up and Assign a Finance Charge Term....................................................................... 7-32

Lesson 5: Set Up and Assign Number Series for Finance Charge Terms ............................... 7-33

Lesson 6: Create and Issue Finance Charge Memos ...................................................................... 7-34

Lab 7.4: Create and Issue Finance Charge Memos ......................................................................... 7-44

Lesson 7: Calculate Interest on Reminders ........................................................................................ 7-45

Module 8: VAT
Lesson 1: VAT Calculation Type ................................................................................................................8-3

Lesson 2: Display VAT Amounts in Sales and Purchase Documents........................................ 8-14

Lesson 3: Adjust VAT Amounts in Sales and Purchase Documents and Journals ............... 8-17

Lab 8.1: Adjust a VAT Amount in a Sales Document ..................................................................... 8-25

Lab 8.2: Adjust a VAT Amount in a Purchase Journal ................................................................... 8-27

Lesson 4: Unrealized VAT ......................................................................................................................... 8-29

Lesson 5: VAT Statements ........................................................................................................................ 8-30

Lesson 6: VAT Settlement ......................................................................................................................... 8-36

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 Table of Contents
Module 9: PREPAYMENTS
Lesson 1: Set Up General Posting Groups.............................................................................................9-3

Lesson 2: Set Up Unrealized VAT for Prepayments ...........................................................................9-4

Lesson 3: Set Up Number Series for Prepayment Documents ......................................................9-6

Lesson 4: Set Up Prepayment Percentages for Customers and Vendors .................................. 9-8

Lesson 5: Set Up Prepayment Percentages for Customer-Item

and Vendor-Item Combinations ................................................................................................................9-9

Lesson 6: Set Up Prepayments Verification ....................................................................................... 9-14

Lab 9.1: Set Up Prepayments for Sales ................................................................................................ 9-17

Lesson 7: Prepayments Processing Flows ........................................................................................... 9-18

Lesson 8: Prepayment Sales and Purchase Orders Overview ..................................................... 9-20

Lesson 9: Process Prepayment Sales and Purchase Orders ......................................................... 9-25

Lesson 10: Process Prepayment Sales and Purchase Invoices .................................................... 9-28

Lesson 11: Demonstration: Prepayment Purchase Order Process ............................................ 9-31

Lab 9.2: Prepayment Sales Order Process with Payment Discount .......................................... 9-37

Lab 9.3: Prepayment Sales Order Process with Unrealized VAT ................................................ 9-45

Lesson 12: Correct Prepayments ........................................................................................................... 9-49

Module 10: YEAR END CLOSING PROCESSES

Lesson 1: Closing a Fiscal Year ............................................................................................................... 10-2

Lesson 2: Transferring Income Statement Account Balances ..................................................... 10-5

Lesson 3: Posting the Journal ................................................................................................................. 10-8

Lab 10.1: Post an Entry into a Closed Fiscal Year ..........................................................................10-10

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Finance Essentials in Microsoft Dynamics® NAV 2013
We created this additional Table of Contents to assist you in quickly finding out the areas that are
new and, or changed from the Microsoft Dynamics NAV earlier version for this course.
These areas are identified with this icon throughout the training material.

Module 3: GENERAL JOURNALS

Lesson 2: Standard Journals .................................................................................................................... 3-11

Module 4: CASH MANAGEMENT – RECEIVABLES AND PAYABLES

Topic 3: Analyzing Receivables .............................................................................................................. 4-13

Module 6: RECEIVABLES AND PAYABLES MANAGEMENT:

PAYMENT DISCOUNT AND PAYMENT TOLERANCE
Topic 2: Demonstration: Process an Incorrect Customer Payment .......................................... 6-44

Module 7: RECEIVABLES MANAGEMENT: REMINDERS AND

FINANCE CHARGE MEMOS
Topic 5: Assign Reminder Terms ..............................................................................................................7-9

Lesson 2: Set Up and Assign Number Series for Reminders and Issued Reminders.......... 7-14

Topic 1: Reminder Process without Interest Calculation .............................................................. 7-16

Topic 4: Assign Finance Charge Terms ................................................................................................ 7-29

Lesson 5: Set Up and Assign Number Series for Finance Charge Terms ............................... 7-33

Topic 1: Finance Charge Memo Process ............................................................................................. 7-35

Topic 2: Reminder Process with Interest Calculation ..................................................................... 7-46

Module 9: PREPAYMENTS
Lesson 2: Set Up Unrealized VAT for Prepayments ...........................................................................9-4

Topic 2: Demonstration: Set Up Prepayment Percentages for Vendors ................................... 9-9

Topic 2: Demonstration: Set Up Prepayment Defaults for a Vendor-Item Combination 9-12

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 Table of Contents
Topic 2: Review Prepayment Invoices ................................................................................................. 9-28

Topic 4: Create Final Sales and Purchase Invoices .......................................................................... 9-30

Topic 5: Review Final Invoices ................................................................................................................ 9-30

Lesson 11: Demonstration: Prepayment Purchase Order Process ............................................ 9-31

Lab 9.2: Prepayment Sales Order Process with Payment Discount .......................................... 9-37

Lab 9.3: Prepayment Sales Order Process with Unrealized VAT ................................................ 9-45

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Finance Essentials in Microsoft Dynamics® NAV 2013

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INTRODUCTION
Training is an important component of maintaining the value of a Microsoft
Dynamics® investment. Quality training from industry experts keeps you up-to-
date and helps you develop the skills necessary for fully maximizing the value of
your solution. Microsoft Dynamics provides different kinds of training to meet
everyone’s needs, from online training, classroom training, or training materials.
Select the training type that will best help you stay ahead of the competition.

Online Training

Online training delivers convenient, detailed training in the comfort of your own
home or office. Online training provides immediate access to training 24 hours a
day. It is perfect for the customer who does not have the time or budget to travel.
Online training options combine the efficiency of online training with the
thorough product coverage of classroom training.

Classroom Training

Classroom training provides, comprehensive learning through hands-on

interaction. From demonstrations to presentations to classroom activities, you
receive practical experience with instruction from our certified staff of experts.

Training Materials

Training materials help you learn at your own pace, in your own time, with
information-packed training manuals. The many training manuals features many
tips, tricks, and insights that you can reference continuously.

Microsoft Dynamics Courseware

The Microsoft Dynamics courseware consists of detailed training manuals that are
designed from a training perspective. These manuals include advanced topics, in
addition to training objectives, exercises, interactions, and quizzes.

Look for a complete list of manuals that are available for purchase on
CustomerSource or PartnerSource.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Microsoft Dynamics Courseware Contents

Microsoft Dynamics courseware contains labs and quick interactions. These help

Lab
Within the Microsoft Dynamics training materials, you will find labs. These labs are
typically offered in two levels to accommodate each student’s variety of
knowledge and expertise. We suggest that you try the High level steps first. If you
need help completing the task, look to the information in the Detailed steps.

High level steps

High levels steps are the most challenging. These steps are designed for the
experienced student who requires little instruction to complete the required task.

Detailed steps
Detailed steps are geared toward new users who require detailed instructions and
explanations to complete the lab. Detailed steps guide you through the whole
task. This includes navigation.

What’s New Icon

This training material might include content for new features that is specific to this
software version, and to any updated features. To assist in finding the content for
the new features, an icon ( ) is placed next to the heading. The icon identifies
areas that are new and, or changed from the earlier version. However, it is
important to review all content to make sure there is a thorough understanding of
this information.

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 Introduction

Student Objectives
What do you hope to learn by participating in this course?

List three main objectives here.

1.

2.

3.

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Finance Essentials in Microsoft Dynamics® NAV 2013

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MODULE 1: FINANCIAL MANAGEMENT SETUP

Module Overview
Financial Management Setup describes in detail the following areas that must be
set up to use financials in Microsoft Dynamics® NAV 2013.

• General Ledger
• Accounting Periods

Note: There are other setup areas in the General Ledger, such as No. Series,
Dimensions, and Posting Groups. The setup of these areas is covered in the course
Application Setup in Microsoft Dynamics NAV 2013.

Objectives

The objectives are:

• Explain and set up the fields on the General Ledger Setup window.
• Explain and set up Accounting Periods.

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General Ledger Setup

The General Ledger Setup window is used to specify a default setting for the
general ledger and other application areas. The general ledger setup must be
completed for each company that is set up in Microsoft Dynamics NAV 2013.

The five FastTabs on the General Ledger Setup window are as follows:

• General
• Numbering
• Dimensions
• Reporting
• Application

To access the General Ledger Setup window, follow these steps.

1. Click Departments in the navigation pane.

2. Click Administration, and then click Application Setup.
3. Click Financial Management and then click Finance.
4. In the Finance window, under Tasks, click General Ledger Setup.

FIGURE 1.1: GENERAL LEDGER SETUP, GENERAL FASTTAB

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 Module 1: Financial Management Setup
General FastTab

The General FastTab contains the basic setup defaults and includes the following
fields:

• Allow Posting From / Allow Posting To - Specify the date range

that all users can post transactions in.

Because a specific accounting period cannot be closed in Microsoft

Dynamics NAV 2013, setting the posting date range prevents users
from posting entries outside that date range.

Note: Specific user posting date restrictions are specified in the User Setup
window. If there are no user restrictions, the company defaults are in effect. If there
are no company defaults, there are no restrictions on dates for posting.

• Register Time - Specify whether the system registers the user's time
usage.
• Local Address Format - Specify the address format that is used on
printed documents.
• Local Cont. Addr. Format - Specify where the contact name must
appear in mailing addresses.
• Invoice Rounding Precision (LCY) - Specify the size of the interval
to be used when rounding amounts in local currency (LCY).
• Invoice Rounding Type (LCY) - Specify if invoice amounts are
rounded up or down. The option selected here is used with the
rounding interval specified in the Invoice Rounding Precision (LCY)
field.
• Allow G/L Acc. Deletion Before - The date in this field determines
when G/L accounts can be deleted. G/L accounts that have entries on
or after the date specified in this field cannot be deleted.
• Check G/L Account Usage - Specifies that you want the program to
protect G/L accounts that are used in setup tables from being
deleted.
• EMU Currency - Select this field if the LCY is an European Monetary
Union (EMU) currency. Use this field only when you apply entries in
different currencies.
• LCY Code - Enter the currency code for the LCY. The value is only
used on printouts because the system uses <Blank> as the indicator
for the LCY when displaying information in tables.
• Pmt. Disc. Excl. VAT - Specify whether the payment discount is
based on amounts including or excluding value-added tax (VAT).

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Finance Essentials in Microsoft Dynamics® NAV 2013
• Adjust for Payment Disc. - If you select it, the system recalculates
VAT amounts when you are posting payments that trigger payment
discounts.
• Unrealized VAT – Select this field if you want the system to post
unrealized VAT.
• Prepayment Unrealized VAT - Specify whether the system manages
prepayments for unrealized VAT.
• Max. VAT Difference Allowed - Enter the maximum amount that
you can have for VAT corrections in the local currency.
• VAT Rounding Type - Select how VAT is rounded when it is
calculated for the local currency.
• Bill-to/Sell-to VAT Calc. - By default, this field is set to Bill-to/Pay-to
No., and it indicates that the VAT Business Posting Group is taken
from the Bill-to customer or Pay-to vendor for orders/invoices. Select
Sell-to/Buy-from No. to use the VAT Business Posting Group for the
Sell-to customer or Buy-from vendor for orders/invoices.
• Print VAT Specification in LCY - If you select it, a line is added on
the printed sales documents that specifies the VAT details in the LCY,
in addition to the invoicing currency. When this is not selected, VAT
details will only print in the invoicing currency.

Note: In addition to the invoice rounding precision, you can specify the
amount rounding precision and the unit amount rounding precision. However, these
fields are not visible in Microsoft Dynamics NAV 2013 W1. Use the About This
Page function to view the values of these fields.

Numbering FastTab

Bank Account Nos. is the only field on the Numbering FastTab. In this field,
enter the code for the number series that will be used to assign numbers to bank
accounts.

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 Module 1: Financial Management Setup

FIGURE 1.2: GENERAL LEDGER SETUP, NUMBERING FASTTAB

Number series are described in the Application Setup in Microsoft Dynamics®

NAV 2013 courseware.

Dimensions FastTab

On the Dimensions FastTab, specify the global and the shortcut dimensions to be
used for financial reporting.

The codes specified here are selected from the dimensions set up in the
Dimension table.

FIGURE 1.3: GENERAL LEDGER SETUP, DIMENSIONS FASTTAB

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Finance Essentials in Microsoft Dynamics® NAV 2013
Global dimensions can be used as filters for general ledger entries or on all
reports, account schedules, and batch jobs.

Determine which two dimensions will be analyzed most frequently and select
these as the two global dimensions.

Shortcut dimensions offer a fast and convenient way to enter dimension

information directly on the line in journals, sales and purchase documents. The
eight shortcut dimensions are available to add as columns with the Choose
Columns function in journals and documents lines.

The system automatically creates the first two shortcut dimensions based on the
global dimensions. Users can select the other six shortcut dimensions based on
the company’s preferences and business rules.

Global Dimensions

To change the global dimensions, follow these steps.

1. In the General Ledger Setup, on the Actions tab, click Change

Global Dimensions.
2. Use the drop-down list to change one or both of the global
dimensions.
3. Click OK to run the Change Global Dimensions batch job.

FIGURE 1.4: CHANGE GLOBAL DIMENSIONS

Note: Changing a global dimension code requires that the system changes
entries which are already posted. Carefully consider which dimension codes are
designated as a global dimension to minimize the need for future changes.

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 Module 1: Financial Management Setup
Reporting FastTab

The Reporting FastTab is used to determine whether an additional reporting

currency is used. An additional reporting currency is used when transaction
information must also be available in a currency other than the local currency.
When an additional reporting currency is set up, users can run financial reports in
both the local currency and the additional reporting currency.

FIGURE 1.5: GENERAL LEDGER SETUP, REPORTING FASTTAB

The fields on the Reporting FastTab are as follows:

• Additional Reporting Currency - Specify the currency used as an

additional reporting currency in the general ledger area.
If you specify it:
o General ledger and other entries that include VAT entries in both
the LCY and the additional reporting currency are automatically
recorded in both LCY and additional reporting currency.
o Reports are printed in either the LCY or the additional reporting
currency.
• VAT Exchange Rate Adjustment - Use with the Additional
Reporting Currency field to specify how the accounts set up for VAT
posting in the VAT Posting Setup table are adjusted for exchange rate
fluctuations between the LCY and the additional reporting currency.

The complete setup process of the additional reporting currency is covered in the
course Finance Advanced in Microsoft Dynamics NAV 2013.

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Application FastTab

The fields on the Application FastTab are used to specify the following:

• Currency rounding tolerance.

• How payments are applied to outstanding amounts. This includes the
payments from customers and the payments to vendors.

FIGURE 1.6: GENERAL LEDGER SETUP, APPLICATION FASTTAB

The Application FastTab contains the following fields:

• Appln. Rounding Precision - Specify the size of the interval for

rounding differences for the LCY when you apply the LCY entries to
entries in a different currency.
• Payment Disc. Tolerance Warning, Payment Disc. Tolerance
Posting, and Payment Discount Grace Period - Complete these
fields to allow tolerances on payment discount terms. More
information about payment discount tolerance is available in the
Receivables and Payables Management module in this Finance
content.
• Payment Tolerance Warning and Payment Tolerance Posting -
Complete these fields to close outstanding receivables and payables
with payment amounts that differ from what is owed. More
information about payment discount tolerance is available in the
Receivables and Payables Management module in this Finance
content.
• Payment Tolerance % - Enter the percentage that the payment or
refund can differ from the amount on the invoice or credit memo.

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 Module 1: Financial Management Setup
• Max. Payment Tolerance Amount - Enter the maximum amount
that the payment or refund can differ from the amount on the invoice
or credit memo.

Payment Tolerance

To change the payment tolerance, follow these steps.

1. In the General Ledger Setup, on the Actions tab, click Change

Payment Tolerance.
2. Select the All Currencies check box if you want to use the same
payment tolerance settings for both local and foreign currencies.
3. Leave the Currency Code field blank if you want to set up payment
tolerances for the local currency.
4. Enter a percentage in the Payment Tolerance % field.
5. Enter an amount in the Max. Payment Tolerance field.
6. Click OK to run the Change Payment Tolerance batch job.

FIGURE 1.7: CHANGE PAYMENT TOLERANCE WINDOW

Note: Payment tolerances can be set up by currency in the Currencies

window.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Accounting Periods
With accounting periods users can create time references in Microsoft Dynamics
NAV 2013. A fiscal year consists of several accounting periods. The shortest
possible fiscal year consists of one accounting period with one day. This means
that you can set up accounting periods that are different from a calendar year.

You can use the Accounting Periods window to do the following:

• Open new fiscal years.

• Define accounting periods.
• Close fiscal years.

You can use accounting periods in reporting. For example, when you are
reviewing posted entries in a Balance/Budget window where the reporting
interval can be specified, one of the options you may specify to report by
accounting period.

FIGURE 1.8: ACCOUNTING PERIODS WINDOW

The Accounting Periods window contains the following fields:

• Starting Date – Specifies the date that the accounting period will
begin. This can, but does not have to be the first day of the month.
You can change the starting date of a period manually when the
Date Locked check box is empty.
• Name – Specifies the name of the accounting period. As a default,
the program will enter the name of the month that corresponds to
the starting date.

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 Module 1: Financial Management Setup
• New Fiscal Year – Specifies whether to use the accounting period to
start a fiscal year.
• Closed – Specifies if the accounting period belongs to a closed year.
By closing a fiscal year, all periods in the year will be closed.
• Date Locked – Specifies if you can change the starting date for the
accounting period. After closing a fiscal year, there will be a check
mark in this field for all the periods in the year, and the first period of
the next fiscal year.
• Inventory Period Closed – Specifies that the inventory period with
an ending date equal to or greater than the ending date of the
accounting period is closed.

Set Up an Accounting Period Manually

Accounting Periods can be created by using one of the following methods:

• Manually
• Automatically, by using the Create Fiscal Year batch job

To manually set up an accounting period, follow these steps.

1. In the Search box, enter Accounting Periods, and click the related
link.
2. Click New.
3. In the Starting Date field, enter the date that the accounting period
begins.
4. In the Name field, the system automatically updates the name of the
month that corresponds to the Starting Date.
5. Select the New Fiscal Year check box to indicate the start of the year.
6. Repeat steps 4 and 5 for each period.

The New Fiscal Year check box must contain a check mark if an accounting
period is the first in a fiscal year. Microsoft Dynamics NAV 2013 uses that period
to determine which periods to close when the Close Year function is run.

Set Up an Accounting Period Automatically

To run the Create Fiscal Year batch job, follow these steps.

1. In the Search box, enter Accounting Periods, and click the related
link.
2. Click Create Year.

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FIGURE 1.9: CREATE FISCAL YEAR WINDOW

3. In the Starting Date field, enter the date on which the fiscal year
starts.
4. In the No. of Periods field, enter the number of accounting periods
the fiscal year will be divided into. There can be from 1 to 365
periods.
5. In the Period Length field, enter how long each accounting period
will be, for example, 1M = 1 month, 1Q = 1 quarter, and so on.
6. Click OK.

Note: For more information on date formulas, refer to the online help.

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 Module 1: Financial Management Setup
Reports

The Accounting Periods window also has the option to print a Trial Balance by
Period. Select the option and enter the parameters for the report.

FIGURE 1.10: TRIAL BALANCE BY PERIOD WINDOW

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Finance Essentials in Microsoft Dynamics® NAV 2013

Lab: Accounting Periods

Scenario

As the controller at CRONUS International Ltd., you must create a new fiscal year
for 2015. Quickly create the new year by using the following information:

• The fiscal year begins on February 1, 2015 and ends on the January
31, 2016.
• The length of an accounting period is a month.

Exercise 1: Create a Fiscal Year

Exercise Scenario

As the controller at CRONUS International Ltd., you must create a new fiscal year
for 2015. Quickly create the new year by using the following information:

• The fiscal year begins on February 1, 2015 and ends on January 31,
2016.
• The length of an accounting period is a month.

Task 1: Create a Fiscal Year

High Level Steps

1. Create the fiscal year for 2015 as specified in the scenario.

Detailed Steps
1. Create the fiscal year for 2015 as specified in the scenario.
a. Click Departments in the navigation pane.
b. Click Administration, click Application Setup, click Financial
Management and then click Finance.
c. In the Finance window, click Accounting Periods.
d. In the Home tab, click Create Year.
e. In the Starting Date field, enter 2/1/2015.
f. In the No. of Periods field, enter 12.
g. In the Period Length field, enter 1M.
h. Click OK.

Exercise 2: Change the Starting Date

Exercise Scenario

After you create the fiscal year for 2015 you realize that a fiscal year should start
on January 1. Make the necessary changes so that both fiscal years 2015 and 2016
start on January 1.

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 Module 1: Financial Management Setup
Task 1: Change the Starting Date

High Level Steps

1. Manually change the starting date of fiscal years 2015 and 2016.

Detailed Steps
1. Manually change the starting date of fiscal years 2015 and 2016.
a. Click Departments in the navigation pane.
b. Click Administration, Application Setup, Financial
Management and then click Finance.
c. In the Finance window, select Accounting Periods.
d. In the Home tab, click Edit List.
e. For the accounting period with the starting date 1/1/2015, select
the New Fiscal Year check box.
f. For the accounting period with the starting date 2/1/2015, clear
the New Fiscal Year check box.
g. Repeat steps 5 and 6 for fiscal year 2016.
h. Click OK.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Module Review
Module Review and Takeaways

Financial Management Setup describes the areas that must be set up to use
Financial Management in Microsoft Dynamics NAV 2013.

The General Ledger Setup window provides a quick and fast view of the options
to set up the general ledger area for a company in Microsoft Dynamics NAV 2013.

You can use accounting periods to open and close the fiscal year. They are used as
a time reference in financial reporting.

The areas discussed in this content are the basis of the general ledger setup. There
are many other areas that must be set up in Microsoft Dynamics NAV 2013, such
as Posting Groups and Dimensions.

Test Your Knowledge

Test your knowledge with the following questions.

1. Where are fiscal years defined?

( ) Fiscal Year window

( ) Accounting Periods window

( ) General Ledger Setup window

( ) Company Setup window

2. Where are posting date restrictions set in Microsoft Dynamics NAV 2013?

( ) General Ledger Setup window

( ) Database or Windows Logon window

( ) User Security window

( ) General Journal Templates window

3. How many shortcut dimensions can be defined?

( )2

( )6

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 Module 1: Financial Management Setup
( )8

( ) Unlimited

4. Which rule applies when you change the starting date of an accounting
period?

( ) You cannot change the starting date of an accounting period.

( ) The starting date can only be changed for accounting periods in the
future.

( ) You can change the starting date of an accounting period.

( ) The starting date can only be changed for accounting periods without
a date lock.

5. How are the global dimensions changed?

( ) By running the Change Global Dimensions batch job in the Dimension

Value window.

( ) By running the Change Global Dimensions batch job in the General

Setup window.

( ) By selecting the global dimensions in the chart of accounts.

( ) When global dimensions are set up, they cannot be changed any
longer.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Test Your Knowledge Solutions

Module Review and Takeaways

1. Where are fiscal years defined?

( ) Fiscal Year window

(√) Accounting Periods window

( ) General Ledger Setup window

( ) Company Setup window

2. Where are posting date restrictions set in Microsoft Dynamics NAV 2013?

(√) General Ledger Setup window

( ) Database or Windows Logon window

( ) User Security window

( ) General Journal Templates window

3. How many shortcut dimensions can be defined?

( )2

(√) 6

( )8

( ) Unlimited

4. Which rule applies when you change the starting date of an accounting
period?

( ) You cannot change the starting date of an accounting period.

(√) The starting date can only be changed for accounting periods in the
future.

( ) You can change the starting date of an accounting period.

( ) The starting date can only be changed for accounting periods without
a date lock.

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 Module 1: Financial Management Setup
5. How are the global dimensions changed?

( ) By running the Change Global Dimensions batch job in the Dimension

Value window.

(√) By running the Change Global Dimensions batch job in the General
Setup window.

( ) By selecting the global dimensions in the chart of accounts.

( ) When global dimensions are set up, they cannot be changed any
longer.

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Finance Essentials in Microsoft Dynamics® NAV 2013

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MODULE 2: CHART OF ACCOUNTS

Module Overview
General Ledger is the central application area of MICROSOFT DYNAMICS ®
NAV 2013 that is used to post, summarize and report financial information.

Two main components of the General Ledger application area are the Chart of
Accounts and G/L Budgets. The Chart of Accounts provides quick access to G/L
accounts and balances, and the budgets feature provides a comparison between
actual amounts and budgeted amounts, by using a combination of G/L accounts,
periods, and dimensions.

Note: Because G/L budgets are used in financial reporting, the setup and use
of G/L budgets is covered in the course Finance Advanced in Microsoft Dynamics
NAV 2013.

Objectives

The objectives are:

• Explain how to use the Chart of Accounts.

• Explain the elements of the G/L Account Card.
• Explain the elements of the G/L Account Card ribbon.

Explain the elements of the Chart of Account ribbon.

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Chart of Accounts Overview

The income statement and balance sheet or two important company reports.

An account in the income statement and the balance sheet is called a G/L
account, and all the G/L accounts make up the Chart of Accounts list.

You use G/L account cards to create and edit G/L accounts.

G/L Account Card

In the Chart of Accounts list, all G/L accounts are available and can be viewed at
one time. However, there is also a G/L Account Card for each account, and this
can be accessed from the Chart of Accounts list.

The G/L account card has five FastTabs that are explained in the following section.

General FastTab

To open a G/L account card page, follow these steps.

1. In the Search box, enter Chart of Accounts, and click the related
link.
2. Select the relevant account to view.
3. On the Home tab, click Edit.

Best Practice: You can also double-click the line of the relevant account to
open the G/L account card.

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FIGURE 2.1: G/L ACCOUNT CARD WINDOW

The General FastTab contains the following fields:

• No.: The number of the G/L account.

• Name: The name or description.
• Income/Balance: Indicates whether the account is classified as an
income statement of a balance sheet account. This field is important
to determine whether an account must be closed in the fiscal year-
end.
• Debit/Credit: Indicates the type of entries that will be posted to this
account. The selection made does not restrict the type of transaction
posted to the account.
• Account Type: Indicates the purpose for the account in the different
list, journals, and reports. The following options are available:
o Posting: The only account type where entries can be posted.
o Heading: Used for description and reporting purposes only.
o Total: Used to total the accounts nominated in the Totaling
field.
o Begin-Total: Marks the beginning of an account range in the
Totaling field.
o End-Total: Marks the end of an account range in the Totaling
field.

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• Totaling: Specifies an account interval or a list of account numbers.
The program will total the entries of the accounts displayed in this
field. Totaling formulas are possible for G/L accounts of the account
type Total and End-Total.
• No. of Blank Lines: Determines the number of blank lines to insert
before the account is displayed in a report.
• New Page: Determines whether a new report page is printed after
the account is displayed in the report.
• Search Name: Used to search for a particular account when the
account number cannot be recalled.
• Balance: Displays the current balance of the account. Click the
balance amount to access the General Ledger Entries list.
• Reconciliation Account: Determines whether the G/L account is
included in the Reconciliation list in the general journals. Use the
Reconciliation list before posting to review the effect of posting the
accounts in the journal.
• Automatic Ext. Texts: If this is selected, extended text set up on the
accounts is automatically added to the sales and purchase
documentation in the Description field. If this is not selected,
extended text can still be set up on the account and added to
documents manually. To create the extended text, click Extended
Text in Navigate tab.
• Direct Posting: Indicates whether posting can move directly into this
account from a journal line. Be aware that this field is automatically
selected when new accounts are created. G/L accounts such as the
receivables (trade debtors) account, that are posted based on posting
groups, are usually only set up for indirect posting.
• Blocked: If you select it, this field prevents entries from posting to
this account. Accounts can be blocked and reopened as needed.
• Last Date Modified: System generated field that displays the date
the G/L account is last changed.

Posting FastTab

The Posting FastTab contains the following fields that determine how the G/L and
value-added tax (VAT) transactions are recorded.

• Gen. Posting Type: Defines whether the account is used only for a
Sale or Purchase transaction or with both types of transactions. This
field is used with the VAT Bus. Posting Group and VAT Prod.
Posting Group fields to determine where the system will posts VAT.
The following options are available:

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o <Blank>
o Purchase
o Sale
• Gen. Bus. Posting Group: Identifies the default general business
posting group for the account. This field is used together with the
Gen. Prod. Posting Group and Gen. Posting Type fields to find the G/L
accounts to post to for sales, purchases, discount amounts, Cost of
Goods Sold (COGS), and inventory adjustments.
Because the general business posting group indicates whom you sell-
to or buy-from, the customer’s or vendor’s general business posting
group takes priority over the G/L account’s general business posting
group. When there is no customer or vendor involved in a
transaction, the program will use the G/L account’s general business
posting group.
• Gen Prod. Posting Group: Identifies the default general product
posting group for the account. This field is used with the Gen. Bus.
Posting Group and Gen. Posting Type fields to find the G/L
accounts to post to for sales, purchases, discount amounts, COGS, and
inventory adjustments. The general product posting group of an item
takes priority over the G/L account’s general product posting group.
• VAT Bus. Posting Group: Identifies the default VAT Business Posting
Group for the account. This field is used with the VAT Prod. Posting
Group and Gen. Posting Type fields to determine the VAT
percentage and the VAT calculation type and to find the G/L accounts
where the program posts VAT. Because the VAT business posting
group indicates whom you sell-to or buy-from, the customer’s or
vendor’s VAT business posting group takes priority over the G/L
account’s VAT business posting group. When there is no customer or
vendor involved in a transaction, the program will use the G/L
account’s VAT business posting group.
• VAT Prod. Posting Group: Identifies the default VAT Product
Posting Group for the account. This field is used with the VAT Bus.
Posting Group and Gen. Posting Type fields to determine the VAT
percent and the VAT calculation type and to find the G/L accounts
where the program posts VAT. The VAT product posting group of an
item takes priority over the G/L account’s VAT product posting group.
• Default IC Partner G/L Acc. No.: Identifies the default Intercompany
(IC) G/L account number for this G/L account. When you enter this
G/L account in an intercompany general journal, the IC G/L account
specified in this field is used as the default balancing account number.

After the posting types and the posting group codes are assigned to a G/L
account, these codes are automatically inserted in a journal, sales, or purchase line
when the G/L account is selected.

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Note: If the general posting groups are set up with default VAT posting
groups, the VAT posting group fields are automatically populated with the default
values when the general posting group(s) is selected.

Consolidation FastTab

The Consolidation FastTab contains the following fields that specify the link with
the consolidated company:

• Consol. Debit Acc.: Specifies the number of the account in a

consolidated company that you will transfer debit balances to on this
account.
• Consol. Credit Acc.: Specifies the number of the account in a
consolidated company that you will transfer credit balances to on this
account.
• Consol. Translation Method: Contains the consolidation translation
method that will be used for the account. The translation
methodology identifies the currency translation rate to be applied to
the account.

Note: For more information about the fields that appear on the
Consolidation FastTab, refer to the Help.

Reporting FastTab

The Reporting FastTab specifies how general ledger accounts will be adjusted for
exchange rate fluctuations between the local currency (LCY) and the additional
reporting currency, if you post in an additional reporting currency.

More information on the additional reporting currency is available in the Finance

Advanced in Microsoft Dynamics 2013 courseware.

Cost Accounting FastTab

The Cost Accounting FastTab specifies a cost type number to establish the cost
type that a general ledger account belongs to.

More information on cost accounting is available in the course Finance Advanced

in Microsoft Dynamics NAV 2013.

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 Module 2: Chart Of Accounts
Create an Account in the G/L Account Card

To create an account in the G/L Account Card, follow these steps.

1. In the Search box, enter Chart of Accounts, and click the related
link.
2. In the Home tab of the ribbon, click New.
3. On the General FastTab, in the No. field, enter the account number.
4. In the Name field, enter a description.
5. In the Income/Balance field, click the drop-down list and select the
relevant option.
6. In the Account Type, field, click the drop-down list and select the
relevant option.
7. If it is necessary, enter the range in the Totaling field.

Note: By running the Indent Chart of Accounts function, the Totaling field
is populated automatically.

8. If it is necessary, enter a value in the No. of Blank Lines field.

9. Enter check marks in the check boxes as is needed.
10. On the Posting FastTab, in the Gen. Posting Type field, click the
drop-down list and select the relevant option.
11. In the Gen. Bus. Posting Group field, click the drop-down list and
select the relevant option.
12. In the Gen. Prod. Posting Group field, click the drop-down list and
select the relevant option.
13. Enter information on the Consolidation, Reporting and Cost
Accounting FastTabs as necessary.
14. Click OK to close the G/L account card.

To assign a dimension to the G/L account, follow these steps.

1. In the Navigate tab of the ribbon, click Dimensions and then select
Dimensions-single.
2. In the Dimension Code field, click the drop-down list and select the
relevant dimension from the list.
3. In the Dimension Value Code field, click the drop- down list and
select the relevant dimension value from the list.
4. If there are dimension posting requirements, in the Value Posting
field, click the drop-down list and select the appropriate option.
5. Close the Default Dimension and the G/L Account Card.

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When you use begin-total and end-total accounts, you can use the Indent Chart
of Accounts function to do the following:

• Indent the G/L accounts between the begin-total account and the
end-total account.
• Populate the totaling field of the end-total account.

To indent the new G/L account, follow these steps.

1. In the Chart of Accounts list, locate and select the new account.
2. Click Actions, point to Functions, and then click Indent Chart of
Accounts.
3. Click Yes to run the indent function.
4. Close the Chart of Accounts list.

G/L Account Card Ribbon

The G/L account card ribbon provides several functions and overviews related to
the G/L account. The following tabs are available in the ribbon:

• Home
• Actions
• Navigate
• Report

FIGURE 2.2: G/L ACCOUNT CARD RIBBON

Home Tab

From the Home tab, you can view, edit, delete, or create a new G/L account.

The following single-click accesses are also available from the Home tab:

• General Posting Setup

• VAT Posting Setup
• G/L Register
• Detail Trail Balance
• Trial Balance

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Additionally, you can show information attached to the G/L account from the
following sources:

• OneNote
• Notes
• Links

Actions Tab

The Actions button provides the most relevant navigation accesses for the G/L
Account Card.

You can use the Apply Template function to create G/L accounts by using Data
Templates. Data templates are part of the Rapid Start tool. This tool is explained
in the Application Setup in Microsoft Dynamics NAV 2013 content.

Navigate Tab

You can use the Navigate tab to display information about the balances and
transaction amounts for the account. You can also open the set up windows for
the relevant G/L account.

The Navigate tab provides single-click access to the following functions and
overviews:

• Ledger Entries: Display all ledger entries for the account.

• Comments: Display or enter comments that relate to the account.
• Dimensions: Display or enter default dimensions for the account.
• Extended Texts: Display or enter extended test for the account.
• Receivables-Payables Overview: Provides a summary of the
following:
o Expected net operational cash flow from customers and vendors
over time.
o Open customer and vendor ledger entries sorted by their Due
Date instead of Posting Date.

This summary can be viewed by the:

o Period, such as daily, monthly, or quarterly.

o Expected cash flow movement for a period by clicking the Net
Change option.
o Expected net balance of outstanding customer and vendor
balances at any date by clicking the Balance at Date option.
• Where-Used List: Displays a list of tables where this G/L account is
used.

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• G/L Account Balance: Displays the balance or net change for the G/L
account over time.
• G/L Balance: Displays the balance or net change for all G/L accounts
for a specific period.
• G/L Balance by Dimension: Displays balance or net change
information for all accounts. The information displayed in columns
and lines can be set to one of the following views:
o G/L account
o Period
o Global dimensions 1 and 2
• General Posting Setup: Specifies which accounts will be used to post
sales, purchases, discounts, COGS, and inventory adjustments.
• VAT Posting Setup: Consists of combinations of VAT business
posting groups and VAT product posting groups. You can set up as
many combinations that you must have and link various G/L accounts
to each combination.
• G/L Register: Contains the general ledger register that is created
every time that a general ledger entry is posted.

Report Tab

On the Report tab, you can run the following reports:

• Detail Trial Balance: Shows a detail of the entries for selected

general ledger accounts.
• Trial Balance: Shows the chart of accounts that have balances and
net changes.
• Trial Balance by Period: Shows the opening balance by general
ledger account, the movements in the selected period of month,
quarter, or year, and the resulting closing balance.
• G/L Register: Contains the general ledger register that is created
every time that a general ledger entry is posted.

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 Module 2: Chart Of Accounts

Lab 2.1: Create a Revenue Account

Scenario

A new revenue account must be created for miscellaneous sales. Because you are
the accounting manager at CRONUS International Ltd., it is your responsibility to
use the following information to set up the new account by using the G/L Account
Card.

• Miscellaneous Sales, account number 6140, is an income statement

account that is used to accumulate transactions.
• You can use direct posting.
• The posting groups are as follows:

Field Value
Gen Posting Type Sale
Gen. Bus. Posting Group NATIONAL

Gen. Prod. Posting Group MISC

VAT Bus. Posting Group NATIONAL

VAT Prod. Posting Group VAT25

Make sure that the Account Types are formatted and the hierarchy is established.

Exercise 1: Create a Revenue Account

Task 1: Create the revenue account by using the information that is

provided in the scenario.

High Level Steps

1. Open a new G/L Account Card page.
2. Complete the General FastTab by using the information that is
provided in the scenario.
3. Complete the Posting FastTab by using the information that is
provided in the scenario.

Detailed Steps
1. Open a new G/L Account Card page.
a. In the navigation pane, click Departments and then click
Financial Management.
b. In the Financial Management page, click General Ledger, and
then click Chart of Accounts.
c. In the Action Pane, select the New button.

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2. Complete the General FastTab by using the information that is
provided in the scenario.

In the General FastTab enter the following:

a. In the No. field, enter 6140.
b. In the Name field, enter Sales, Miscellaneous.
c. Make sure that the Income/Balance field displays Income
Statement.
d. Make sure that the Account Type field displays Posting.
e. Make sure that a check mark is in the Direct Posting field.

3. Complete the Posting FastTab by using the information that is

provided in the scenario.

In the Posting FastTab enter the following:

a. In the Gen. Posting Type field, click the drop-down list and
select Sale.
b. In the Gen. Bus. Posting Group field, click the drop-down list
and select NATIONAL.
c. In the Gen. Prod. Posting Group field, click the drop-down list
and select MISC.
d. Press Enter or Tab. The VAT posting group fields are
automatically populated based on the general posting group
selections.
e. Close the G/L Account Card.

Task 2: Run the function to align the account display.

High Level Steps

1. Run the Indent Chart of Accounts function.

Detailed Steps
1. Run the Indent Chart of Accounts function.
a. In the Chart of Accounts list, in the Home tab of the ribbon,
click Indent Chart of Accounts.
b. Click Yes to run the indent function.
c. Review the new account; notice that it is indented with the other
sales accounts in the same range.

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Chart of Accounts
The Chart of Accounts page contains the same fields that are on the G/L Account
Card page but here they are in a table format. In addition to the information on
the individual account cards, the Chart of Accounts list displays the current Net
Change and Balance information for the accounts.

FIGURE 2.3: CHART OF ACCOUNTS WINDOW

Chart of Accounts Page

The Chart of Accounts page contains a ribbon with options that resemble the
G/L Account Card:

• Home
• Actions
• Navigate
• Report

FIGURE 2.4: CHART OF ACCOUNT HOME TAB

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To use the options for an account in this page, select the line and then select one
of the options.

Note: Because most of the functions of the Chart of Accounts ribbon

resemble those that are on the G/L Account Card ribbon, only those that are
different will be explained in the following section.

Home Tab

Compared with the G/L Account Card, the Home tab of the Chart Of Accounts
contains the following additional functions:

• Indent Chart of Accounts: Indents the accounts according to the

defined hierarchy. Establishes the hierarchy by using the account
types Begin-Total and End-Total. Account numbers within this
range are included in the end-total range in the Totaling field.
• Show as List: Shows the page as a list. This is the default layout for all
list locations.
• Show as Chart: Shows the page as a chart. This is done by selecting a
measure and a dimension. The following example shows the net
change of the end-total accounts.

FIGURE 2.5: CHART OF ACCOUNTS IN THE CHART OVERVIEW

Actions Tab

The Find function helps you find accounts by searching on the fields displayed in
the chart of accounts. The columns added with the Choose Columns function will
also become available in the Find function.

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 Module 2: Chart Of Accounts
Navigate Tab

Compared with the G/L Account Card, the Navigate tab of the Chart Of
Accounts contains following additional functions:

• Dimensions:
o Dimensions - Single - The same function as the Dimensions
function on the account card.
o Dimensions - Multiple - Used to assign the same default
dimensions to multiple accounts.

Because the Chart of Accounts page is a list of accounts, you can

assign the same default dimensions to several accounts by
selecting the relevant account lines. Therefore, reducing the entry
time is needed for setting up default dimensions.
• Chart of Accounts Overview: Displays the Chart of Accounts with
different levels of detail. Use the expand and collapse feature to view
only header and footer accounts, or all the accounts in between.

Assign the Same Dimensions to Multiple G/L Accounts

To assign the same dimensions to multiple G/L Accounts, follow these steps.

1. In the Chart of Accounts page, select all the accounts to assign

dimensions to.
2. Click the Home tab, click Dimensions and then click Dimensions -
Multiple.
3. Click New to create a new dimension.
4. Fill in the Dimension Code, Dimension Value Code, and Value
Posting fields.
5. Close the Default Dimension-Multiple page.
6. Verify that the dimension is assigned to multiple accounts by
selecting an account, clicking Dimensions, and then Dimensions –
Single in the Home tab.
7. Close the Default Dimension page and repeat step 5 for a different
account.

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Lab 2.2: Assign a Dimension to Multiple Accounts

Scenario

All sales should be posted to the DEPARTMENT dimension SALES. This should be a
mandatory dimension and dimension value, where SALES is the only possible
dimension value.

As the accounting manager, it is your responsibility to set up the default

dimension by using the following criteria:

• G/L accounts 6100 to 6955.

• The SALES dimension value of the DEPARTMENT dimension should
be assigned.

Use the value posting to make the dimension and dimension value mandatory.

Exercise 1: Assign a Dimension to Multiple Accounts

Task 1: Select the Sales G/L Accounts

High Level Steps

1. Open the chart of accounts page, locate and select the sales G/L
accounts.

Detailed Steps
1. Open the chart of accounts page, locate and select the sales G/L
accounts.
a. In the navigation pane, click Departments, and then click
Financial Management.
b. In the Financial Management page, click General Ledger, and
then click Chart of Accounts.
c. Select the lines of accounts 6100 to 6955.

Task 2: Assign a Default Dimension

High Level Steps

1. Open the Default Dimensions-Multiple page and assign the default
dimension.

Detailed Steps
1. Open the Default Dimensions-Multiple page and assign the default
dimension.
a. In the Navigate tab, click Dimensions, and click Dimensions-
Multiple.
b. In the Home tab, click New.

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c. In the Dimension Code field, click the drop-down list and select
DEPARTMENT.
d. In the Dimension Value Code field, click the drop-down list and
select SALES.
e. In the Value Posting field, click the drop-down list and select
Same Code.
f. Click OK.

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Module Review
Module Review and Takeaways

As the core component of a company, the Chart of Accounts lesson covered the
G/L Account Card and the Chart of Accounts page, and the process for creating
G/L accounts. This lesson also covered additional functions such as, indenting the
chart of accounts, and assigning default dimensions to multiple accounts.

Understanding the Chart of Accounts is essential when users are working in

Microsoft Dynamics NAV 2013.

Test Your Knowledge

Test your knowledge with the following questions.

1. What function is used to create default G/L account setups for accounts that
are frequently created, such as expenses?

( ) Assign Template

( ) Enter Template

( ) Import Template

( ) Apply Template

2. In the G/L Account Card, what field is used to determine which accounts are
closed during the fiscal year end closing process?

( ) Reconciliation Account

( ) Debit/Credit

( ) Account Type

( ) Income/Balance

3. What is true about the chart of accounts page?

( ) You cannot change the name of an account, using the chart of

accounts page.

( ) You cannot set up a graphical overview of all the G/L accounts with a
negative balance, using the chart of accounts page.

( ) You can create new G/L accounts from the chart of accounts page.

( ) You cannot export the chart of accounts to Word and Excel.

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4. How do you define a G/L account as a sales account?

( ) By selecting the Sales Account check mark.

( ) By assigning a general business posting group that is linked to a sales

account.

( ) By assigning a general product posting group that is linked to a sales

account.

( ) By linking the combination of the general business posting group and

general product posting group to a sales account.

( ) By selecting Sale in the Gen. Posting Type field.

5. Direct posting is typically not enabled for G/L accounts on which only system-
generated transactions are posted. For which of the following G/L account
would you not select direct posting?

( ) Receivables account

( ) Cash account

( ) Office supplies account

( ) Inventory Finished Goods account

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Test Your Knowledge Solutions

Module Review and Takeaways

1. What function is used to create default G/L account setups for accounts that
are frequently created, such as expenses?

( ) Assign Template

( ) Enter Template

( ) Import Template

(√) Apply Template

2. In the G/L Account Card, what field is used to determine which accounts are
closed during the fiscal year end closing process?

( ) Reconciliation Account

( ) Debit/Credit

( ) Account Type

(√) Income/Balance

3. What is true about the chart of accounts page?

( ) You cannot change the name of an account, using the chart of

accounts page.

( ) You cannot set up a graphical overview of all the G/L accounts with a
negative balance, using the chart of accounts page.

(√) You can create new G/L accounts from the chart of accounts page.

( ) You cannot export the chart of accounts to Word and Excel.

4. How do you define a G/L account as a sales account?

( ) By selecting the Sales Account check mark.

( ) By assigning a general business posting group that is linked to a sales

account.

( ) By assigning a general product posting group that is linked to a sales

account.

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 Module 2: Chart Of Accounts
( ) By linking the combination of the general business posting group and
general product posting group to a sales account.

(√) By selecting Sale in the Gen. Posting Type field.

5. Direct posting is typically not enabled for G/L accounts on which only system-
generated transactions are posted. For which of the following G/L account
would you not select direct posting?

(√) Receivables account

( ) Cash account

( ) Office supplies account

( ) Inventory Finished Goods account

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MODULE 3: GENERAL JOURNALS

Module Overview
In Microsoft Dynamics® NAV 2013, general journals are used to post information
into the general ledger and other accounts. The general journal is also used to
post cost allocations and other adjustments to the accounts and then users can
reverse and correct incorrect entries, when you have to.

When users frequently have to enter the same journal postings, Microsoft
Dynamics NAV 2013 provides two helpful tools, standard journal and recurring
journals. Standard journals can be created and used to enter journal lines
automatically. Recurring journals can be created and when they are opened they
already contain journal lines that can be reviewed, adjusted and posted on a
recurring basis. Additionally, when you use recurring journals that you can post
cost allocations by using allocation keys based on amounts or percentages.

Note: How to set up journal templates and batches is covered in the course
Application Setup in Microsoft Dynamics NAV 2013.

Objectives

The objectives are:

• Explain the general journal entry and posting system.

• Create and post general journal entries.
• Describe standard general journals.
• Describe recurring general journals and include the fields and
allocations.
• Show how to use recurring journals with allocations and how to
record accruals.
• Explain how to reverse and correct journal entries.

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Creating and Posting Journal Entries

Users can create and post journal entries for:

• Single entry lines without a separate balancing account line.

• Multiple entry lines by using a balancing account line.
• Entries with Dimensions.

Create a Single Journal Entry Line

To enter lines in a general journal, follow these steps.

1. In the navigation pane, click Departments.

2. Click Financial Management, then click General Ledger, and then
click General Journals.
3. When multiple general journal templates of the type General are
created, the General Journal Template List page opens. Highlight
the line that you want for the general journal, and then click OK to
open the General Journal page.
4. In the Batch Name field, click the drop-down list and select the
relevant batch.
5. Click OK.
6. In the Posting Date field, enter the date of this entry.
7. In the Document Type field, click the drop-down list and select the
relevant document type for this entry. Typically, for a general journal
entry this field is left blank.
8. In the Document No. field, leave the defaulted number, provided by
the number series that is set up on the general journal template, or
assign a unique number if this field is empty.
9. In the Account Type and Account No. fields, click the drop-down
list and select the account this entry will be posted to. Typically, for a
general journal entry, general ledger accounts are used.
10. The Description field is automatically populated with the name of
the account. Update this field as it is necessary.
11. When the Copy VAT Setup to Jnl. Lines field is selected in the
corresponding general journal batch, the Gen. Posting Type, Gen.
Bus. Posting Group, VAT Bus. Posting Group, Gen. Prod. Posting
Group, and VAT Prod. Posting Group fields are populated based on
the posting setup on the Account No. selected. Typically, the Copy
VAT Setup to Jnl. Lines field is cleared for general journals and the
fields are left blank. These fields can be updated as this is needed.

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Note: Through the Choose Columns function, the VAT Bus. Posting Group
and VAT Prod. Posting Group fields can be made available on the General
Journal page.

12. In the Amount field, enter the amount for the entry. Positive and
negative amounts in general journals are posted to the account
specified in the Account No. field as follows:
o A positive amount represents a debit to the account.
o A negative amount represents a credit to the account.

Note: Through the Choose Columns function, the Debit Amount and Credit
Amount fields can be made available on the General Journal page. When you
enter an amount in these fields, the Amount field will be automatically filled in.

• Entering a positive amount in the Debit Amount field will result in a

positive amount in the Amount field.
• Entering a negative amount in the Debit Amount field will result in a
negative amount in the Amount field.
• Entering a positive amount in the Credit Amount field will result in a
negative amount in the Amount field.
• Entering a negative amount in the Credit Amount field will result in a
positive amount in the Amount field.
• Entering a positive amount in the Amount field will result in a
positive amount in the Debit Amount field.
• Entering a negative amount in the Amount field will result in a
positive amount in the Credit Amount field.

Note: When the posting group fields are filled in, the amount in the Amount
field is considered eligible for the value-added tax (VAT). After posting, the amount
will be split in the amount excluding VAT. This amount will then be posted on the
account filled in on the journal line, and the VAT amount, that will be posted on the
VAT account, according to the VAT setup of the specified VAT posting groups on the
journal line.

13. In the Bal. Account Type and Bal. Account No. fields, click the
drop-down list to select the balancing account for this entry. These
fields are automatically populated when the controlling general
journal batch is set up with a default balancing account type and
number.

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14. After the Copy VAT Setup to Jnl. Lines field is selected in the
corresponding general journal batch, the Bal. Gen. Posting Type,
Bal. Gen. Bus. Posting Group, Bal. VAT Bus. Posting Group, Bal.
Gen. Prod. Posting Group, and Bal. VAT Prod. Posting Group
fields are populated based on the posting setup on the Account No.
selected. Typically, the Copy VAT Setup to Jnl. Lines field is cleared
for general journals and the fields are left blank. These fields can be
updated as this is needed.

Note: Through the Choose Columns function, the Bal. VAT Bus. Posting
Group and Bal. VAT Prod. Posting Group fields can be made available on the
General Journal page.

Notice that the Balance and Total Balance fields at the bottom of the window are
equal to zero.

Create Journal Entries with a Balancing Line

When a journal contains multiple entries that are all applied to the same
balancing account, users can enter one final balancing line so that only one
complete line is posted to the balancing account. This is helpful, for example,
when you are reallocating costs.

To create journal entries with a separate balancing line, follow these steps.

1. Repeat steps 1 through 12 from the previous lesson “Create a Single

Journal Entry Line”.
2. Move to the next general journal line by pressing the DOWN
ARROW key. Notice that many of the fields on the new line are
identical as to those on the first line.

Note: The Document No. field contains the same number as the previous
line when the previous lines combined are not in balance. When the previous lines
are in balance the Document No. field will be given the next sequential number,
according to the number series that is set up in the No. Series field on the
corresponding general journal batch.

3. Repeat steps 6 through 12 from the previous lesson “Create a Single

Journal Entry Line.”
4. Create as many journal lines (with debit and credit amounts) as is
necessary for the Total Balance field to be equal to zero.

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Preview a Test Report

To view the effect that the journal will have on the accounts set up as reconciling
accounts, you can print a test report before posting. To preview the test report
from a general journal, follow these steps.

1. On the Actions tab, click Test Report.

2. Select the Show Dimensions check box, if you want to view the
dimensions and the dimension values that are assigned to the journal
lines.
3. Click Preview.
4. Review the report. If the journal lines are out of balance a warning will
be given on the report.
5. Close the Print Preview page.

Post a General Journal

You can only post a general journal, when you meet the following conditions:

• The Total Balance field at the bottom of the General Journal page
is equal to zero.
• The general journal lines are balanced by date, based on Posting
Date.
• If the Force Doc. Balance field is selected in the controlling general
journal template, the general journal lines must also balance by
document number and document type.

Note: When the Force Doc. Balance field is clear, you can post transactions
that do not balance by document number. However, you cannot reverse the
resulting entries, because you cannot automatically reverse transactions that do not
balance by document number.

To post the general journal, follow these steps.

1. On the Actions tab, click Post.

2. Click Yes to post the journal lines.

Note: Only visible journal lines, or, in other words, lines that are within the
filter, and are in balance, are posted. The entries that are hidden because the filter is
applied are not posted, even if they balance.

3. Click OK.
4. Click OK to close the General Journal page.

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To post several general journal batches at the same time, follow these steps.

1. In the Batch Name field, click the drop-down list to open the
General Journal Batches page.
2. On the Home tab, click Post.
3. Click Yes to post the journals.
4. Click OK.
5. Click OK to close the General Journal Batches page.
6. Click OK to close the General Journal page.

General Journal Posting Results

The results of a journal posting can be viewed on the G/L Registers page. To
access the entries, follow these steps.

1. On the navigation pane, click Departments.

2. Click Financial Management, then click General Ledger, and then
click G/L Registers in the History section.
3. Press CTRL+END to move to the bottom of the G/L Registers page
and select the relevant journal batch. You should be aware that the
system date is listed as the Creation Date, not the posting date of
the general journal line.
4. On the Navigate tab, click General Ledger.
5. Review the general ledger entries.
6. Click Close to close the General Ledger Entries page.

Demonstration: Post a Cleaning Expense Correction

Scenario: On January 25, 2014, Cassie, the accountant for CRONUS International
Ltd. had to post a 60.00 local currency (LCY) payment for a cleaning expense.
However, she accidentally posted the expense on the incorrect account, 8120. She
now has to post the expense to the correct account, 8110. This expense must be
posted to the Production department dimension. Notice that the Department
dimension is already added to the General Journal window. Because this is a
single entry, a separate balancing line will not be used. Review the entry after
posting.

Demonstration Steps

1. Post the journal entry.

a. On the navigation pane, click Departments.
b. Click Financial Management, click General Ledger, and then
click General Journals.
c. In the Batch Name field, click the drop-down list and select the
DEFAULT journal batch.

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 Module 3: General Journals
d. Click OK.
e. Delete existing lines, if there are any.
f. In the Posting Date field, enter 01/25/14.
g. Do not change the Document No. field.
h. Leave the Document Type field blank.
i. In the Account Type field, click the drop-down list and select G/L
Account.
j. In the Account No. field, enter 8110.
k. In the Description field, enter ‘Correction cleaning expense
January 2014.’
l. Remove the values from the Gen. Posting Type, Gen. Bus.
Posting Group, VAT Bus. Posting Group, Gen. Prod. Posting
Group, and VAT Prod. Posting Group fields. This will ensure
that VAT is not calculated on any amounts.
m. In the Amount field, enter 60.00.
n. In the Bal. Account No. field, enter 8120.
o Remove the values from the Bal. Gen. Posting Type, Bal. Gen.
Bus. Posting Group, Bal. VAT Bus. Posting Group, Bal. Gen.
Prod. Posting Group, and Bal. VAT Prod. Posting Group fields.
o. On the Home tab, click Dimensions.
p. In the Dimension Code field, enter DEPARTMENT.
q. In the Dimension Value Code field, enter PROD.

FIGURE 3.1: GENERAL JOURNAL – DIMENSION SET ENTRIES

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r. Click OK to close the Edit Dimension Set Entries page.
s. Verify that the Total Balance is zero.
t. On the Home tab, click Post.
u. Click Yes to post the journal lines.
v. Click OK.
w. Click OK to close the General Journal page.

2. Review the entry after posting.

a. On the navigation pane, click Departments.
b. Click Financial Management, then click General Ledger, and
then click G/L Registers in the History section.
c. Press CTRL+END to move to the bottom of the G/L Registers
page and select the relevant journal batch.
d. On the Navigate tab, click General Ledger.
e. Review the general ledger entries.

FIGURE 3.2: G/L REGISTERS – GENERAL LEDGER ENTRIES

f. Click Close to close the General Ledger Entries page.

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Lab 3.1: Create a Journal Entry

Scenario

As the accounting manager at CRONUS International Ltd., you have to create and
post a debit journal entry that is divided between the Sales and Administration
Departments. But the credit entry must not be separated by department. Use the
following criteria to complete this journal entry:

• DEFAULT general journal batch

• Posting date January 1, 2014
• Debit to G/L account 8110
o 100.00 LCY to the Sales Department
o 60.00 LYC to the Administration Department
• Credit to G/L account 2910

After you post the entries, review them in the G/L Register and then close all open
windows.

Exercise 1: Create a Journal Entry

Task 1: Create a Journal Entry

High Level Steps

1. Enter the necessary lines in the general journal.
2. Post the general journal.
3. Review the entries in the G/L Register.

Detailed Steps
1. Enter the necessary lines in the general journal.
a. On the navigation pane, click Departments.
b. Click Financial Management, click General Ledger, and then
click General Journals.
c. In the Batch Name field, click the drop-down list and select the
DEFAULT journal batch.
d. Delete existing lines, if there are any.
e. In the Posting Date field, enter 01/01/14.
f. Do not change the Document No. field.
g. In the Account Type field, click the drop-down list and select G/L
Account.
h. In the Account No. field, enter 8110.

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i. Remove the values from the Gen. Posting Type, Gen. Bus.
Posting Group, VAT Bus. Posting Group, Gen. Prod. Posting
Group, and VAT Prod. Posting Group fields.
j. In the Amount field, enter 100.00.
k. On the Home tab, click Dimensions.
l. In the Dimension Code field, enter DEPARTMENT.
m. In the Dimension Value Code field, enter SALES.
n. Click OK.
o Move to the next general journal line by pressing the DOWN
ARROW key.
o. In the Posting Date field, enter 01/01/14.
p. Do not change the Document No. field.
q. In the Account Type field, click the drop-down list and select G/L
Account.
r. In the Account No. field, enter 8110.
s. Remove the values from the Gen. Posting Type, Gen. Bus.
Posting Group, VAT Bus. Posting Group, Gen. Prod. Posting
Group, and VAT Prod. Posting Group fields.
t. In the Amount field, enter 60.00.
u. On the Home tab, click Dimensions.
v. In the Dimension Code field, enter DEPARTMENT.
w. In the Dimension Value Code field, enter ADM.
x. Click OK.
y. Move to the next general journal line by pressing the DOWN
ARROW key.
z. In the Posting Date field, enter 01/01/14.
aa. Do not change the Document No. field.
bb. In the Account Type field, click the drop-down list and select G/L
Account.
cc. In the Account No. field, enter 2910.
dd. Remove the values from the Gen. Posting Type, Gen. Bus.
Posting Group, VAT Bus. Posting Group, Gen. Prod. Posting
Group, and VAT Prod. Posting Group fields.
ee. In the Amount field, enter -160.00.

2. Post the general journal.

a. Verify that the Total Balance is zero.
b. On the Actions tab, click Post.
c. Click Yes to post the journal lines.
d. Click OK.
e. Click OK to close the General Journal.

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3. Review the entries in the G/L Register.
a. On the navigation pane, click Departments.
b. Click Financial Management, then click General Ledger, and
then click G/L Registers in the History section.
c. Press CTRL+END to move to the bottom of the G/L Registers
page and select the relevant line.
d. On the Navigate tab, click General Ledger.
e. Review the general ledger entries.
f. Click Close to close the General Ledger Entries page.

Standard Journals
Standard journals are useful for transactions that are posted frequently with few
or no changes, but do not have a fixed recurrence between two posts. A standard
general journal is a general journal that is saved as a default set of lines. It can be
accessed at a later stage to automatically fill in general journal lines.

A standard journal is created from a journal, and it can be:

• Created only for journals of the type General.

• Used only within the same journal template.
• Used for the different journal batches from the same journal
template.

Demonstration: Create a Standard Journal

Scenario: Phyllis, the Accounting Manager at CRONUS, processes payroll

payments every month. Although the amounts are different every time, the G/L
accounts are always the same. She decides to create a standard journal for this
transaction, with the following criteria:

• GENERAL journal template, CASH journal batch

• Debit to G/L accounts:
o 8710
o 8720
o 8730
o 8750
o 5830
o 8740
• A single credit journal line to Bank Account WWB-OPERATING

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Demonstration Steps

1. Create the general journal lines.

a. On the navigation pane, click Departments.
b. Click Financial Management, then click General Ledger, and
then click General Journals.
c. In the Batch Name field, click the drop-down list and select
CASH.
d. Click OK.
e. In the Posting Date field, leave the defaulted date.
f. In the Document Type field, click the drop-down list and select
Payment.
g. In the Document No. field, leave the defaulted number that is
provided by the number series that is set up on the journal
template, or assign a unique number if this field is empty.
h. In the Account Type, click the drop-down list and select G/L
Account.
i. In the Account No. field, enter 8710.
j. The Description field is automatically populated with the name
of the account. Update this field as necessary.
k. Leave the Gen. Posting Type, Gen. Bus. Posting Group, VAT
Bus. Posting Group, Gen. Prod. Posting Group, and VAT Prod.
Posting Group fields blank.
l. Repeat steps e-k for G/L accounts 8720, 8730, 8750, 5830, and
8740.
m. Move to the next general journal line by pressing the DOWN
ARROW key.
n. In the Posting Date field, leave the defaulted date.
o In the Document Type field, click the drop-down list and select
Payment.
o. In the Document No. field, leave the defaulted number that is
provided by the number series that is set up on the journal
template, or assign a unique number if this field is empty.
p. In the Account Type, click the drop-down list and select Bank
Account.
q. In the Account No. field, enter WWB-OPERATING.
r. The Description field is automatically populated with the name
of the account. Update this field as necessary.
s. Leave the Gen. Posting Type, Gen. Bus. Posting Group, VAT
Bus. Posting Group, Gen. Prod. Posting Group, and VAT Prod.
Posting Group fields blank.

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 Module 3: General Journals
2. Create a standard journal.
a. On the Actions tab, click Save as Standard Journal.
b. In the Code field, type PAY.
c. In the Description field, enter Payroll journal.
d. Clear the Save Amount field. Standard Journals can also save the
Amounts you have recorded in the journal. Check this field if you
want to keep the amounts.

FIGURE 3.3: GENERAL JOURNAL – SAVE AS A STANDARD JOURNAL

e. Click OK to save the standard journal.

f. Click OK when you receive the message.
g. Delete the journal lines.
h. Click OK to close the General Journal page.

Demonstration: Use a Standard Journal

Scenario: On January 31, 2014 Phyllis has to process the payroll payments by
using the standard journal, with the following criteria.

1. Debit to G/L accounts:

o 8710 – 100,000.00 LCY
o 8720 – 30,000.00 LCY
o 8730 – 1,000.00 LCY

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o 8750 – 8,000.00 LCY
o 8740 – 25,000.00 LCY
2. Credit to:
o G/L account 5830 – 8,000.000 LCY
o Bank account WWB-OPERATING – 156,000.00 LCY

Demonstration Steps

1. Use a standard journal.

a. On the navigation pane, click Departments.
b. Click Financial Management, then click General Ledger, and
then click General Journals.
c. In the Batch Name field, click the drop-down list and select
CASH.
d. Click OK.
e. In the Posting Date field, enter 01/31/14.
f. On the Actions tab, click Get Standard Journals.
g. Select the standard journal with the code PAY.
h. Click OK.
i. Click OK to the message that states the journal lines are
successfully inserted.

FIGURE 3.4: GENERAL JOURNAL WINDOW

j. The Posting Date field on all the journal lines is 01/31/14.

k. The Document No. is different for each journal line. Because
there are no amounts filled in on the standard journal, each line is

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 Module 3: General Journals
in balance. Therefore, the next line is assigned the sequential
number according to the number series that is set up on the
journal batch. You can always adjust the document number if this
is necessary.

Note: If the Force Doc. Balance check box is selected on the controlling
journal template, then you will be obligated to change the document number. All
journal lines must then have the same document number otherwise you cannot
post the general journal.

l. Fill in the Amount field on each journal line, according to the

scenario.
m. Verify that the Total Balance field is equal to zero.
n. On the Home tab, click Post.
o Click Yes to post the journal lines.
o. Click OK.
p. Click OK to close the General Journal page.

Recurring Journals
Recurring journals are useful for transactions that are posted frequently with few
or no changes. Some criteria for a recurring journal includes the following:

• Contains special fields for managing recurring transactions.

• You can use it to allocate single entries to multiple general ledger
accounts.
• You can create it for:
o Each general journal type (general, assets, cash receipts,
payments, intercompany, jobs, sales, and purchase).
o Fixed asset journals.
o Item journals.
o Resource journals.
• Balancing fields will not be available on the journal lines.
• The journal lines are preserved after posting.

Additional information about accessing recurring journals includes the following:

• The Recurring General Journals page contains recurring journals of

all general journal types, and can be accessed as follows:
o Departments > Financial Management > Fixed Assets.
o Departments > Financial Management > Period Activities >
General Ledger.

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o Departments > Financial Management > Period Activities >
Receivables.
o Departments > Financial Management > Period Activities >
Payables.
• The Recurring Fixed Assets Journals page contains recurring fixed
asset journals and it can be accessed as follows: Departments >
Financial Management > Fixed Assets.
• The Recurring Item Journals page contains recurring item journals
and it can be accessed as follows: Departments > Purchase >
Inventory & Costing.
• The Recurring Job Journals page contains recurring job journals and
it can be accessed as follows: Departments > Jobs.
• The Recurring Resource Journals page contains recurring resource
journals and it can be accessed as follows: Departments > Resource
Planning.

FIGURE 3.5: RECURRING GENERAL JOURNAL

Note: Only the recurring general journals post to general ledger accounts and
they will be discussed later in this lesson.

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Recurring Methods

The Recurring Method field determines how the amount on the journal line is
treated after posting. The following table shows the various recurring methods.

Recurring Description Examples

Method
Fixed Use when the journal Monthly expensing of a prepaid
amount is the same each annual insurance premium
period. The amount on the throughout the year.
journal line remains Recording fixed expense
unchanged after posting. invoices if purchase documents
are not used (for example,
cleaning on a contract basis).

Variable Use when the journal Recording variable expense

amount is different each invoices if purchase documents
period. The amount on the are not used (for example,
journal line is deleted after stationery, maintenance).
the recurring journal is Recording regular customer
posted. sales if sales documents are not
used.
Recording payroll for an
itinerant/irregular workforce,
where the hours change every
week/fortnight/month.

Balance The balance of the account Periodic allocation of an

on the line is allocated expense account between
among the accounts departments.
specified for the line on the Periodic allocation of overheads
Allocations page. Therefore, posted to a single overhead
the balance on the account account to several specific
on the line is set to zero. overhead accounts.
Remember to fill in the Intercompany expense
Allocation % field in the allocations.
Allocations page.

Reversing The amount on the journal Monthly accrual of a contract

Fixed line remains unchanged after cleaning invoice not received
posting, and a reversing until the following month.
entry posts on the following
day.

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Recurring Description Examples
Method
Reversing The amount on the journal Monthly accrual of an electricity
Variable line is deleted after posting, invoice is not received until the
and a reversing entry is end of the first week of the
posted the next day. following month.
Monthly income accrual for the
sales value of items shipped but
not invoiced.

Reversing The balance of the account The same examples as the

Balance on the line is allocated Balance method but the
among the accounts allocations are only temporary.
specified for the line on the (For example, the allocations are
Allocations page. The temporary because they are
balance on the account is set only an estimate for periodic
to zero. A reversing entry reporting.)
posts on the following day.

Recurring Frequency

The Recurring Frequency field contains a formula that determines how

frequently the entry on the journal line will be posted. This formula can contain no
more than 20 alphanumeric characters that the program recognizes as
abbreviations for time specifications.

For example, if the formula 1M is entered with a Posting Date of 01/15/10, after
the journal is posted, the date is changed to 02/15/10.

Use one of the following methods to post an entry on the last day of every month
after the current month:

• Post the first entry on the last day of a month and enter the formula
1D+1M-1D (1 day + 1 month - 1 day). With this formula, the
program calculates the date correctly regardless of how many days
are in the month.
• Post the first entry on any arbitrary day of a month and then enter
the formula: 1M+CM. With this formula, the program calculates one
full month plus the remaining days of the current month.

Note: If you are posting monthly accruals that must be reversed the following
month (Reversing Fixed, Reversing Variable, and Reversing Balance methods), post
them on the last day of each month. The first entry must be posted on the last day
of the current month and the recurring frequency must be either 1D+1M-1D or
1M+CM. This makes sure the reversal is always posted on the first day of the
following month.

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Document Number Formulas

Instead of using a number series to determine the value in the Document No.
field, Microsoft Dynamics NAV 2013 provides the option to enter a formula to
create a document number for each posted entry that is then updated
automatically every time that the recurring journal is posted.

Note: Typically, the No. Series field is left blank on the Journal Templates
page and the General Journal Batches page for recurring journals and
corresponding journal batches.

The Posting No. Series field on the journal batch will override the manual
document numbers on the recurring journal line. If you want to use the formulas as
the posted number on the ledger entries, make sure that the Posting No. Series
field is left blank.

Simple text can be combined with the following text codes to form a number
series:

• %1 - The current day number

• %2 - The current week number
• %3 - The current month number
• %4 - The current month name
• %5 - The current accounting period name

For example, if the entry's document number is R (rent) + current month, enter
R%3 in the field. The document number for January will then be R1.

Note: The Document No. field supports up to 20 alphanumeric characters.

Consider this limitation when you are creating formulas.

If there is more than one line in the journal, the program will do the following:

• Automatically keep the same number on the next lines, until the
balance for the journal is zero (0).
• Enter the next consecutive number on the next line.

Posting Group Fields

When the Copy VAT Setup to Jnl. Lines field is selected in the general journal
batch, the following five fields are populated based on the posting setup on the
selected Account No.

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• Gen. Posting Type
• Gen. Bus. Posting Group
• Gen. Prod. Posting Group
• VAT Bus. Posting Group
• VAT Prod. Posting Group

The values in these fields can be modified or deleted as is needed.

Note: Through the Choose Columns function, the VAT Bus. Posting Group
and VAT Prod. Posting Group fields can be made available on the Recurring
General Journal page.

Note: When the posting group fields are filled in, the amount in the Amount
field will be considered to include VAT.

Expiration Dates

Recurring journal lines can be set up with expiration dates. Use the Expiration
Date field to limit the posting period by specifying the last date that an entry can
be repeated.

By using this field, a line can be entered in the journal even though it will only be
posted for a limited period. The line will not be posted after the date entered in
the field.

The advantage of using this field is that the line will not be deleted from the
journal immediately and the present expiration date can be replaced with a later
one so that the line can be used additionally into the future.

If the field is blank, the line will be posted during each posting process until it is
deleted from the journal.

Allocations

Allocations are used to allocate the amount on the recurring journal line to several
G/L accounts and dimensions. Meaning that the allocation is in itself a balancing
account line to the recurring journal line because recurring entries do not have
balancing accounts.

Just as in a recurring journal, an allocation only has to be entered one time. The
allocation remains in the allocation journal after posting. Therefore, you do not
have to re-enter amounts and allocations every time that the recurring journal line
is posted.

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Enter allocations for a journal entry by using one of the following methods:

• Double-click the Allocated Amt. (LCY) field on the recurring journal

line.
• On the ribbon, click the Navigate tab, and then click Allocations.

FIGURE 3.6: ALLOCATIONS WINDOW

Allocate the amount from the line to different accounts and dimensions by using
one of the following allocation methods:

• Allocation Quantity - Allocate the amounts by quantities. An

example is allocating by the number of people in each department.
• Allocation % - Allocate the amounts by percentage.
• Amount - If you use the Allocation Quantity or Allocation% field,
the program calculates the allocated amount in this field. However,
the field can be used to enter a manually calculated allocation
amount.

After you enter the lines with the allocations, the Recurring General Journal
page displays the following:

• The Allocated Amt. (LCY) field will now be filled in.

• If the recurring journal line is in LCY, the Allocated Amt. (LCY) field
will match the Amount field but have the opposite sign.

Note: The posting fields can be filled in on either the recurring journal line or
on the allocation line, but not on both. These fields are as follows: Gen. Posting
Type, Gen. Bus. Posting Group, Gen. Prod. Posting Group, VAT Bus. Posting
Group, and VAT Prod. Posting Group.

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Allocations can be used with all Recurring Methods. However, some rules apply
for using the Balance method. They include the following:

• Allocations must be used because this method cannot post to a

balance account in another journal line.
• Do not enter an Amount because, as part of the posting process, the
program determines the amounts to post on the line from the
account balance.
• The recurring journal must be posted before the allocated amounts
can be viewed. The Test Report does not show the calculated
allocation amounts.

Processing Recurring Journals

When you process recurring journals, you can save frequently posted journals as a
recurring template for the general journal. This helps to save time when you are
posting in the accounts.

The demonstrations in this lesson will show how to process recurring journals. The
first demonstration uses a new recurring journal that will be set up first. It will
show how to post recurring payable entries that must be paid but do not require
invoice documents. Different recurring methods are used and the costs are
allocated to multiple departments.

The second demonstration summarizes income and expense accruals. It will show
how to post an accrual by using the Reverse Variable method.

Demonstration: Process a Recurring Journal with

Allocations

Scenario: Cassie, the accountant at CRONUS International Ltd., must set up a

recurring payments journal for monthly expenses. This includes the following:

• Cleaning: The amount 500.00 LCY, always due on the fifteenth of each
month, and allocated between these three departments:
o Administration - 50 percent
o Production - 25 percent
o Sales - 25 percent
• Advertising Expenses: Variable, but always due on the twenty-fifth of
each month and allocated only to the Sales Department.

These expenses must be available for payment selection but do not require an
invoice document.

For this demonstration, a new recurring journal batch is created so that manual
document numbers can be used.

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 Module 3: General Journals
Demonstration Steps

1. Create a recurring payables journal and batch.

a. In the navigation pane, click Departments.
b. Click Administration, and then click Application Setup.
c. On the Application Setup page, click Financial Management,
then click General, and then click Journal Templates.
d. Click New.
e. In the Name field, enter RECPAY.
f. In the Description field, enter Recurring Payments Journal.
g. In the Type filed, enter Payments.
h. Select the Recurring check box.
i. Leave the No. Series and Posting No. Series fields blank.
j. Clear the Copy VAT Setup to Journal Lines check box.
k. Click Yes to the message to update the journal lines.
l. On the Navigate tab, click Batches.
m. In the Name field, enter RECURRING.
n. In the Description field, enter Recurring Payments Journal.

FIGURE 3.7: RECURRING GENERAL JOURNAL TEMPLATE AND BATCH

o. Click OK to close the General Journal Batches page.

p. Click OK to close the General Journal Templates page.

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2. Enter the line and allocation for the cleaning expense.
a. In the navigation pane, click Departments.
b. Click Financial Management, then click Periodic Activities,
then click Payables, and then click Recurring General Journals.
c. On the General Journal Template List page, select the newly
created recurring payments journal and then click OK.
d. In the Batch Name field, make sure that the RECURRING batch is
selected.
e. In the Recurring Method field, click the drop-down list and
select “F Fixed”.
f. In the Recurring Frequency field, enter 1M.
g. In the Posting Date field, enter 02/15/14.
h. In the Document Type field, click the drop-down list and select
Invoice.
i. In the Document No. field, enter 2014Cleaning %3.
j. In the Account Type field, click the drop-down list and select
Vendor.
k. In the Account No. field, enter 20000.
l. In the Amount field, enter -500.00.
m. On the Navigate tab, click Allocations.
n. Use the Choose Columns function to add the Department Code
field.
o In the Account No. field, enter 8110.
o. In the Department Code field, enter ADM.
p. Remove the values from the posting fields.
q. In the Allocation % field, enter 50.
r. Press the DOWN ARROW key.
s. In the Account No. field, enter 8110.
t. In the Department Code field, enter PROD.
u. Remove the values from the posting fields.
v. In the Allocation % field, enter 25.
w. Press the DOWN ARROW key.
x. In the Account No. field, enter 8110.
y. In the Department Code field, enter SALES.
z. Remove the values from the posting fields.
aa. In the Allocation % field, enter 25.

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FIGURE 3.8: RECURRING PAYMENTS JOURNAL PAGE – CLEANING EXPENSE ALLOCATION

bb. Click OK to close the Allocations page.

3. Enter the line and allocations for the advertising expense.

a. In the Recurring General Journal page, press the DOWN
ARROW key.
b. In the Recurring Method field, click the drop-down list and
select “V Variable”.
c. In the Recurring Frequency field, enter 1M.
d. In the Posting Date field, enter 02/25/14.
e. In the Document Type field, click the drop-down list and select
Invoice.
f. In the Document No. field, enter 2014 Advert %3.
g. In the Account Type field, click the drop-down list and enter
Vendor.
h. In the Account No. field, enter 60000.
i. For February, the advertising expense is -760.00. Enter this
amount in the Amount field.
j. On the Navigate tab, click Allocations.
k. In the Account No. field, enter 8410.
l. In the Department Code field, enter SALES.
m. Remove the values from the posting fields.
n. In the Allocation % field, enter 100.

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FIGURE 3.9: RECURRING PAYMENTS JOURNAL PAGE – ADVERTISING EXPENSE ALLOCATION

o. Click OK to close the Allocations page.

4. Post the recurring journal.

a. Change your work date to 02/15/14 to post the cleaning expense.
b. On the Actions tab, click Post.
c. Click Yes to post the journal lines.
d. Click OK.
e. Change your work date to 02/25/14 to post the advertising
expense.
f. Repeat steps b through d.

Note: Recurring Journals will not post if the workdate is before the Posting
Date or after the Expiration Date.

g. Review the lines remaining in the journal:

 The Posting Date on the first line is 03/15/14 and the
second line is 03/25/14.
 The Amount field contains the following:
 The first line still contains the -500.00 LCY because it is a
fixed amount.
 The second line is empty because the method is variable.
 The Allocated Amt. (LCY) fields still display the
allocation amounts.

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FIGURE 3.10: RECURRING PAYMENTS JOURNAL PAGE AFTER POSTING

Note: To record next month’s expenses, update the amount on the second
line and then post the journal. Because the Allocation % field is set to 100 for the
second line, the allocation always calculates based on the value entered in the
Amount field on the recurring journal line. Therefore, it does not have to be
updated.

h. Click OK to close the Recurring General Journal page.

5. Review the posted recurring journal entries.

a. In the navigation pane, click Departments.
b. Click Financial Management, then click General Ledger, and
then click G/L Registers in the History section.
c. Move to the second last entry to review the ledger entries of the
cleaning expense.
d. On the Navigate tab, click General Ledger.
e. Review the entries in the register:
 The Document No. field contains the results of the
formula. The number 2 represents February.
 The amounts are allocated to the Departments.

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FIGURE 3.11: G/L REGISTERS – GENERAL LEDGER ENTRIES CLEANING

EXPENSE
f. Click Close to close the General Ledger Entries page.
g. Move to the last entry on the G/L Registers page.
h. Repeat steps d through f to review the ledger entries for the
advertising expense.

Demonstration: Recording Accruals

You can use the recurring journal to record accruals. Income and expense accruals
are entered at the end of an accounting period to make sure that all income and
expenses for the period are included in the financial results. These accruals are
reversed out of the ledger the day after the entry is posted.

Scenario: Starting in February 2014, Cassie, the accountant for CRONUS

International Ltd. must set up a recurring monthly accrual for bank interest in the
amount of 200.00 LCY. The interest is received the second day of the month
following the month it is accrued.

The recurring journal with allocation is set up as follows:

• The interest is recorded in the month that it is earned and is posted to

account 9110, Interest on Bank Balances.
• The Document No. field contains the current month name and the
word Interest.
• The day after the interest is posted to 9110, the entry is reversed and
the interest is posted to account 2330, Accrued Interest.

Review the entries after you have posted them.

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 Module 3: General Journals
Demonstration Steps

1. Enter the accrual and allocations.

a. In the navigation pane, click Departments.
b. Click Financial Management, then click Periodic Activities,
then click General Ledger, and then click Recurring General
Journals.
c. On the General Journal Template List page, select the
Recurring Payments Journal and then click OK.
d. In the Batch Name field, make sure that the RECURRING batch is
selected.
e. Delete all existing lines.
f. In the Recurring Method field, click the drop-down list and
select RV Reversing Variable.
g. In the Recurring Frequency field, enter 1M+CM.
h. In the Posting Date field, enter 02/28/14.
i. In the Document No. field, enter %4 Interest.
j. In the Account Type field, click the drop-down list and enter G/L
Account.
k. In the Account No. field, enter 9110.
l. In the Amount field, enter -200.00.
m. On the Navigate tab, click Allocations.
n. In the Account No. field, enter 2330.
o. In the Allocation % field, enter 100.
p. Click OK to close the Allocations page.
q. Notice that the Allocated Amt. (LCY) field displays 200.00.
r. Change your work date to 02/28/14.
s. On the Home tab, click Post.
t. Click Yes to post the journal lines.
u. Click OK.
v. Review the lines remaining in the window:
 The Posting Date is now 03/31/14.
 The Amount field is empty because the method is
variable.
 The Allocated Amt. (LCY) field displays the allocation
amount.
w. Click OK to close the Recurring General Journal page.

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2. Review the posted accrual.
a. In the navigation pane, click Departments.
b. Click Financial Management, then click General Ledger, and
then click G/L Registers in the History section.
c. Press CTRL+END to move to the last entry.
d. On the Navigate tab, click General Ledger.
e. Review the entries in the register:
 The two accrual entries posted on 02/28/14 and the two
reversal entries posted on 03/01/14.
 The Document No. field contains the results of the
formula. November is displayed because %4 is used.

FIGURE 3.12: G/L REGISTERS – GENERAL LEDGER ENTRIES ACCRUALS

f. Click Close to close the General Ledger Entries page.

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 Module 3: General Journals

Lab 3.2: Create and Post a Recurring Journal

Scenario

On February 1, 2014, CRONUS International Ltd. signed a new vehicle repairs and
maintenance contract for a fixed amount of 1,000.00 LCY, due on the twenty-fifth
of every month.

As the accountant, it is your responsibility to set up and post this expense starting
February 2014 with an expiration date of February 1, 2015. You also want a
document number to reflect an abbreviation of the expense (VRM) and the
number of the month.

Use the RECURRING general journal and DEFAULT batch to credit this expense to
the Cash account (2910) and allocate it to the company departments as follows:

• Administration Department: 18 percent

• Production Department: 58 percent
• Sales Department: 24 percent

You do not have to review the entries after you post them.

Exercise 1: Create and Post a Recurring Journal

Task 1: Create and Post a Recurring Journal

High Level Steps

1. Use the Recurring Journal to set up the vehicle repair and
maintenance expense.
2. Allocate to the departments specified in the scenario.
3. Post the journal.

Detailed Steps
1. Use the Recurring Journal to set up the vehicle repair and
maintenance expense.
a. In the navigation pane, click Departments.
b. Click Financial Management, then click Periodic Activities,
then click General Ledger, and then click Recurring General
Journals.
c. On the General Journal Template List page, select the recurring
journal and then click OK.
d. In the Batch Name field, make sure that the DEFAULT batch is
selected.
e. In the Recurring Method field, click the drop-down list and
select F Fixed.

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f. In the Recurring Frequency field, enter 1M.
g. In the Posting Date field, enter 02/25/14.
h. In the Document No. field, enter VRM%3.
i. In the Account No. field, enter 2910.
j. In the Amount field, enter -1,000.00.

2. Allocate to the departments specified in the scenario.

a. On the Navigate tab, click Allocations.
b. In the Account No. field, enter 8530.
c. In the Allocation % field, enter 18.
d. In the Department Code field, enter ADM.
e. Press the DOWN ARROW key.
f. In the Account No. field, enter 8530.
g. In the Allocation % field, enter 58.
h. In the Department Code field, enter PROD.
i. Press the DOWN ARROW key.
j. In the Account No. field, enter 8530.
k. In the Allocation % field, enter 24.
l. In the Department Code field, enter SALES.
m. Press the DOWN ARROW key.
n. Click OK to close the Allocations page.

3. Post the journal.

a. Change the work date to 02/25/14.
b. On the Actions tab, click Post.
c. Click Yes to post the journal lines.
d. Click OK.
e. Click OK to close the Recurring General Journal page.

Reversals and Corrections

Occasionally, users will have to reverse or correct journal entry lines because
changes or entries were booked incorrectly. Reversing journal entry lines helps
users reverse entries easily and correctly.

Reversing Journal Entries

In Microsoft Dynamics NAV 2013, when an incorrect general journal is posted, the
posted ledger entries can be reversed in the corresponding registers. However, to
reverse an entry, the following must be true of the original entry:

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 Module 3: General Journals
• The Journal Batch Name field must not be blank in the G/L Register.
• Customer Ledger Entries must not be applied.
• Vendor Ledger Entries must not be applied.
• Bank Ledger Entries must not be closed by reconciliation.
• The total amount of the G/L Entries must equal zero.
• The entry must not include any Item Ledger Entries.
• The ledger entries cannot be created by a reversal.

After you reverse the entries, you can then post them in the same register.

To reverse posted ledger entries from a register, follow these steps.

1. On the navigation pane, click Departments.

2. Click Financial Management, then click General Ledger, and then
click G/L Registers.
3. Locate and select the register to be reversed.
4. On the Home tab, click Reverse Register.
5. On the Reverse Register Entries page, on the Actions tab, click
Reverse.
6. Click Yes to reverse the entries.
7. Click OK to the message that the entries are reversed.
8. Move to the last entry on the G/L Registers page to review the fields
on the reversing entry:
o The Source Code is Reversal.
o The Creation Date is the system date.
o The Posting Date is the original posting date of the entry.

Posting Correction Entry Lines

Posted ledger entries cannot be changed or deleted in Microsoft Dynamics NAV

2013. However, you can correct the incorrect entries by posting one or more
corrective entries by using the general journal.

When you are correcting entries, selecting the Correction check box affects the
way entries are posted.

To use the correction functionality, the following fields must show on the General
Journal page:

• Correction
• Debit Amount
• Credit Amount

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Note: The Correction field cannot be added through the Choose Columns
function. It must be added through the design environment.

If the Correction check box is selected on the journal lines:

• The Amount field on the line must have the opposite sign of the
original, incorrect entry.
• Positive amounts in the Amount field are posted as a positive
amount in the Debit Amount field as usual.
• Negative amounts in the Amount field are posted as a positive
amount in the Credit Amount field as usual.

If the Correction check box is cleared on the journal lines:

• The Amount field on the line must have the opposite sign of the
original, incorrect entry.
• Positive amounts in the Amount field are posted as a negative
amount in the Credit Amount field.
• Negative amounts in the Amount field are posted as a negative
amount in the Debit Amount field.

The Debit Amount and Credit Amount fields in the journal display the
difference between corrections and usual postings.

After you post a correcting entry in a journal, the effect on the account that is
used for posting is as follows:

• If the Correction check box is selected:

o The original entry and correcting entry are posted to the same
side of the account, either as debits or credits.
o The correcting entry has a negative sign. This is helpful when you
run reports such as the Cash Flow Statement.
• If the Correction check box is cleared, the original entry and
correcting entry are posted to opposite sides of the account, one as a
debit and the other as a credit.

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 Module 3: General Journals

Module Review
Module Review and Takeaways

General journals are the basis of many financial functions in Microsoft Dynamics
NAV 2013.

General journals can be posted with and without balancing lines and the user can
set up dimensions.

Recurring journals help users to record frequently posted entries and to allocate
expenses to various departments.

How to reverse and correct incorrect entries is useful in everyday work.

Additionally, a full understanding of how journals are used is helpful in
performing other finance related tasks, such as the reconciling accounts or for
additional information.

Test Your Knowledge

Test your knowledge with the following questions.

1. What type of journal does not have a balancing account on the line?

( ) Payment Journal

( ) Recurring General Journal

( ) General Journal

( ) Sales Journal

2. What does the following Document No. formula represent in a recurring

journal: %4?

( ) Current month name

( ) Current month number

( ) Current accounting period name

( ) Current day number

3. On a Recurring General Journal, which Recurring Method must use

allocations?

( ) Variable

( ) Reversing Variable

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Finance Essentials in Microsoft Dynamics® NAV 2013
( ) Balance

( ) Fixed

4. To reverse a posted ledger entry, which of the following condition(s) must be

met?

( ) The Journal Batch Name field must be blank.

( ) Customer and Vendor ledger entries must not be applied.

( ) Bank ledger entries can be either opened or closed by reconciliation.

( ) The total of the G/L entries must be greater than zero.

5. Regardless of whether the Correction check box is selected or cleared, what

must be done when you post a correcting ledger entry in the general journal?

( ) Enter positive amounts in the Debit Amount field on the line.

( ) Enter the same sign as the original, incorrect entry in the Amount field
on the line.

( ) Enter the opposite sign of the original, incorrect entry in the Amount
field on the line.

( ) Enter negative amounts in the Credit Amount field on the line.

6. Which of the following results from posting a correction with the Correction
check box selected?

( ) The original entry and correcting entry are posted to opposite sides of
the account, one as a debit and the other as a credit.

( ) The original entry and the correcting entry are posted to the same
side of the account, either as debits or credits.

( ) The correcting entry has a positive sign.

( ) Click here to enter text.

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 Module 3: General Journals

Test Your Knowledge Solutions

Module Review and Takeaways

1. What type of journal does not have a balancing account on the line?

( ) Payment Journal

(√) Recurring General Journal

( ) General Journal

( ) Sales Journal

2. What does the following Document No. formula represent in a recurring

journal: %4?

(√) Current month name

( ) Current month number

( ) Current accounting period name

( ) Current day number

3. On a Recurring General Journal, which Recurring Method must use

allocations?

( ) Variable

( ) Reversing Variable

(√) Balance

( ) Fixed

4. To reverse a posted ledger entry, which of the following condition(s) must be

met?

( ) The Journal Batch Name field must be blank.

(√) Customer and Vendor ledger entries must not be applied.

( ) Bank ledger entries can be either opened or closed by reconciliation.

( ) The total of the G/L entries must be greater than zero.

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5. Regardless of whether the Correction check box is selected or cleared, what
must be done when you post a correcting ledger entry in the general journal?

( ) Enter positive amounts in the Debit Amount field on the line.

( ) Enter the same sign as the original, incorrect entry in the Amount field
on the line.

(√) Enter the opposite sign of the original, incorrect entry in the Amount
field on the line.

( ) Enter negative amounts in the Credit Amount field on the line.

6. Which of the following results from posting a correction with the Correction
check box selected?

( ) The original entry and correcting entry are posted to opposite sides of
the account, one as a debit and the other as a credit.

(√) The original entry and the correcting entry are posted to the same
side of the account, either as debits or credits.

( ) The correcting entry has a positive sign.

( ) Click here to enter text.

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MODULE 4: CASH MANAGEMENT – RECEIVABLES
AND PAYABLES

Module Overview
Cash management in Microsoft Dynamics® NAV 2013 is used to manage the
company's bank accounts.

One of the main features of cash management is the Bank Account Card. The
Bank Account Card contains all the company's bank details. On the Bank Account
Card, users can perform the following:

• Process payments received from customers.

• Process payments to vendors.
• Void posted checks (known as financial voiding).

In Cash management, receivables and payables play an important role.

In the receivables management area, all information for a customer is kept in a

customer card. This includes all customer ledger entries and detailed ledger
entries.

The basic functions in receivables cash management include the following:

• Applying and posting customer payments.

• Unapplying and reversing posted entries.

In the payables management area, vendor information is kept on vendor cards.

This includes vendor ledger entries and detailed ledger entries. Payables
Management helps companies manage vendor payments more effectively and
build up a comprehensive vendor database.

Objectives

The objectives are:

• Describe the Bank Account Card.

• Explain the Payments FastTab on the customer card.
• Explain the Payments FastTab on the vendor card.
• Show how to enter and post payments received from customers, by
using cash receipt journals.
• Show how to enter and post payments to vendors by using the
payment journal.

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• Explain the Suggest Vendor Payments batch job.
• Explain how to print and post payables checks.
• Explain and show how to financially void a check.
• Explain how to void and reprint computer checks.
• Explain how to apply entries to customer and vendor ledger entries.
• Explain how to unapply entries to customer and vendor ledger
entries.
• Explain how to reverse customer ledger entries posted by using
journals.

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 Module 4: Cash Management – Receivables and Payables

Bank Account Overview

For each transaction made in Microsoft Dynamics NAV 2013 that uses a bank
account, the system will post an entry in the bank account ledger. The bank
account posting group that is assigned to each bank account is used to post the
related general ledger (G/L) entries with the transaction.

Additionally, if the user makes a manual or computer check payment, the system
posts an entry to the check ledger to record the check transaction and the current
status of the check.

Each bank account has its own card that contains different kinds of information.
On the bank account card, you enter information that is specific to the individual
bank account, and you can change this information, if this is necessary.

Bank Account Window

To access the Bank Account window from the navigation pane, click the
Departments button, click Financial Management, click Cash Management,
and then click Bank Accounts.

FIGURE 4.1: BANK ACCOUNT WINDOW

The Bank Account window provides an overview of all the bank accounts that are
created in Microsoft Dynamics NAV 2013. To create a new bank account, or
change an existing one, double-click the bank account to locate the bank account
card.

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Bank Account Card

The Bank Account card has four FastTabs:

• General
• Communication
• Posting
• Transfer

FIGURE 4.2: BANK ACCOUNT CARD GENERAL AND COMMUNICATION

FASTTAB

General FastTab

The General FastTab contains all the general information about the bank where
the account is held, such as the name, address, and contact person.

In addition to this information, the General FastTab includes the following fields:

• No. – A unique identifier to represent the bank account. This field is

not used to specify the bank account number.
• Bank Branch No. – The alphanumeric code used to represent the
bank branch number for the bank account. All banks have a number
series that specifies the bank branch where the account is opened.
• Bank Account No. – The bank account number that is used by the
bank.
• Balance – Displays the bank account’s balance denominated in the
bank’s currency.

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• Balance (LCY) – Displays the bank account’s balance in the local
currency. For the bank account in local currency, the Balance and
Balance (LCY) show the same amount.
• Min. Balance - The minimum balance the bank account can have.
The amount is in the currency of the bank account and it can be
positive or negative.
• Our Contact Code – The contact person in the user's company that is
responsible for the bank account. In the program, this must be
someone set up in the Salespeople/Purchasers table.
• Blocked – Specifies to block the bank account by selecting the check
box. If you block the bank account, you will be unable to select the
bank account on a journal line in the Account No. field or on an
invoice in the Bal. Account No. field.

Communication FastTab

The Communication FastTab contains the following information:

• Telephone and fax numbers

• Email
• Home page addresses for the bank

Posting FastTab

All the posting information is entered on the Posting FastTab of the bank account
card.

FIGURE 4.3: BANK ACCOUNT CARD POSTING AND TRANSFER FASTTAB

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The Posting FastTab contains the following fields:

• Currency Code – The currency for the bank account. The following
rules apply for check payments and bank account currencies:
o If the Currency Code field of a bank account is blank, you can
only make check payments in local currency (LCY) for that
account. If a currency code is selected in this field, only use this
bank account to receive and make payments in the currency
selected in this field.
o If a currency code is not selected, you can receive payments by
using any currency including LCY. Non-check payments can use
any currency including LCY. You can only make check payments
in LCY.

• Last Check No. – If you are using checks, specify the last check
number that is used. The program updates this number every time
that a new check is printed.
• Transit No. – An alphanumeric code used to represent the bank
where the account is held.
• Last Statement No – The statement number of the last Bank Account
Statement reconciled in the program.
• Balance Last Statement – The statement ending balance of the last
Bank Account Statement reconciled in the program.
• Bank Acc. Posting Group – The posting group assigned to this bank
account. Microsoft Dynamics NAV 2013 uses this to post the related
G/L entries for each transaction by using the bank account.

Transfer FastTab

The Transfer FastTab contains the following fields that you must have to make
transfers to and from the bank account:

• Bank Branch No. – Defaults from the General FastTab.

• Bank Account No. – Defaults from the General FastTab.
• Transit No. – Defaults from the Posting FastTab.
• SWIFT Code – The international bank identifier code (BIC) that is
assigned to the bank. SWIFT Codes are typically used in automatic
payment transactions.
• IBAN – The bank account's International Bank Account Number
(IBAN). The program checks whether the IBAN entered has the
correct format and length.

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Bank Account Card Ribbon

You can use the Bank Account Card ribbon for single-click access to several
functions and overviews. The following tabs are available in the ribbon:

• Home
• Actions
• Navigate
• Report

FIGURE 4.4: BANK ACCOUNT CARD RIBBON

From the Home tab, you can view, edit, or create a new bank account.

The following single-click accesses are also available from the Home tab:

• Cash Receipt Journals – Use to register and post payments from

customers.
• Payment Journals – Use to register and post payments to vendors.
• Statistics – Displays the current balance for the account in the bank
account currency and LCY and comparative figures from prior
periods.
• Statements – Displays the reconciled Bank Account Statements for
this bank account.
• Bank Account Reconciliation – Displays the Bank Acc. Reconciliation
List. This is described later in this module.
• Receivables-Payables – Contains a summary of receivables and
payables.
• List – Displays a list of all bank accounts in the system.
• Detail Trial Balance – Displays options to print a detail trial balance
for bank accounts.
• Check Details – Displays options to print a detailed trial balance for
selected checks.

The Actions tab also provides access to the cash receipts journals and the
payment journals.

You can use the Navigate tab to display information about the balances and
transaction amounts for the bank account.

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The Navigate tab provides single-click access to the following functions and
overviews:

• Statistics – Same function as on the Home tab.

• Comments – Displays or enters any detailed comments that relate to
this bank account.
• Dimensions – Displays or enters default dimensions for this bank
account.
• Balance – Displays the Bank Account Balance window. It shows the
balance or net change in the bank account in the bank account
currency and LCY over time.
• Statements – Same function as on the Home tab.
• Ledger Entries – Displays bank account ledger entries for this bank
account.
• Check Ledger Entries -Displays only the check ledger entries for this
bank account. Use this option to financially void checks, as is
described in the "Financially Voiding Checks" topic in lesson “Voiding
Checks” in this course.
• Contact – Displays the company contact card for this bank account.
When you create a new bank account, the system also creates and
links a Company contact card to the bank account.
• Online Map – Displays information about what map to display in the
online map. The online map is set up in the Online Map Setup
window.
• Bank Account Reconciliations – Same function as on the Home tab.
• Receivables-Payables – Same function as on the Home tab.

You can run the following reports on the Report tab and also access them from
the Home tab:

• List
• Detail Trial Balance
• Receivables-Payables
• Check Details

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Lab 4.1: Create a Bank Account

Scenario

CRONUS International Ltd. recently opened a new account at the Super Krone
Bank in Denmark. As the accounting manager, it is your responsibility to set up
the bank account in Microsoft Dynamics NAV 2013 with the criteria shown in the
following table.

Field Value
Bank No. SK Bank - DK

Name SK Bank Denmark

Address 1-3 Remouladevej

City Vedbaek
Post Code DK-2950

Country/Region Code DK

Phone No. 46 75 75 34

Contact Name Anne Hellung-Larsen

Bank Branch No. 2396824

Bank Account No. 9652833

Additionally, Linda Martin is the resource responsible for all interactions with this
bank. The bank's currency is Danish Kroner (DKK) and the bank must be assigned
to the Currencies posting group.

Close the Bank Account Card when you have finished the setup process.

Exercise 1: Create a Bank Account

Task 1: Create the bank account in the Bank Account Card window

High Level Steps

1. Open the Bank Account Card and insert a new record.
2. Complete each FastTab by using the criteria that is specified in the
scenario.

Detailed Steps
1. Open the Bank Account Card and insert a new record.
a. In the Search box, enter Bank Accounts and then select the
related link.
b. Click New in the ribbon.

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2. Complete each FastTab by using the criteria that is specified in the
scenario.
a. In the No. field, enter SK Bank / DK.
b. In the Name field, enter Super Krone Bank.
c. In the Address field, enter Remouladevej 1-3.
d. In the Post Code field, click the drop-down list and select DK-
2950 and then click Enter.
e. In the Country/Region Code field, click the drop-down list and
then select DK from the list.
f. In the Phone No. field, enter 46 75 75 34 and then click Enter.
g. In the Contact field, enter Ann Hellung/Larsen and then click
Enter.
h. In the Bank Branch No. field, enter 2396824 and then click
Enter.
i. In the Bank Account No. field, enter 9652833 and then click
Enter.
j. In the Our Contact Code field, click the drop-down list and then
select Linda Martin.
k. On the Posting FastTab, in the Currency Code field, click the
drop-down list and then select DKK.
l. In the Bank Account Posting Group field, click the drop-down
list and then select CURRENCIES.
m. Click OK.

Customer Overview
To manage the total finances of the company, you must be able to manage
customer data. In Microsoft Dynamics NAV 2013, customer master data is
maintained in customer cards. The customer card is used for customers in
receivables management, financial management, and order management.

Customers Window

To access the Customers window from the navigation pane, click the
Departments button, click Financial Management, click Receivables, and then
click Customers.

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FIGURE 4.5: CUSTOMERS WINDOW

The customer window provides an overview of the customers who are created in
Microsoft Dynamics NAV 2013. To create a new customer, or change an existing
one, double-click the customer for which you want to locate the customer card.

Customer Card and Receivables

The Payments FastTab on the customer card is used to define how customer’s
payments are managed.

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FIGURE 4.6: CUSTOMER CARD PAYMENTS FASTTAB

The Payments FastTab contains the following fields:

• Application Method – Specify how to apply payments for this

customer. The following options are available:
o Manual – Payments are only applied if you specify a document.
o Apply to Oldest – If you do not specify a document for the
payment to be applied to, payments are applied to the oldest of
the customer’s open entries.
• Payments Terms Code – Specifies a code for the payment terms that
you will grant the customer. The payment term determines the due
date of the invoices and credit memos the customer will receive. You
also use the payment terms to specify the payment discount
percentage.
• Payment Method Code – Specifies a code for the method that the
customer usually uses to submit payment. To view the payment
methods in the Payment Methods window, click the field.
• Reminder Terms Code – Specifies a reminder terms code for the
customer. To view the reminder terms codes in the Reminder Terms
window, click the field.
• Finance Charge Terms Code – Specifies a code that will be used to
compute finance charges, such as interests, for the customer.
• Cash Flow Payments Term Code – Specifies a payment term that
will be used for calculating cash flow. Cash flow payment terms are
used in the Cash Flow Forecast Card window.

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• Print Statements – Specifies whether to include this customer when
you print statements.
• Last Statement No. – Shows the number for the last statement that
is printed for this customer.
• Block Payment Tolerance – Specifies that the customer is not
allowed payment tolerance.

Analyzing Receivables

When you post transactions to customers in Microsoft Dynamics NAV 2013, the
following customer entries are created:

• Customer ledger entries

• Detailed customer ledger entries

Customer entries provide more information about customers and sales business.
Customer ledger entries are posted entries from sales documents such as, sales
orders and sales invoices.

FIGURE 4.7: CUSTOMER LEDGER ENTRIES

Note: The system shows open entries that have past their due date in bold,
italic and red.

To view the detail of a customer ledger entry, you can drill down on the amount
fields to the detailed customer ledger entries.

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The Customer Entries Diagram figure shows the structure of the entries.

FIGURE 4.8: CUSTOMER ENTRIES DIAGRAM

The detailed customer ledger entries store the actual amounts of the customer
transactions, such as an invoice. The customer ledger entries show the amounts as
FlowFields.

Examples of where additional detailed customer ledger entries are created to

change the customer ledger entries include the following:

• Foreign currency exchange rates

• Payment discounts
• Payment tolerances
• Applications
• Rounding

The Detailed Cust. Ledger Entries window figure shows the two detailed customer
ledger entries of one (applied) customer ledger entry.

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FIGURE 4.9: DETAILED CUST. LEDGER ENTRIES WINDOW

Vendor Overview
To manage the total finances of the company, you must be able to manage
vendor data and vendor payments. This helps avoid penalty fees if there is a late
payment, maintain a good relationship with the vendors, and to receive a discount
if the company makes an early payment.

Vendor Window

To access the Vendors window from the navigation pane, click the Departments
button, click Financial Management, click Payables, and then click Vendors.

FIGURE 4.10: VENDORS WINDOW

The vendor window shows the most relevant vendor information. You can use the
vendor card to view additional information, to create a new vendor, or to change
an existing vendor.

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Vendor Card and Payables

The Payments FastTab on the Vendor Card is used to define how payments to
vendors are managed.

FIGURE 4.11: VENDOR CARD PAYMENTS FASTTAB

The Payments FastTab contains following fields:

• Application Method – Specify how to apply payments for this

customer. The following options are available:
o Manual – Payments are only applied if you specify a document.
o Apply to Oldest – If you do not specify a document for the
payment to be applied to, payments are applied to the oldest of
the customer’s open entries.
• Payments Terms Code – Specifies a code for the payment terms that
you will grant the customer. The payment term determines the due
date of the invoices and credit memos from the vendor. You also use
the payment terms to specify the payment discount percentage.
• Payment Method Code – Specifies a code for the method that the
customer usually uses to submit payment. To view the payment
methods in the Payment Methods window, click the field.
• Priority – Specifies a number that corresponds to the priority you
give the vendor. The Priority field can be used if you have only a
limited amount available for payments.
• Cash Flow Payments Term Code – Specifies a payment term that
will be used for calculating cash flow. Cash flow payment terms are
used in the Cash Flow Forecast Card window.

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• Our Account No. – Specifies your account number with the vendor, if
you have one.
• Block Payment Tolerance – Specifies that a vendor is not allowed
payment tolerance.

Analyzing Payables

Similar to customers, vendor postings also result in two vendor entries:

• Vendor ledger entries

• Detailed vendor ledger entries

Vendor entries behave exactly like customer entries. Therefore, for more
information, refer to the topic “Analyzing Receivables” in this module.

Cash Receipt Journal and Payment Journal Overview

In Microsoft Dynamics NAV 2013, payments received from customers are
recorded in the Cash Receipt Journal.

The Cash Receipt Journal can be accessed from the following two areas on the
financial management menu:

• Cash Management
• Receivables

Payments to vendors are created and posted in the Payment Journal. You can
use the payment journal to quickly record and post handwritten checks. Computer
checks for open invoices can be entered manually, or by using the Suggest
Vendor Payments batch job.

The Payment Journal can be accessed from the following two areas on the
Financial Management menu:

• Cash Management
• Payables

Entering Cash Receipts

When payments from customers are received, they are recorded in the cash
receipt journal. You can apply payments to open customer ledger entries, by using
the Apply Entries function.

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FIGURE 4.12: CASH RECEIPT JOURNAL WINDOW

The following fields are important when you enter and post a cash receipt:

• Document Type: When you receive payments from customers, select

the document type Payment. For payments that you send to
customers, the document type should be Refund.
• Account Type: The account type is set to Customer.
• Bal. Account Type: To post the payment to a bank account, select
Bank Account in this field.
• Bal. Account No.: Select the bank account on which to post the
payment.

Note: You can set up the balancing account type and balancing account
number on the journal batch. Then they are populated automatically on the journal
line when a payment is entered.

Demonstration: Enter Cash Receipt Payments

Scenario: On January 14, 2014, Arnie, the accounts receivable administrator at

CRONUS International Ltd. receives a payment from customer 10000, The Cannon
Group PLC. The following table shows the breakdown of the 63,269.04 LCY
payment.

Invoice/Document No. Amount (LCY)

00-16 30,000.00

103005 8,269.04

n/a 25,000.00

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The 30,000.00 is a partial payment for Document No. 00-16 and the payment for
Document No. 103005 is a full amount.

Because the 25,000.00 LCY is not assigned to an invoice, Arnie decides to apply
the amount to the customer account without applying it to a particular invoice.

The Cash Receipt Journal is used to post the payment.

Demonstration Steps

1. Enter the payment for this customer.

a. In the Search box, enter Cash Receipt Journals, and then select
the related link.
b. In the Batch Name field, click the drop-down list and select Bank
and then click OK.
c. In the Posting Date field, type 01/14/14.
d. In the Document Type field, click the drop-down list and then
select Payment.
e. In the Account Type field, click the drop-down list and then
select Customer.
f. In the Account No. field, type 10000.
g. In the Amount field, type -63269.04.
h. In the Home tab on the ribbon, click Apply Entries.
i. In the line for Document No. 00-16, select the Amount to
Apply field and then type 30000.
j. Press TAB or ENTER. This is the partial amount that is applied to
invoice 00-16.
k. Locate and select the line for Document No. 103005.
l. Click Set Applies-to ID. This is the full amount that is applied to
invoice 103005.
The Amount field at the bottom of the window contains -
25,000.00. This is the open amount that will be posted to the
customer account without having it be applied to an invoice.
m. Click OK.

The Bal. Account No. field is populated with the WWB-OPERATING bank
account. This is set up on the Bank batch.

To post the Cash Receipt Journal, follow these steps.

a. Click Post.
b. Click Yes to post the journal lines.
c. Click OK.
d. Click OK to close the Cash Receipt Journal.

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To review the entry posted to the bank account, follow these steps.

a. In the Cash Management folder, click Bank Accounts.

b. Locate and select bank account WWB-OPERATING.
c. In the Navigate tab on the ribbon, click Ledger Entries.
d. Locate the payment line dated 01/14/14 for 63,269.04. This entry
represents the payment that is posted in the cash receipt journal.
e. Close the Bank Account Ledger Entries window.

To review the posted Customer Ledger Entries for this payment, follow these
steps.

a. On the Financial Management menu, click Receivables >

Customers.
b. Locate and select customer 10000, The Cannon Group PLC.
c. In the Home tab on the ribbon, click Ledger Entries.
d. Review the payment lines. The Remaining Amount field for the:
 Partly paid invoice (00-16) displays the unpaid amount of
3,852.35.
 Fully paid invoice (103005) displays a zero balance.
 Payment line dated 01/14/14 displays the open -
25,000.00 credit that is not applied to any invoice.
e. Click OK to close the Customer Ledger Entries.

Entering Payments

You can use the payment journal to prepare and post payments to vendors. With
the Apply Entries function, you can apply payments to open vendor ledger
entries.

When a vendor is paid by using a handwritten check, you can enter a line in the
payment journal, by using the bank payment type Manual Check. This creates a
corresponding check ledger entry for the amount.

Handwritten checks are quickly recorded and posted.

Printed computer checks can be entered:

• Manually
• By using the Suggest Vendor Payments batch job

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FIGURE 4.13: PAYMENT JOURNAL WINDOW

The following fields are important when you enter and post a payment:

• Document Type: When you make payments to vendors, select the

document type Payment. For payments that are created by vendors,
the document type should be Refund.
• Account Type: The account type is set to Vendor for recording
vendor payments.
• Bal. Account Type: To post the payment to a bank account, select
Bank Account in this field.
• Bal. Account No.: Select the bank account on which to post the
payment.
• Bank Payment Type: Select one of the following options:
o <Blank>: The payment is created without a check.
o Computer Check: Checks are printed from the payment journal.
o Manual Check: Use a handwritten check to pay the vendor.

The Document No. field represents the check number and is populated based on
the selections in the Bank Payment Type field.

When you process manual checks, the Bank Payment Type is set to Manual
Check, and the check number is entered in the Document No. field.

For computer checks, the Bank Payment Type is set to Computer Check and the
Document No. field is specified as follows:

• To print one check for each vendor:

o The Document No. field is left empty.
o The Document No. field is populated with the check numbers
that are specified during the check printing process.

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• To print multiple checks for each vendor:
o Create separate lines for each vendor payment.
o In the Document No. field on each line, indicate separate check
numbers, for example, enter 1 on the first line, 2 in the next line,
and so on.
o During the check printing process, Microsoft Dynamics NAV 2013
recognizes that the numbers are different and prints multiple
checks.

Bank Account Currency Restrictions on Payments

The currency of the bank account can limit the currency of payments that are
made by using the bank account. The following table provides a summary of
currency restrictions for bank accounts.

Bank Account Bank Payment Type = Computer Bank Payment Type =

Currency Code Check or Manual Check Blank
Blank (LCY) Checks are only printed for LCY Payment lines with any
payment lines. currency code including
Only LCY payment lines post. LCY post.

Currency Code Checks are only printed for Only payment lines with
payment lines with the same the same currency code
currency code as the bank as the bank account
account. post.
Only payment lines with the same
currency code as the bank
account post.

Demonstration: Enter and Post Payables Checks

Scenario: April, the accounts payable coordinator at CRONUS International Ltd., is

informed of two checks that were handwritten in January, as shown in the
following table.

Vendor Date Check No. Amount (LCY) Applies to

10000 01/21/14 1201 8,245.76 Document No. 108019
50000 01/28/14 1203 1,500.00 Deposit for future work

April enters and posts these checks in the Payment Journal as manual checks.

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Demonstration Steps

1. Enter the two manual checks and apply if this is possible.

a. In the Search box, enter Payment Journals, and then select the
related link.
b. In the Batch Name field, click the drop-down list and then select
Bank.
c. Click OK.
d. In the Posting Date field, enter 01/21/14.
e. In the Document Type field, click the drop-down list and then
select Payment.
f. In the Document No. field, enter 1201.
g. In the Account Type field, click the drop-down list and then
select Vendor.
h. In the Account No. field, enter 10000.
i. Click Apply Entries.
j. Click the line for Document No. 108019.
k. Click Set Applies-to ID.
l. Click OK.

The Amount field is populated with the invoice amount: 8,245.76.

a. Make sure that the Bal. Account No. field contains the WWB-
OPERATING bank account. This is set up on the Bank batch.
b. In the Bank Payment Type field, click the drop-down list and
select Manual Check.

To enter the second manual check and post the Payment Journal, follow these
steps.

a. Click the next line.

b. In the Posting Date field, enter 01/28/14.
c. In the Document No. field, enter 1203.
d. In the Account Type field, click the drop-down list and then
select Vendor.
e. In the Account No. field, enter 50000.
f. In the Amount field, enter 1500.
g. In the Bank Payment Type field, click the drop-down list and
select Manual Check.
h. Click Post.
i. Click Yes to post the journal lines.
j. Click OK.
k. Close the Payment Journal.

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To review the posted entries to the bank account, follow these steps.

a. In the Cash Management page, click Bank Accounts.

b. Locate and select bank account WWB-OPERATING.
c. Click Check Ledger Entries in the ribbon.

Check No. 1201 and 1203 represent the manual checks posted to this bank
account.

a. Click Close in the Check Ledger Entries window.

To review the posted entries to the vendors, follow these steps.

a. On the Financial Management page, click Payables > Vendors.

b. Locate and select vendor 10000.
c. Click Ledger Entries in the ribbon.
d. Locate the payment line dated 01/21/14 and the line for
Document No. 108019.

Because a full payment is applied completely to the invoice, the Remaining

Amount field on both lines displays 0.00.

a. Close the Vendor Ledger Entries window.

b. Locate and select vendor 50000.
c. Click Ledger Entries in the ribbon.
d. Locate the payment line dated 01/28/14. Because this payment is
not applied to a specific invoice, the Remaining Amount field
displays the full amount of the payment.
e. Close the Vendor Ledger Entries window.

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Lab 4.2: Apply and Post Cash Receipts

Scenario

On January 28, 2014, you receive a 154,251. 63 LCY payment from customer
30000, John Haddock Insurance Co. This payment is for the following invoices.

Invoice/Document No. Amount (LCY)

00-10 76,167.75

00-13 40,000.00

n/a 38,083.88

As the accounts receivable administrator for CRONUS International Ltd., it is your

responsibility to apply and post this payment to this customer's invoices. Use the
Bank batch for this posting.

After you post it, review the posted customer ledger entries.

Exercise 1: Enter, Apply, and Post the Cash Receipt Journal

Task 1: Create the payment line for customer 30000.

High Level Steps

1. Open the Bank batch in the Cash Receipt Journal.
2. Create the payment line for customer 30000.

Detailed Steps
1. Open the Bank batch in the Cash Receipt Journal.
a. In the Search box, enter Cash Receipt Journals, and then select
the related links.
b. Make sure that the Bank batch is selected.

2. Create the payment line for customer 30000.

a. In the Posting Date field, enter 01/28/14.
b. In the Document Type field, click the drop-down list and then
select Payment.
c. In the Account Type field, click the drop-down list and then
select Customer.
d. In the Account No. field, enter 30000.
e. In the Amount field, enter -154,251.63.

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Task 2: Apply the full and partial payments.

High Level Steps

1. Apply the entries.

Detailed Steps
1. Apply the entries.
a. In the ribbon, click Apply Entries.
b. Locate and select the line for Document No. 00-10.
c. In the ribbon, click Set Applies-to ID.
d. Locate and select the line for Document No. 00-13.
e. Click the Amount to Apply field and then enter 40.000.00.
f. Verify that the Balance field at the bottom of the window
is -38,083.88.
g. Click OK.

Task 3: Post the journal lines

High Level Steps

1. Post the journal lines.

Detailed Steps
1. Post the journal lines.
a. Click Post.
b. Click Yes to post the journal lines.
c. Click OK.
d. Close the Cash Receipt Journal window.

Task 4: Review the customer ledger entries.

High Level Steps

1. Open the Customer Card window and review the posted entries for
this payment.
2. Access the Customer Ledger Entries window.
3. Review the posted entries for this payment.

Detailed Steps
1. Open the Customer Card window and review the posted entries for
this payment.
a. On the Financial Management menu, click Receivables >
Customers.
b. Locate and select customer 30000, “John Haddock Insurance Co.”

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2. Access the Customer Ledger Entries window.
a. Click Ledger Entries.

3. Review the posted entries for this payment.

a. Review the posted entries.
 Document No. 00-10 has a Remaining Amount of 0.00.
 Document No. 00-13 has a Remaining Amount of
40,399.29.
 The payment line posted on 01/28/14 has a Remaining
Amount of -38,083.88.
b. Close the Customer Ledger Entries and Customer Card
windows.

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Lab 4.3: Enter and Post Manual Checks

Scenario

In January, two manual checks are written:

• On 01/08/14, check number 1200, for 8,132.00 LCY, for Document

No. 108018, to vendor 10000, London Postmaster.
• On 01/23/14, check number 1202, for 2,850.00 LCY, for a delivery that
required payment on delivery to vendor 60000, Grassblue Ltd.

The invoice for the check to vendor 60000 is still not received. But because it is
approaching the end of the month, the check must be recorded.

As the accounts payable coordinator at CRONUS International Ltd, it is your

responsibility to apply and post these manual checks to the worldwide operating
bank account, by using the Bank batch.

Exercise 1: Enter, Apply and Post the Payment Journal

Using Manual Checks.

Task 1: Enter both manual checks in the Payment Journal, and apply
if this is possible.

High Level Steps

1. Open the Payment Journal and apply if possible.

Detailed Steps
1. Open the Payment Journal and apply if possible.
a. In the Search box, enter Payment Journals, and then select the
related link.
b. Make sure that the Bank batch is selected.
c. In the Posting Date field, enter 01/08/14.
d. In the Document Type field, click the drop-down list and select
Payment.
e. In the Document No. field, enter 1200.
f. In the Account Type field, click the drop-down list and select
Vendor.
g. In the Account No. field, enter 10000.
h. Click Apply Entries.
i. Click the line for Document No. 108018.
j. Click Set Applies-to ID.
k. Click OK.

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l. In the Bank Payment Type field, click the drop-down list and
select Manual Check.
m. Click the next line.
n. In the Posting Date field, enter 01/23/14.
o. In the Document No. field, enter 1202.
p. In the Account No. field, enter 60000.
q. In the Amount field, enter 2850.
r. In the Bank Payment Type field, click the drop-down list and
select Manual Check.

Task 2: Post the Journal.

High Level Steps

1. Post the journal.

Detailed Steps
1. Post the journal.
a. Click Post in the ribbon.
b. Click Yes to post the journal lines.
c. Click OK.

Suggest Vendor Payments

In the Payment Journal, the Suggest Vendor Payments function processes open
vendor ledger entries, and creates payment suggestions based on criteria such as
the following:

• Specific vendors
• Due Dates
• Vendor Priority

The Suggest Vendor Payments function can also be run to include payments for
which you can obtain a discount, and to summarize a suggested line for each
vendor, by dimension.

Suggest Vendor Payments Batch Job Overview

The Suggest Vendor Payments batch job contains two FastTabs:

• Vendor
• Options

To open the batch job, click Suggest Vendor Payments in the Home tab in the
ribbon.

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On the Vendor FastTab, filter the suggestion lines by vendor information.
Additional filters can be added in a blank line.

To suggest vendor payments for all vendors, do not set filters on this FastTab.

The Options FastTab is used to determine how the batch job is executed and
contains the following fields:

• Last Payment Date – The latest payment date that can appear on
the vendor ledger entries to be included in the batch job.
o Only entries that have a due date or a payment discount date
either before or on this date are included.

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o If this date is earlier than the system date, the system displays a
warning message.
• Find Payment Discounts – If this field is selected the batch job
includes vendor ledger entries for which a payment discount can be
received.
• Use Vendor Priority – If this field is selected, the contents of the
Priority field on the Vendor Cards determine in which order vendor
entries are suggested for payment by the batch job.
Microsoft Dynamics NAV 2013 always prioritizes vendors for payment
suggestions if an available amount is specified in the Available
Amount (LCY) field.
• Available Amount (LCY) – Indicates that there is a maximum
amount available (in local currency) for payments. Therefore, the
batch job:
o Creates a payment suggestion from this amount and the vendor
priority.
o Only includes vendor entries that can be paid fully.
• Summarize per Vendor – If this field is selected, the batch job
suggests one line for each vendor, for each currency in which the
vendor has ledger entries.
If this field is not selected, the batch job suggests one line for each
invoice.
• By Dimension – If the Summarize per Vendor check box contains a
check mark select the dimensions to group the suggested payments.
Based on the selected dimensions, Microsoft Dynamics NAV 2013:
o Calculates a total amount for each dimension value that is
contained in the outstanding vendor ledger entries.
o Transfers each amount and the dimension value to a new
payment line.
• Posting Date – The posting date that appears on the lines that the
batch job inserts in the Payment Journal.
• Starting Document No. – Automatically populated with the next
available number in the number series for the journal batch that is
linked to the payment journal.
This field can also be filled in manually.
• New Doc. No. per Line – If this field is selected, the batch job fills in
the payment journal lines with consecutive document numbers,
starting with the document number that is specified in the Starting
Document No. field.
This check box must contain a check mark if:
o The Bank Payment Type field is set to Manual Check.
o The Summarize per Vendor field does not contain a check mark.

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• Bal. Account Type – The balance account type to be used in the
batch job. The options are as follows:
o G/L Account
o Bank Account
• Bal. Account No. – Either the G/L Account or Bank Account number.
• Bank Payment Type – If the Bal. Account Type is set to Bank
Account the selection in this field determines whether the suggested
lines are Manual Checks or Computer Checks.

Note: If Bank Account is selected and the bank account contained in the Bal.
Account No. field has a currency code other than LCY, only those entries with the
same currency as the bank account are included in the batch job.

Demonstration: Suggest Vendor Payments for Local

Vendors

Scenario: On the fifteenth of each month, April, the accounts payable

coordinator, pays invoices for local vendors. Today is January 15, 2014, and she
must run the Suggest Vendor Payments batch job as follows:

• For all open entries that are due on or before January 25, 2014.
• For vendors from Great Britain (GB).
• To search for payment discounts.

The checks are printed to create a single check for each vendor.

Demonstration Steps

1. Run the Suggest Vendor Payments batch job for all local vendors.
a. In the Search box, enter Payment Journals, and then select the
related link.
b. Make sure that the Bank batch is selected.
c. Click Suggest Vendor Payments.
d. Open the Options FastTab.
e. In the Last Payment Date field, enter 01/25/14.
f. Click the Find Payment Discounts check box.
g. In the Posting Date field, enter 01/15/14.
h. In the Starting Document No. field, enter CH001.
i. In the Bal. Account Type field, click the drop-down list and then
select Bank Account.
j. In the Bal. Account No. field, click the drop-down list and select
WWB-OPERATING and then click OK.

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k. In the Bank Payment Type field, click the drop-down list and
then select Computer Check.
l. In the Vendor FastTab, click the Payment Method Code drop-
down list and select Country/Region Code.
m. In the Enter a value field for the Country/Region Code line,
select GB.
n. Click OK.
o. Click OK to the message that asks whether you still want to run
the batch job, because the payment date is earlier than 01/23/14.
p. Click OK to the message that suggested vendor payments lines
for all currencies that are created.

To verify that open entries continue to be included in the Suggest Vendor

Payments batch job, follow these steps.

a. Delete all Payment Journal lines.

b. Run the same Suggest Vendor Payment process by clicking
Suggest Vendor Payments.
c. Click OK.
d. Click OK to the message that states lines are created.

Be aware that the lines all appear again.

Until open entries are closed, they will appear in the Suggest Vendor Payment
process if they are within the set filters and parameters.

To prepare for the "Suggest Payments for a Single Vendor" demonstration, delete
all the Payment Journal lines again.

Suggest Payments Using Vendor Priority

Use vendor priority when there are limited funds available to pay vendors.
Therefore, you must prioritize the order in which vendors are paid. Vendor priority
is set on the Payments FastTab of the Vendor Card.

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FIGURE 4.15: VENDOR CARD PAYMENTS FASTTAB

To determine which specific payments to suggest, Microsoft Dynamics NAV 2013

applies the following rules:

• Only vendor entries that can be fully paid are suggested.

• All Priority 1 vendor entries that can be fully paid within the
Available Amount (LCY) are suggested first. Any vendor entries for
lesser priority vendors that can be fully paid within the remaining
amount are then suggested.
• For each vendor, the batch job suggests amounts based on the Due
Date of the vendor ledger entries for that vendor. Invoices with the
earliest due date are suggested first.

When specifying an Available Amount (LCY) in the Suggest Vendor Payments

batch job, Microsoft Dynamics NAV 2013, does not automatically calculate the
payment tolerance and the payment discount tolerance when suggesting the
amounts to pay.

This lesson includes a demonstration that will show how to use vendor priorities
that have specified available amounts. To provide a controlled demonstration
environment, only two vendors are included. Typically when you are using vendor
priority, specific vendors are not filtered.

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 Module 4: Cash Management – Receivables and Payables
Demonstration: Use Vendor Priority and Available
Amounts

Scenario: On the twenty-fifth of each month, April, the accounts payable

coordinator, pays all open vendor invoices. However, this month there is a limited
fund issue because of previous holiday expenses. The accountant has informed
April to use vendor priority to allocate the 100,000 available for payments.

April learns that vendor 10000 has Priority 1 and vendor 20000 has Priority 2. The
following table shows the ledger entries that are ready for payment this month.

Vendor Document No. Due Date Amount (LCY)

10000 5578 01/17/14 -24,156.97

5672 01/18/14 -57,976.72

108023 01/31/14 -15,846.00

20000 108017 12/31/13 -1,535.63

108025 01/31/14 -1,368.90

Because of the limited funds, April also decides to search for available discounts
when she runs the Suggest Vendor Payments batch job.

Demonstration Steps

1. Run the Suggest Vendor Payments batch job by using vendor priority
and available amounts.
a. In the Search box, enter Payment Journals, and then select the
related link.
b. Click Suggest Vendor Payments.
c. In the Last Payment Date field, enter 01/31/14.
d. Click the Find Payment Discounts check box to insert a check
mark.
e. Select the Use Vendor Priority check box.
f. In the Available Amount (LCY) field, enter 100000.
g. In the Posting Date field, enter 01/24/14.
h. In the Bal. Account Type field, click the drop-down list and
select Bank Account.
i. In the Bal. Account No. field, click the drop-down list and select
WWB-OPERATING.
j. Click OK.
k. In the Bank Payment Type field, click the drop-down list and
select Computer Check.

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l. On the Vendor FastTab, set a filter for the No. line, enter
10000..20000.
m. Click OK.
n. Click OK to the message that suggested that the vendor payment
lines for all currencies are created.

The batch job suggests payments totaling less than 100,000.00 LCY. The following
table shows how Microsoft Dynamics NAV 2013 applied the vendor priority rules
to suggest the payments in the demonstration.

Vendor Document Amount Available Remaining Payment

by Number Amount Available Line
Priority (LCY) Amount (LCY)
10000 5578 -24,156.97 100,000 75,843.03 Yes

5672 -57,976.72 75,843.03 17,866.31 Yes

108023 -15,846.00 17,866.31 2,020.31 Yes

20000 108017 -1,535.63 2,020.31 484,68 Yes

108025 -1,368.90 No

Note: The payments suggested by the batch job are listed by vendor order in
the Payment Journal. They are not listed in the order of vendor priority or in the
order they are suggested.

Do not delete the suggested vendor payment lines for vendors 10000 and 20000.
These entries are used in the Print Computer Checks demonstration.

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Lab 4.4: Suggest Vendor Payments for a Single Vendor

Scenario

On the twenty-fifth of each month, the Suggest Vendor Payments batch job is
run for vendor 30000, CoolWood Technologies, for any credit memos and all
payments that are expected by the end of the month. It is January 25, 2014, and
as the accounts payable coordinator, it is your responsibility to run the batch job
by using the following criteria:

• Use the Bank batch.

• Have the batch job search for payment discounts.
• Post one single payment to this vendor.
• Use Starting Document No. CWT 012514.

After you run the batch job:

• Print a single check for all invoices to a file that is named CWTChecks
012514.
• Post the checks.

Exercise 1: Suggest Vendor Payments for a Single Vendor

Task 1: Set up and Run the Suggest Vendor Payments Batch Job

High Level Steps

1. Run the Suggest Vendor Payments batch job.

Detailed Steps
1. Run the Suggest Vendor Payments batch job.
a. In the Search box, enter Payment Journals, and then select the
related link.
b. Make sure that the Bank batch is selected.
c. Click Suggest Vendor Payments.
d. Enter the following information on the Options FastTab.
i. In the Last Payment Date field, enter 01/31/14.
ii. Make sure that the Find Payment Discounts check box
is selected.
iii. Select the Summarize per Vendor check box.
iv. In the Posting Date field, enter 01/24/14.
v. In the Starting Document No. field, enter CWT 012514.
vi. In the Bal. Account Type field, click the drop-down list
and select Bank Account.

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vii. In the Bal. Account No. field, click the drop-down list
and select the WWB-OPERATING bank.
viii. In the Bank Payment Type field, click the drop-down list
and select Computer Check.
e. On the Vendor FastTab, click Add Filter and point to No.
f. In the Enter a value field, enter 30000.
g. Clear any other filters on this FastTab.
h. Click OK to run the batch job.
i. Click OK to the message about currencies.

Task 2: Print the Check

High Level Steps

1. Print the check as stated in the scenario.

Detailed Steps
1. Print the check as stated in the scenario.
a. Locate the line for vendor 30000.
b. In the Account No. field, right-click on 3000, and choose Filter
to this Value.
c. Click Print Check.
d. In the Options FastTab, do the following:
i. Make sure that the Bank Account field is set to WWB-
OPERATING.
ii. Make sure that the One Check per Vendor per
Document No. check box is not selected.
e. Click Print.
f. In the Check - Print window, click the Print to file check box to
insert a check mark.
g. Click OK.
h. In the Output File Name field, enter CWTChecks 012514.
i. Click OK.
j. Close the Microsoft Office Document Imaging window if it
appears.

Task 3: Post the Journal

High Level Steps

1. Post the journal.

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Detailed Steps
1. Post the journal.
a. In the ribbon, click Post.
b. Click Yes to post the journal lines.
c. Click OK.
d. Close the Payment Journal.

Print and Post Payables Checks

Both suggested payments and manually entered payments can be printed and
posted.

Check printing is affected by the settings in the Document No. on the Suggest
Vendor Payments batch job and One Check per Vendor per Document fields
on the Print Check report.

Computer Check Printing

You can print computer checks from the Payment Journal, by clicking Print Check
on the ribbon.

The Check report contains two FastTabs:

• Options
• Gen. Journal Line

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FIGURE 4.16: PRINT CHECK REQUEST PAGE

The Options FastTab is used to determine how the batch job is executed and
contains the following fields:

• Bank Account – The bank account that the printed checks are drawn
from.
• Last Check No. – Automatically updated with the last check number
that is used for the selected bank account.
This field is not updated if the Last Check No. field is not populated
on the selected bank account's card.
• One Check per Vendor per Document No. – If this field is selected
only one check for each vendor, for each document number, is
printed.
• Reprint Checks – If printed checks have to be reprinted before you
post, click to insert a check mark to reprint the checks.
• Test Print – If this field is selected the checks are printed on blank
paper.
• Preprinted Stub – If this field is selected it will indicate that check
forms with preprinted stubs are used.

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The Gen. Journal Line FastTab is populated with the journal name and batch.
Additional filters can be added in a blank line.

Demonstration: Print Computer Checks

Scenario: In the "Use Vendor Priority and Available Amount" demonstration, April
ran the Suggest Vendor Payments batch job for vendors 10000 and 20000. April
now prints those checks by using the World Wide operating bank account. For
this demonstration, the checks are printed to a file that is named Checks 012514.

Demonstration Steps

1. Print computer checks.

a. In the Payment Journal with the checks ready to print, click
Print Check in the ribbon.
b. In the Bank Account field, click the drop-down list and select
WWB-OPERATING.
c. Press TAB, the Last Check No. field is populated with the last
check number that is used for the World Wide operating bank
account.
d. Select the One Check per Vendor per Document No. check
box.
e. Click Print.
f. In the Check - Print window, click the Print to file check box to
insert a check mark.
g. Click OK.
h. In the Output File Name field, enter Check 012514.
i. Click OK.

The printed check lines are updated, and, depending on the printing setup, the
images of the printed checks can appear in the Microsoft Office Document
Imaging window.

Review the printed checks and check lines.

o If the printed check images appear:

 One check is printed for each vendor.
 Document numbers and amounts of the entries are
individually displayed on the check stubs.
o On the payment journal lines:
 The Document No. field is updated with the next check
number that is from the selected bank account.
 A balancing bank account entry is inserted for each
vendor payment for the full amount of the payment.

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 The Bank Payment Type on the suggested lines is blank
and the balancing bank account entry line is populated
with Computer Check.

Document Number and Computer Check Printing

In Microsoft Dynamics NAV 2013, the number of checks to print and the check
amount is determined by the following information:

• Selection of the One Check per Vendor per Document field in the
Check report.
• Contents of the Document No. field in the Payment Journal
window.

These fields affect one another, based on how entries are created in the following
ways:

• Document No. in the Payment Journal, with and without

summarizing by vendor.
• One Check per Vendor per Document No. field in the Check report.

When you are using the Suggest Vendor Payments batch job to populate the
payment journal lines, the system specifies a starting document number. The
following table shows the results when the batch job is run without selecting the
Summarize per Vendor check box.

Number of Starting Document Result in the Payment Journal Window

Vendors No. field
One Vendor Empty • One payment line for each open
vendor ledger entry for the vendor.
Each payment line:
• Is applied to the related open vendor
ledger entry.
• Has an empty Document No. field.

One Vendor Contains a • One payment line for each open

document number vendor ledger entry for the vendor.
Each payment line:
• Is applied to the related open vendor
ledger entry.
• With the same currency has the same
Document No.

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Number of Starting Document Result in the Payment Journal Window
Vendors No. field
Multiple Empty • One payment line for each open
Vendors vendor ledger entry for each vendor.
Each payment line:
• Is applied to the related open vendor
ledger entry
• Has an empty Document No. field.

Multiple Contains a • One payment line for each open

Vendors document number vendor ledger entry for each vendor.
Each payment line:
• Is applied to the related open vendor
ledger entry.
• For the same vendor, with the same
currency, has the same document
number.

If the Summarize per Vendor check box is selected on the Suggest Vendor
Payments batch job, the payment lines are populated as shown in the following
table.

Number of Starting Document Result in the Payment Journal Window

Vendors No. field
One Vendor Contains a • One payment line for each currency,
only document number summarize the open vendor ledger
entries with the same currency. Each
payment line:
• Is applied to the related open vendor
ledger entries.
• Has a different currency and different
document number.

Multiple Contains a • For each vendor, one payment line

Vendors document number for each currency, summarize the
open vendor ledger entries with the
same currency.
• Each payment line is applied to the
related open vendor ledger entries.
• For each vendor, each payment line
has a different currency and different
document number.

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Note: If you add a check mark in the New Doc. No. per Line check box and
enter a document number in the Starting Document No. field, each suggested
payment line has a different document number.

There are two options when you print checks:

• Print a check for each payment line.

• Sum payment lines into a single check.

The following table shows how the One Check per Vendor per Document No.
field and Document No. field together affect how payment lines are created and
printed. These payment lines are created and printed based on the assumption
that the payment lines are in the same currency as the bank account contained in
the Bal. Account No. field.

One Check per Document No. Number and Amount of Checks

Vendor per in Payment Printed
Document No. field Journal window
Empty Blank A check is printed for each payment
line. If any payment line contains a
negative amount, an error occurs
and the program does not print
checks for the remaining payment
lines after the negative amount.

Empty Contains a A check is printed for each payment

document line. If any payment line contains a
number negative amount, an error occurs
and the program does not print
checks for the remaining payment
lines after the negative amount.

Contains a check Blank • One check for each vendor is

mark printed. For each vendor:
• The check amount is the net
amount of all the payment lines
for that vendor.
• The balancing bank account on
all payment lines is cleared and
a new payment line is created
for the net amount.
The Account No. for the new
payment line is the balancing bank
account.

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One Check per Document No. Number and Amount of Checks
Vendor per in Payment Printed
Document No. field Journal window
Contains a check Contains a • One check for each vendor, for
mark document each document a number is
number printed. For each vendor:
• The check amount is the net
amount of the payment lines
with the same Document No.
• The balancing bank account on
payment lines with the same
Document No. is cleared and a
new payment line is created for
the net amount.
• The Account No. for the new
payment line is the balancing
bank account.

Demonstration: Post the Payment Journal

Scenario: Now that all checks printed successfully, April can post the Payment
Journal.

The Payment Journal is still populated from the previous demonstrations with
the payment entries for vendors 10000, 20000, and 30000.

Demonstration Steps

1. Post the payment journal with printed checks.

a. In the Search box, enter Payment Journal, and then select the
related link.
b. Click Post.
c. Click Yes to post the journal lines.
d. Click OK.
e. Close the Payment Journal window.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Voiding Checks
Voiding checks is performed when handwritten checks are not cleared by the
bank, or when computer checks must be deleted or reprinted.

In Microsoft Dynamics NAV 2013, you can void checks two ways—financially void
posted checks and void unposted checks.

Financially Voiding Checks

A posted check that must be voided is known as a financial void. When financially
voiding a check, make sure that all financial transactions that result from the
check payment are also canceled. In Microsoft Dynamics NAV 2013, users can
unapply and void the check and the transactions, void only the check, and enter a
date to use for the void.

In Microsoft Dynamics NAV 2013, financial voids are made from the Bank Account
Card.

Demonstration: Financially Voiding a Check

Scenario: On January 10, 2014, April, the accounts payable coordinator at

CRONUS International Ltd., posts a manual check to vendor 20000, AR Day
Property Management, for invoice 108017.

Three weeks later, she receives a call from the accounts receivable clerk at London
Postmaster, stating that payment on invoice 108017 is past due. April explains to
the vendor that she sent check number 1204 three weeks ago, and that is must be
lost in the mail. April tells the vendor a new check will be sent by overnight
delivery.

April contacts Phyllis, the accounting manager at CRONUS International Ltd., and
asks Phyllis to financially void the check so that a new check can be issued.

As soon as the check is financially voided, Phyllis reviews the entries to verify that
all the transactions are successfully voided and then she notifies April that the
check can be reissued.

Demonstration Steps

1. Post the manual check for London Postmaster.

a. In the Search box, enter Payment Journals, and then select the
related link.
b. Make sure that the Bank batch is selected.
c. Click OK.
d. In the Posting Date field, enter 01/31/14.

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e. In the Document Type field, click the drop-down list and select
Payment.
f. In the Document No. field, enter 1204.
g. In the Account Type field, click the drop-down list and select
Vendor.
h. In the Account No. field, enter 20000.
i. Click Apply Entries.
j. Click the line for Document No. 108025.
k. Click Set Applies-to ID.
l. Click OK.
m. In the Bank Payment Type field, click the drop-down list and
select Manual Check.
n. Click Post.
o. Click Yes to post the journal lines.
p. Click OK to the message that the lines are successfully posted.
q. Close the Payment Journal window.

2. Financially void check 1204.

a. On the navigation pane, click Departments, click Financial
Management, click Cash Management, and then select Bank
Accounts.
b. Locate and select bank WWB-OPERATING.
c. Click Check Ledger Entries in the Home tab of the ribbon.
d. Locate and select check number 1204.

The Entry Status field is set to Posted.

1. Click Void Check in the Home tab of the ribbon. The Confirm
Financial Void window appears.
2. In the Void Date field, enter 02/21/14.
3. Verify that the Type of Void field has the Unapply and void check
option selected.
4. Click Yes.

The Entry Status field is set to Financially Voided.

5. Close the Check Ledger Entries window.

6. Review the Vendor Ledger Entries to verify that the check is voided
correctly on the vendor.
7. Use the Payment Journal to verify that the invoice (Document
Number 108025) is available for repayment.

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To review the vendor ledger entries and invoice availability, follow these steps.

1. On the navigation pane, click Departments, > Financial

Management > Payables > Vendors.
2. Locate and select vendor 20000, AR Day Property Management.
3. Click Ledger Entries.

The line for check 1204 is displayed as voided on 02/21/14.

4. Close the Vendor Ledger Entries window.

5. In the navigation pane, click Payables and then select Payment
Journals.
6. In the Account No. field, click the drop-down list and select 20000.
7. Click Apply Entries. Document Number 108025 is displayed as an
open invoice, ready for payment.
8. Close the Apply Vendor Entries window.
9. Delete the line and then close the Payment Journal window.

Void Unposted Checks

Before you post a check, if you must delete or reprint a check, you can void it in
the Payment Journal. After you void a check, you can delete or reprint the
payment lines(s) from the journal.

To void a single printed but unposted check, follow these steps.

1. In the Search box, enter Payment Journals, and select the related
link.
2. In the Batch Name field, click the drop-down list and select the
appropriate batch.
3. Click OK.
4. In the Payment Journal lines, click the line for the check to be voided.
5. Click Void Check.
6. Click Yes to the message that asks to void the check.

Now that the check is voided, you can delete or reprint it from the payment
journal.

To void all printed but unposted checks in a batch, follow these steps.

1. On the navigation pane, click Departments, click Financial

Management, click Payables, and then select Payment Journals.
2. In the Batch Name field, click the drop-down list and select the
appropriate batch.
3. Click OK.

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4. Click Void All Checks in the Home tab of the ribbon.
5. Click Yes to the message that asks to void all checks.

Note: Voiding an unposted check automatically clears the Check Printed

check box. You can add this field by using the Choose Columns function.

After all checks are voided, you can delete or reprint them from the payment
journal.

Reprint Voided Checks

When you print checks, the Last Check No. in the Check report is updated
automatically with the last printed check number. When you reprint checks, make
sure that the correct check number will be used. For example, if the check number
must be 206, then enter 205 is in this field.

To reprint a single voided check, follow these steps.

1. In the Search box, enter Payment Journals, and then select the
related link.
2. Select the relevant batch.
3. Click the line with the voided check.
4. Click Print Check.
5. Update the Last Check No.
6. Click to insert a check mark in the Reprint Checks check box.
7. Click Print.

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Lab 4.5: Financially Void a Check

Scenario

In the “Enter and Post Manual Checks“ lab, a manual check payment of 8,132.00
LCY (number 1200) for invoice 108018, is posted to London Postmaster. On
January 29, 2014, the payables clerk at London Postmaster calls to inquire on the
status of the payment. You review the payments for this vendor and discover you
sent the check weeks ago. As a result, you are asked to resubmit payment.

As the accounting manager, you financially void the check in the World Wide
Bank operating account by using the following criteria:

• Void date of 01/29/14.

• Review the Bank Ledger Entries for the voided check, by using Field
filters.

The check is resubmitted by the accounts payable coordinator in the next check
run.

Exercise 1: Financially Void a Check

Task 1: Void a Check

High Level Steps

1. Open the Bank Account Card for the World Wide Bank operating
account, access the Check Ledger Entries, and void check number
1200 by using the information specified in the scenario.

Detailed Steps
1. Open the Bank Account Card for the World Wide Bank operating
account, access the Check Ledger Entries, and void check number
1200 by using the information specified in the scenario.
a. In the Search box, enter Bank Accounts, and then select the
related link.
b. Locate and select bank WWB-OPERATING.
c. In the Navigate tab of the ribbon, click Check Ledger Entries.
d. Locate and select check number 1200.
e. In the Home tab of the ribbon, click Void Check.
f. In the Void Date field, enter 01/29/14.
g. Verify that the Type of Void field has the Unapply and void
check option selected.
h. Click Yes.
i. Close the Check Ledger Entries window.

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Task 2: Review the Entries

High Level Steps

1. Access the Bank Account Ledger Entries and review the check
entries of check number 1200.

Detailed Steps
1. Access the Bank Account Ledger Entries and review the check
entries of check number 1200.
a. In the Navigate tab of the ribbon, click Ledger Entries.
b. Set the Filter field to Document No.
c. In the Type to filter field, enter 1200 and press search.
d. Review the two check entries. The date for the line of the voided
check is 01/29/14.
e. Close the Bank Account Ledger Entries window.

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Lab 4.6: Void a Check

Scenario

On February 1 2014, invoice F8306 for office supplies for an amount of 800.00
(exclusive VAT), is received from vendor 40000. The invoice is posted and it is
approved for payment on February 10 2014. After you run the Suggest Vendor
Payments batch job for vendor 40000, the check is printed to a file that is named
VOID001.

Before the check is posted, the office manager informs you that there is still a
problem and this invoice cannot yet be paid. Void and delete the payment line.

Exercise 1: Void a Check

Task 1: Run the Suggest Vendor Payments Batch

High Level Steps

1. Post the purchase invoice from vendor 61000.
2. Open the Payment Journal window and run the Suggest Vendor
Payment batch by using the criteria that is specified in the scenario.

Detailed Steps
1. Post the purchase invoice from vendor 61000.
a. In the Search box, enter Purchase Invoices, and then select the
related link.
b. In the Home tab, click New.
c. In the Buy-from Vendor No. field, enter 40000.
d. In the Posting Date field, enter 02/01/14.
e. In the Vendor Invoice No. field, enter F8306.
f. In the Lines FastTab, enter G/L Account in the Type field.
g. In the No. field, enter 8210.
h. In the Quantity field, enter 1.
i. In the Direct Unit Cost Excl. VAT field, enter 800.
j. In the Home tab, click Post.
k. Click Yes.
2. Open the Payment Journal window and run the Suggest Vendor
Payment batch by using the criteria that is specified in the scenario.
a. In the Search box, enter Payment Journals, and then select the
related link.
b. Click Suggest Vendor Payments.
c. In the Last Payment Date field, enter 02/20/14.
d. Make sure that the vendor priority fields are empty.

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e. In the Posting Date field, enter 02/10/14.
f. In the Bal. Account Type field, click the drop-down list and
select Bank Account.
g. In the Bal. Account No. field, click the drop-down list and select
WWB-OPERATING.
h. In the Bank Payment Type field, click the drop-down list and
select Computer Check.
i. On the Vendor FastTab, click Add Filter and point to No.
j. In the Enter a value field, enter 40000.
k. Clear any other filters on this FastTab.
l. Click OK to run the batch job.
m. Click OK to the message about currencies.

Task 2: Print and Void the Check

High Level Steps

1. Open the Check report and print the check based on the criteria that
is specified in the scenario and void the check based on the criteria
that is specified in the scenario.

Detailed Steps
1. Open the Check report and print the check based on the criteria that
is specified in the scenario and void the check based on the criteria
that is specified in the scenario.
a. Click Print Check.
b. In the Bank Account field, click the drop-down list and then
select WWB-OPERATING.
c. Press TAB.
d. Make sure that the One Check per Vendor per Document No.
check box does not contain a check mark.
e. Click Print.
f. In the Check - Print window, click the Print to file check box to
insert a check mark.
g. Click OK.
h. In the Output File Name field, enter VOID001.
i. Note the check number.
j. Click Void Check.
k. Click Yes to void the check.
l. Click Delete in the ribbon.
m. Click Yes to delete the line.
n. Close the Payment Journal window.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Applying Payments
Users can apply payments to customer or vendor ledger entries when the
payment is processed and, or after a payment is processed without an application
to an entry.

Some methods to apply payments in the cash receipt journal or payment journal
include the following:

• Post a payment to a single invoice.

• Post a payment to multiple invoices.
• Post a partial payment to a single invoice.
• Post a partial payment to multiple invoices.
• Apply payments after posting.

Note: Applying payments is the same in receivables management and

payables management. The demonstrations in this lesson are based on customer
payments. However, the same applies to vendor payments.

Application Methods

When users post payments without an application to an entry, the option that is
selected in the Application Method field on the Payments FastTab of the
customer's card, determines how the open payment is managed in the customer
ledger entries.

The two application method options are Manual and Apply to Oldest.

When the Manual option is selected, the payment that is posted to a customer's
or vendor’s account is not applied to an invoice and it remains an open payment
in the customer or vendor ledger entries.

Note: Most customers and vendors that are set up in Microsoft Dynamics
NAV use the Manual application method.

When the Apply to Oldest option is selected, the payment that is posted to the
customer’s or the vendor’s account is automatically applied to the customer’s or
the vendor’s oldest open entries.

The option selected does not affect how applications are made when users post a
payment. However, the user must understand how the application method affects
the unapplied entries.

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Apply Customer Entries Window Overview

You can use the Apply Customer Entries window to apply open customer ledger
entries for relevant customers. You can access this window from several areas in
Microsoft Dynamics NAV 2013. This includes the Cash Receipt Journal, where
you can apply payments to entries before they are posted, and the Customer
Ledger Entries, where you can apply payments that are posted and but not yet
applied.

To open the Apply Customer Entries window from these windows, click Apply
Entries in the ribbon.

FIGURE 4.17: APPLY CUSTOMER ENTRIES

The Apply Customer Entries window contains the following five areas:

• General header
• Ribbon
• Lines
• Balancing application fields
• FactBox

The General Header contains the applying entry information. This entry
determines whether the payment discounts, tolerances, and achieved gains or
losses on currencies are offered for the entry.

The lines area shows each open transaction and it is used to determine the entries
that will be applied to it. You can edit the following fields:

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• Applies-to ID – Identifies who or what is making the application and
if it must be posted to the application.
• Amount to Apply – Used for partial payments to specify the exact
amount to apply to the applying entry.
• Due Date – Indicates when an invoice is expected to be paid
• Pmt. Discount Date – Indicates the date on which the amount in the
entry must be paid for a payment discount to be obtained.
• Pmt. Disc. Tolerance Date – Indicates the latest date on which the
amount in the entry must be paid for payment discount tolerance to
be granted.
• Remaining Pmt. Disc. Possible – Identifies the remaining payment
discount that can be received if the payment is made before the
payment discount date.
• Max. Payment Tolerance – Identifies the maximum tolerated
amount that the amount in the entry can differ from the amount on
the invoice or credit memo.

Underneath the lines are the following balancing fields that are used to track the
application:

• Appln. Currency
• Amount to Apply
• Pmt. Disc. Amount
• Rounding
• Applied Amount
• Available Amount
• Balance

The Home tab of the ribbon includes the following three options:

• Set Applies-to ID – Used to set the Applies-to ID field on the line

for each line that is applied against the Applying Entry in the
General FastTab.
• Navigate – Used to navigate on the line that is highlighted.
• Post Application – Used to post the application when users are
applying previously posted entries.

The FactBox on the Apply Customer Entries Card displays the Customer Ledger
Entry Details.

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Demonstration: Post a Payment for Multiple Sales
Documents

Scenario: On January 21, 2014, Phyllis, the accounting manager at CRONUS

International Ltd., receives a euro payment of 6,000.00 for customer 49633663 for
the following documents:

• Invoice 2808
• Invoice 2809
• Credit memo 2810

Phyllis applies and posts the payment using the cash receipt journal.

Demonstration Steps

1. Apply and post the payment.

a. In the Search box, enter Cash Receipt Journals, and then select
the related link.
b. Select the BANK cash receipt journal.
c. Click the batch name, and then click New to create a new batch.
d. Enter euro in the Name field.
e. Enter “euro payments” in the Description field.
f. In the Bal. Account Type, select Bank Account.
g. In the Bal. Account No., select WWB-EUR.
h. Click OK to select the new batch.
i. In the Posting Date field, enter 01/25/14.
j. In the Document Type field, select Payment.
k. Update the Type field, select Customer.
l. In the Account No. field, click the drop-down list and select
customer 49633663.
m. Click OK.
n. Click Apply Entries.
o. Click the line with invoice 2808 to apply the payment to it.
p. Click Set Applies-to ID.
q. Repeat steps 15 and 16 for invoice 2809 and credit memo 2810.
r. Verify that the Balance field at the bottom of the window is
6,000.00
s. Click OK.
t. Make sure that the Bal. Account Type and Bal. Account
Number fields indicate the bank account.
u. Click Post.
v. Click Yes to post the journal

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w. Click OK.
x. Close the Cash Receipt Journal.

Demonstration: Applying Entries After Posting

When you post a payment or credit memo without applying it to an open

customer or vendor ledger entry, you can apply it later from the Customer
Ledger Entries or Vendor Ledger Entries window.

Scenario: On January 31, 2014, a manual check payment for 70,860.66 LCY is sent
to vendor 30000, CoolWood Technologies. April, the accounts payable
coordinator, manually posts check number 1205 to the vendor account without
applying it to a particular invoice.

Some days later, she realizes that this payment must be applied to document
number 12345.

Demonstration Steps

1. Manually post the check.

a. In the Search box, enter Payment Journals, and then click the
related link.
b. Make sure that the Bank batch is selected.
c. In the Posting Date field, enter 01/31/14.
d. In the Document Type field, click the drop-down list and select
Payment.
e. In the Document No. field, enter 1205.
f. In the Account Type field, click the drop-down list and then
select Vendor.
g. In the Account No. field, enter 30000.
h. In the Amount field, enter 70860.66.
i. Make sure that the WWB-OPERATING bank account is selected.
j. In the Bank Payment Type field, click the drop-down list and
then select Manual Check.
k. Click Post.
l. Click Yes to post the journal lines.
m. Click OK.
n. Close the Payment Journal window.
2. Apply the posted payment to the open invoice.
a. In the Payables folder, click Vendors.
b. Locate and select vendor account 30000.
c. Click Ledger Entries.
d. Click the payment line dated 01/31/14. The amount is 70,860.66.

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e. Click Actions, point to Function, and then select Apply Entries.
i. The General FastTab in the header is populated with the
payment information.
ii. The payment line is removed from the lines so that it
cannot be selected as an applied-to entry.
f. In the lines, click the line for Document No. 12388. The amount
is -105,952.82.
g. Click Set Applies-to ID.

The Balance field at the bottom of the window displays -35,092.16. This is the
remaining amount.

To post the application, follow these steps.

a. Click Post Application.

b. Click OK without changing the fields.
c. Click OK to the message that the application is posted.

Close the Apply Vendor Entries and Vendor Ledger Entries windows.

Unapply Customer and Vendor Ledger Entries

You can use the Unapply Customer Ledger Entries functionality to reverse entries
while you make sure that the correct application is processed. This functionality is
available from the Customer Ledger Entries window and the Detailed Cust.
Ledg. Entries window.

FIGURE 4.18: UNAPPLY CUSTOMER ENTRIES WINDOW

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When you unapply applications that are already posted, you can reopen closed
customer ledger entries. All G/L postings that might be derived from an incorrect
application, such as payment discounts and currency gains and, or losses, are also
corrected when an entry is unapplied.

Note: You can only unapply from the bottom up. Therefore, if an entry is
applied by more than one application entry, the last application entry must be
unapplied first.

Unapplying a Ledger Entry

To unapply a ledger entry from the Customer Ledger Entries window, follow these
steps.

1. On the navigation pane, click Departments > Financial

Management > Receivables, and then select Customers.
2. Locate and select the customer to unapply entries for.
3. In the ribbon, click Ledger Entries.
4. Click the line with the entry to unapply.
5. In the ribbon, click Unapply Entries. The Unapply Customer Entries
window shows the original detailed ledger entries that can be used to
unapply the original entry.
6. Click Unapply.
7. Click Yes to unapply the entries. When the entry is unapplied, a new
entry is created by using an opposite sign in the Amount field.
8. Click OK to the message that the entries are unapplied.
9. In the Customer Ledger Entries window, review the unapplied
entries:
o The Remaining Amount field contains the relevant unapplied
amount.
o The Open check box is checked to indicate that the unapplied
entries are open.

Now you can apply the open amount to the correct entry by using the Apply
Customer Entries functionality.

Note: To view a complete overview of all the entries that resulted from a
transaction, use the Navigate function on the ribbon.

Note: Vendor ledger entries are unapplied in the same manner.

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Lab 4.7: Unapply Posted Ledger Entries

Scenario

In late January, you receive a 50,778.50 LCY payment from customer 20000,
Selangorian Ltd., for Document No. 00-8. As you start to apply the payment, you
realize that a temporary employee incorrectly applied two credit memos to this
invoice.

After additional investigation, you realize that these credit memos are to be
applied to the invoices that correspond to the credit memo amounts. The
following table shows these credit memos and the invoices in the order in which
they are applied.

Credit Memo Invoice/Document No. Amount

104002 103008 787.40
104003 103014 1,145.33

As the accounts receivable administrator, it is your responsibility to correct this

error. Use the Unapply Customer Entries function to reverse the application and
then correctly apply the credit memos to the invoices.

The payment for Document No. 00-8 is not posted in this lab.

Exercise 1: Unapply Posted Ledger Entries

Task 1: Unapply the Credit Memo

High Level Steps

1. Open the Customer Ledger Entries for customer 20000 and unapply
the entries.

Detailed Steps
1. Open the Customer Ledger Entries for customer 20000 and unapply
the entries.
a. On the navigation pane, click Departments > Financial
Management > Receivables, and then select Customers.
b. Locate and select customer 20000.
c. Click Ledger Entries.
d. Click the line for credit memo 104003. The amount is -1,145.33.
e. In the ribbon, click Unapply Entries.
f. Click Unapply.
g. Click Yes to unapply the entries.
h. Click OK to the message that the entry is unapplied.

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i. Click the line for credit memo 104002. The amount is -787.40.
j. In the ribbon, click Unapply Entries.
k. Click Unapply.
l. Click Yes to unapply the entries.
m. Click OK to the message that the entry is unapplied.

Task 2: Apply the Credit Memo

High Level Steps

1. Open the Apply Customer Entries window for credit memo 104002
and set it as the applying entry.
2. Set Document No. 103008 as the Applies-to ID and post the
application.
3. Open the Apply Customer Entries window for credit memo 104003
and set it as the applying entry.
4. Set Document No. 103014 as the Applies-to ID and post the
Application.

Detailed Steps
1. Open the Apply Customer Entries window for credit memo 104002
and set it as the applying entry.
a. Click the line for Document No. 104002.
b. In the ribbon, click Apply Entries.
2. Set Document No. 103008 as the Applies-to ID and post the
application.
a. Click the line for invoice 103008.
b. Click Set Applies-to ID.
c. Click Post Application.
d. Click OK to post the application.
e. Click OK to the message that the application is posted.
3. Open the Apply Customer Entries window for credit memo 104003
and set it as the applying entry.
a. Click the line for Document No. 104003.
b. In the ribbon, click Apply Entries.
4. Set Document No. 103014 as the Applies-to ID and post the
Application.
a. Click the line for invoice 103014.
b. Click Set Applies-to ID.
c. Click Post Application.
d. Click OK to post the application.
e. Click OK to the message that the application is posted.
f. Close the Customer Ledger Entries.

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Reversal of Posted Journals

In Microsoft Dynamics NAV 2013, incorrect customer ledger entries posted from a
journal, such as the Sales Journal or Cash Receipt Journal, can be reversed to
correct the entries.

The following are conditions of using this reversal functionality:

• Entries must be generated from a general journal line or from a

previous reversal.
• Customer Ledger Entries must not be applied.
• Bank Ledger Entries must not be closed by reconciliation.
• The total amount of G/L Entries to be reversed must equal zero.

Before you reverse an applied customer ledger entry, you must unapply the entry.

During the reversal process, you can create and post correcting entries with the
same document number and posting date as the original entry for each line in the
entry. After you reverse an entry, you can enter and post the correct entries
manually.

Demonstration: Reverse a Posted Journal Entry

Scenario: When the beginning balance is posted on 12/31/13 for customer

10000, an error is entered for invoice 00-1. An incorrect amount of 25,389.25 LCY
posted instead of the correct amount of 23,589.25 LCY.

Because this invoice is already paid (on 1/17/14 with Document No. 2597) and it is
entered through a journal, it must be reversed.

Cassie, the accountant, wants you to make the reversing entry and then later she
will post the correction and refund the customer. Before you can reverse the entry,
you must unapply the payment.

Demonstration Steps

1. Unapply the invoice as specified in the scenario.

a. On the navigation pane, click the Departments > Financial
Management > Receivables, and then select Customers.
b. Locate and select customer 10000.
c. Click Ledger Entries.
d. With the line for Document No. 00-1 selected, in the ribbon,
click Unapply Entries.
e. Click the first line for Document No. 00-1.
f. Click Unapply.

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g. Click Yes to unapply the entry.
h. Click OK to the message that the entry is unapplied.

2. Reverse the journal entry as specified in the scenario.

a. With the line for Document No. 00-1 selected, in the ribbon,
click Reverse Transaction.
b. Click Reverse.
c. Click Yes to reverse the entry.
d. Click OK to the message that the entry is reversed.
e. Close the Customer Ledger Entries and Customer Card
windows.

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Module Review
Module Review and Takeaways

Cash Management is an important feature of Microsoft Dynamics NAV 2013

because it manages all payments in a company. Understanding how to use the
banking features and the reconciliation process provides an increased awareness
of a company's financial status.

The Check functions in Cash Management provide companies with a secure

process when they use checks for payment and must void a check.

Receivables and payables management helps keep track of open balances and all
entries that are posted to customers and vendors.

Test Your Knowledge

Test your knowledge with the following questions.

1. When you post a manual or computer check, what is posted to record the
check transaction and the current status of the check?

( ) Bank Account Ledger Entry

( ) Detailed Bank Account Ledger Entry

( ) Check Ledger Entry

( ) Detailed Check Ledger Entry

2. On the Bank Account Card, what makes the program post the related G/L
entries for each transaction by using the bank account?

( ) Posting Account No.

( ) Bank Acc. Posting Group

( ) Bank Account No.

( ) Bank Acc. G/L Group

3. Where are Application Methods specified?

( ) Cash Receipt Journal

( ) Customer Card

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Finance Essentials in Microsoft Dynamics® NAV 2013
( ) Customer Ledger Entries

( ) Detailed Customer Ledger Entries

4. In what window are actual posted customer entries amounts located?

( ) Posted Customer Ledger Entries window

( ) Customer Ledger Entries window

( ) Detailed Ledger Entries window

( ) Detailed Customer Ledger Entries window

5. What should you do when a handwritten check is refused by the bank?

( ) Void the check

( ) Financially void the check

( ) Reprint the check

( ) Unapply the vendor ledger entries

6. What is not true about the Suggest Vendor Payments batch job?

( ) The Suggest Vendor Payments batch job always searches for a

payment discount.

( ) The vendor priority can be used in combination with an available

amount.

( ) The Suggest Vendor Payments batch job can be used to create

computer checks.

( ) You can use the Suggest Vendor Payments batch job to summarize
payments by vendor and by dimension.

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 Module 4: Cash Management – Receivables and Payables

Test Your Knowledge Solutions

Module Review and Takeaways

1. When you post a manual or computer check, what is posted to record the
check transaction and the current status of the check?

( ) Bank Account Ledger Entry

( ) Detailed Bank Account Ledger Entry

(√) Check Ledger Entry

( ) Detailed Check Ledger Entry

2. On the Bank Account Card, what makes the program post the related G/L
entries for each transaction by using the bank account?

( ) Posting Account No.

(√) Bank Acc. Posting Group

( ) Bank Account No.

( ) Bank Acc. G/L Group

3. Where are Application Methods specified?

( ) Cash Receipt Journal

(√) Customer Card

( ) Customer Ledger Entries

( ) Detailed Customer Ledger Entries

4. In what window are actual posted customer entries amounts located?

( ) Posted Customer Ledger Entries window

( ) Customer Ledger Entries window

( ) Detailed Ledger Entries window

(√) Detailed Customer Ledger Entries window

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Finance Essentials in Microsoft Dynamics® NAV 2013
5. What should you do when a handwritten check is refused by the bank?

( ) Void the check

(√) Financially void the check

( ) Reprint the check

( ) Unapply the vendor ledger entries

6. What is not true about the Suggest Vendor Payments batch job?

(√) The Suggest Vendor Payments batch job always searches for a
payment discount.

( ) The vendor priority can be used in combination with an available

amount.

( ) The Suggest Vendor Payments batch job can be used to create

computer checks.

( ) You can use the Suggest Vendor Payments batch job to summarize
payments by vendor and by dimension.

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MODULE 5: CASH MANAGEMENT

Module Overview
Cash management in Microsoft Dynamics® NAV 2013 is used to manage the
company's bank accounts.

Additionally, the bank account administration, and the users must become familiar
with the Bank Acc. Reconciliation window and the bank reconciliation process.
Understanding this process will help make sure that transactions are always
reconciled and that the user can follow the balances on the bank accounts.

Objectives

The objectives are:

• Review the Bank Account Reconciliation window and the options for
populating the bank reconciliation lines.
• Show how to process a bank reconciliation.

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Bank Reconciliation
Bank accounts maintained in Microsoft Dynamics NAV 2013 must be reconciled
regularly. The bank reconciliation feature is used to check the bank ledger entries
and the balance on the accounts against the statement from the bank.

This lesson will explain the Bank Account Reconciliation window. Additionally, it
will describe how to populate the bank reconciliation lines to prepare for the
"Complete a Bank Reconciliation" demonstration.

Note: To successfully perform the demonstration in this lesson, each

demonstration and lab in the “Cash, Receivables, and Payables Management”
module must be completed.

Using Bank Account Reconciliations

In Microsoft Dynamics NAV 2013, bank transactions are posted by using different
journal types, such as the cash receipt journal and the payment journal. A bank
transaction is posted as an open bank account ledger entry. This means that the
bank account ledger entry is not reconciled.

Bank reconciliations are used to compare the open bank account ledger entries
with the bank statement transactions.

When you run the reconciliation batch, for each open bank account ledger entry,
a reconciliation line is created. If all the suggested reconciliation lines match the
bank statement lines for the corresponding date range, the reconciliation can be
posted.

In a typical business situation, the following differences can occur:

• Transactions entered into the bank account in Microsoft Dynamics

NAV 2013 are not on the bank statement.
• Transactions on the bank statement are not in Microsoft Dynamics
NAV 2013.
• Transactions in the bank account and on the bank statement
correspond to one another but are recorded differently.

These differences must be reconciled before the reconciliation process can be

completed.

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 Module 5: Cash Management
Bank Acc. Reconciliation Window Overview

To access the Bank Acc. Reconciliation window, follow these steps.

1. On the navigation pane, click Departments, and then click Financial

Management.
2. Click Cash Management and then click Bank Account
Reconciliations.
3. In the Home tab, click New.

FIGURE 5.1: BANK ACCOUNT RECONCILIATION WINDOW

This window contains three areas:

• Ribbon
• General FastTab
• Lines FastTab

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You can use the General FastTab on the Bank Acc. Reconciliation window to
enter information about the bank account and the bank statement. The General
FastTab includes the following fields:

• Bank Account No.: Specifies the bank account code of the account
to be reconciled.
• Statement No.: Specifies the number of the bank account statement.
After you enter a statement number and post the bank reconciliation,
Microsoft Dynamics NAV 2013 updates the statement number with
the next consecutive number the next time that the bank
reconciliation for this bank account is performed.
• Statement Date: Specifies the date on the bank account statement.
• Balance Last Statement: Specifies the ending balance that is shown
on the last bank statement that is used in the last posted bank
reconciliation for this bank account.
• Statement Ending Balance: Specifies the ending balance that is
shown on the bank statement.

Note: The reconciliation lines cannot be posted unless the amount in this field
agrees with the amount in the Total Balance field.

Bank Account Reconciliation Window - Lines

On the Lines FastTab, users perform the actual reconciliation by entering and
adjusting the posted transactions and the transactions on the bank statement
until they agree with one another.

The lines include the following fields:

• Transaction Date: Specifies the posting date of the bank account or

check ledger entry on the reconciliation line when the Suggest Lines
function is used.
• Type: Shows the type of ledger entry or a difference to be reconciled
on this line. The options are as follows:
o Bank Account Ledger Entry: Used to reconcile an entry from a
bank account ledger.
o Check Ledger Entry: Used to reconcile an entry from a check
ledger.
o Difference: Used to record an amount in the bank reconciliation
that is not posted in Microsoft Dynamics NAV to balance the
reconciliation.
• Description: Shows a description for the transaction on the
reconciliation line.

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 Module 5: Cash Management
• Statement Amount: Shows the transaction amount that appears on
the bank's statement that shows on the reconciliation line.
• Applied Amount: Shows the transaction amount on the
reconciliation line that is applied to the bank account or the check
ledger entry.
• Difference: Shows the difference between the amount in the
Statement Amount field and the Applied Amount field for the
reconciliation line.

When you use the Choose Column feature, the following fields are available in
the lines:

• Value Date: You can use this field to enter the official date when
funds are available and when interest is calculated on the amount on
the reconciliation line.
• Document No.: Shows the document number that is specified on the
original bank account ledger entry.
• Check No.: Shows the check number (specified as the document
number) used on the original check ledger entry.
• Applied Entries: Specifies whether the transaction on the bank's
statement on this reconciliation line is applied to one or more bank
account or check ledger entries.

By clicking Line in the Lines window, the Apply Entries function becomes
available. You use this function to apply reconciliation lines to one or more open
bank account ledger entries.

Bank Account Reconciliation Window - Ribbon

You can use the Bank Acc. Reconciliation ribbon for single-click access to several
functions and overviews. The Home tab contains the following buttons that are
used in the bank reconciliation process:

• Suggest Lines: Provides access to the Suggest Bank Acc.

Reconciliation batch job.
• Transfer to General Journal: Provides access to the Trans. Bank
Rec. to Gen. Jnl. batch job.
• Post: Used to post the bank reconciliation.
• Post and Print: Used to print and post the bank reconciliation.

From the Navigate tab, the Card button is available. The Card button provides
access to the Bank Account Card.

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Populating Bank Reconciliation Lines

The transactions on the bank statement must be entered on the reconciliation

lines. There are two methods that are available to populate the lines—Manually
and by using the Suggest Bank Acc. Recon. Lines batch job.

Typically, the batch job is used to suggest open bank account and check ledger
entries in Microsoft Dynamics NAV 2013. Entries not in the system are entered
manually. They include, but are not limited to the following:

• Bank fees
• Interest earned and charged
• Transaction adjustments

All the transactions on the bank statement must be applied to the open bank
account or the open check ledger entries on the relevant bank account. The batch
job makes these applications automatically, whereas any manual entries must be
applied by using the Apply Entries button.

If you access the Suggest Bank Acc. Recon. Lines batch job from the Home tab
on the Bank Acc. Reconciliation window, it will include the following fields:

• Starting Date: Enter the starting posting date for the ledger entries
to be reconciled.
Leave this blank to have the batch job suggest all open or bank
account and check ledger entries that are not reconciled.

Best Practice: Leave the starting date open to include all open bank account
ledger entries until the ending date.

• Ending Date: Populated automatically with the Statement Date that

is entered in the header of the Bank Acc. Reconciliation window.
• Include Checks: If this is selected, the batch job suggests check
ledger entries instead of the corresponding bank account ledger
entries.
This option fills in the Check No. field on the reconciliation line.

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FIGURE 5.2: SUGGEST BANK ACC. RECON. LINES WINDOW

Note: Typically, the range that is specified in the Starting Date and Ending
Date fields is the same as the date range of the bank statement.

Demonstration: Complete a Bank Reconciliation

The main steps in reconciling a bank account in Microsoft Dynamics NAV 2013 are
as follows:

1. Fill in the bank reconciliation.

2. Update bank reconciliation lines.
3. Record incorrect transaction amounts.
4. Post the Bank Reconciliation.

In this demonstration, each step of the bank reconciliation process is completed.

Scenario

April is the accounts payable assistant, and she is responsible for reconciling the
bank accounts every fourteen days.

In this demonstration, April finishes each step of the reconciliation process for the
WWB-OPERATING bank account for the period January 14 2014 through January
31 2014.

Note: To successfully perform this demonstration, each demonstration and

lab in the “Cash, Receivables, and Payables Management” module must be
completed.

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Step 1: Filling in the Bank Reconciliation

The first step of the bank reconciliation process is to fill in the bank reconciliation
header and lines.

Scenario: April opens the Bank Acc. Reconciliation window, fills in the header,
and then uses the Suggest Line function to populate the reconciliation lines.

To fill in the Bank Reconciliation header, follow these steps.

1. On the navigation pane, click Departments, click Financial

Management, click Cash Management, and then click Bank
Account Reconciliations.
2. Click New.
3. In the Bank Account No. field, click the drop-down list and select the
WWB-OPERATING account.
4. In the Statement Date field, type 01/31/14.
5. In the Statement Ending Balance field, type -1,387,491.94.

The Statement No. and the Balance Last Statement fields are automatically
populated based on the information on the bank account card.

Note: If this is the first bank statement and reconciliation for the account,
manually enter the statement number. The program automatically fills in the
Statement No. and the Last Balance Statement for all future reconciliations.

Populate and Review the Bank Reconciliation Lines

You can use the Suggest Lines function to automatically populate the bank
reconciliation lines with transactions that are posted to the bank account, but are
not yet reconciled.

To fill in the bank reconciliation lines by using the suggest lines function, follow
these steps.

1. With the Bank reconciliation header completed, click Suggest Lines

in the Home tab of the ribbon.
2. In the Suggest Bank Acc. Recon. Lines window, leave the Starting
Date field empty.
3. Do not change the Ending Date field.
4. Click the Include Checks check box to insert a check mark.
5. Click OK.

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 Module 5: Cash Management

The suggested reconciliation lines consist of all open ledger entries on the bank
account for the period specified in the Suggest Bank Acc. Recon. Lines batch
job.

FIGURE 5.4: BANK ACC. RECONCILIATION WINDOW

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Note: To complete the demonstration, use the Choose Columns function to

add the following fields: Value Date, Document No., Check No., and Applied
Entries.

The Suggest Lines process also applied the reconciliation lines automatically to the
corresponding ledger entries. To verify the applications for each reconciliation
line, follow these steps.

1. Select the line to review.

2. Click the Applied Entries field to view the applied entries.

After reviewing, close the Bank Account Ledger Entries or Check Ledger Entries
window.

Step 2: Updating the Bank Reconciliation Lines

In a typical business situation, the following differences can occur:

• Transactions entered into the bank account in Microsoft Dynamics

NAV 2013 are not on the bank statement.
• Transactions on the bank statement are not in Microsoft Dynamics
NAV 2013.
• Transactions in the bank account and on the bank statement
correspond to one another but are recorded differently.

Removing Transactions Not in the Bank Statement

Typically, the first step in reconciling differences is to remove the transactions

entered in the program that do not appear in the bank statement. Examples of
these transactions are as follows:

• Checks that are sent to the vendors, but are not presented to the
bank.
• Cash or checks that are received and entered in the system but not
deposited and cleared in your bank account.

Scenario: After filling in the bank reconciliation header and lines, April compares
the bank statement to the bank reconciliation lines to find entries in Microsoft
Dynamics NAV 2013 that do not appear on the bank statement. All the amounts
on the statement are in local currency (LCY).

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Date Description Amount Reason

01/08/14 Check No. 1200 -8,132.00 Check not received by
the vendor, is
financially voided.

01/16/14 Bank Transfer -3,070.45 Posted as a single

transfer; adjusted in a
later step.

01/16/14 Bank Transfer -1,489.07 Posted as a single

transfer; adjusted in a
later step.

01/22/14 Doc. No. 2603 -77,302.30 Not cleared by the

bank by 01/31/10.

01/23/14 Doc. No. 2605 -121.57 Incorrect amount,

check is cleared by the
bank as 211.57.

01/29/14 Doc. No. 1200 8,132.00 Voiding entry for

check number 1200.

01/31/14 Check No. 1204 -15,846.00 Not cleared by the

bank by 01/31/10.

The following items are removed from the bank reconciliation:

• Document No.: BANK1 and BANK2.

Because they do not match the transfer amount on the bank
statement. These items are addressed in the Applying Bank
Transactions to Multiple Entries section.
• Document No.: 2603 for the amount -77,302.30 LCY.
Because it has not cleared the bank account by 01/31/14, it will
appear in the next bank reconciliation.
• Check No.: 1204 for the amount -15,845.00 LCY.
Because it has not cleared the bank account by 01/31/10. This check
is already financially voided in February. Therefore, it has to be
available for the next reconciliation so that you can assign it to the
voiding check entry.

To remove the entries, follow these steps.

1. In the Bank Reconciliation window, select both bank transfer lines

(Document No. BANK1 and BANK2).
2. Right-click the lines and point to Delete Lines.
3. Click Yes to delete the lines.

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4. Locate and select the line for the -77,302.30 amount (Document No.
2603).
5. Right-click the lines and point to Delete Lines.
6. Click Yes to delete the lines.
7. Locate and select the line for the -15,845.00 amount (Check No.
1204).
8. Right-click the lines and point to Delete Lines.
9. Click Yes to delete the lines.

FIGURE 5.5: BANK ACC. RECONCILIATION WINDOW

The following items are not removed from the bank reconciliation:

• Check No. 1200 and Document No. 1200.

o The check did not clear in the previous bank reconciliation. This is
why it appears in this one.
o Because the corresponding voiding check entry (Document No.
1200) does appear, these two entries will remain in the
reconciliation so that they can be posted and closed.
• Document No. 2605 is an incorrect amount that will be corrected in
the journal and has to remain in the reconciliation.

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Adding and Posting Transactions Recorded by the Bank

After you remove transactions that do not appear on the bank statement, add the
lines for bank-related transactions, such as fees or interest. Because these
transactions are not in the program, the following steps must be performed:

1. Add the transactions manually to the bank reconciliation lines.

2. Transfer the line to a general journal.
3. Post the transactions by using a general journal.
4. Apply the posted general journal entry to the bank reconciliation line.

Scenario: April will now view the entries on the bank statement that do not
appear in Microsoft Dynamics NAV 2013. There is a 2,178.83 LCY entry for interest
charged. April must enter this interest charge in Microsoft Dynamics NAV 2013 to
continue with the reconciliation process.

To enter the interest amount, follow these steps.

1. At the bottom of the Bank Acc. Reconciliation window, insert a new

line.
2. In the Transaction Date field, type 01/31/14.
3. Make sure that the Type is set to Bank Account Ledger Entry.
4. In the Description field, type Interest, January 2014.
5. In the Statement Amount field, type -2,178.83.
6. Press TAB or ENTER.

The following fields are affected by this transaction line:

• The Applied Amount and Applied Entries fields are zero because it
has not been applied to an entry in the Bank Account Ledger Entries.
• The Difference field on the line contains the amount entered in the
Statement Amount field because it is not applied to an entry.
• The Total Difference field at the bottom of the window also contains
the difference.

The bank reconciliation cannot be posted unless the contents of the Total
Difference field is either:

• Equal to zero (this is achieved when all lines are fully applied).
• The sum of the Statement Amounts from all reconciliation lines with
a type of Difference.

To achieve either of these results, the new transaction line must be transferred to
a general journal and posted.

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The Trans. Bank Rec. to Gen. Jnl. batch job transfers all bank reconciliation lines
that meet the following conditions:

• Type: Bank account ledger entry.

• Difference: Nonzero balance.

To transfer the new lines to a General Journal, follow these steps.

1. In the Bank Acc. Reconciliation ribbon, click Transfer to General

Journal.
2. In the Gen. Journal Template field, click the drop-down list and
select GENERAL.
3. In the Gen. Journal Batch field, click the drop-down list and select
the DEFAULT and then click OK.
4. Click OK to transfer the entry to the General Journal.

FIGURE 5.6: TRANS. BANK REC. TO GEN. JNL. WINDOW

The next step is to open the general journal and post the interest entry. To post
the line in the general journal, follow these steps.

1. In the navigation pane, click Financial Management, click General

Ledger and then click General Journals.
2. In the Batch Name field, click the drop-down list and select
DEFAULT.
3. Click OK.
4. If other lines appear in the batch, delete all lines except for the
interest entry with a Posting Date of 01/31/14.
5. In the Document Type field, click the drop-down list and select
Payment. This indicates that the journal involves a cash payment.
6. In the Bal. Account No. field, type 9210, because this entry is interest
due on revolving credit.

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7. Click Post.
8. Click Yes to post the journal lines.
9. Click OK.
10. Close the General Journal window.

The final step in posting the interest transaction is to apply the line in the bank
reconciliation to the posted general journal entry.

To apply the interest entry in the bank reconciliation, follow these steps.

1. On the Bank Acc. Reconciliation window, make sure that the

interest entry line is selected.
2. In the Lines window, click Line, and select the Apply Entries
function.
3. Find the line for interest entry, posted on 01/31/14.
4. Select the Applied check box.
5. Click OK.

FIGURE 5.7: APPLY BANK ACC. LEDGER ENTRIES WINDOW

The following fields are affected by this process:

• The Applied Amount field now contains -2,178.83.

• The Applied Entries field now contains a 1. This specifies that a single
application is made for this entry.
• The Difference field for the line contains 0.00.

Because the Total Difference field is now zero, the interest reconciliation line no
longer prevents the bank reconciliation from being posted.

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Applying Bank Transactions to Multiple Entries

If a single transaction on the bank statement corresponds to multiple separate

bank account ledger entries in Microsoft Dynamics NAV 2013, you can apply
these multiple ledger entries to the single reconciliation line for the bank
statement transaction.

Scenario: April notices that the bank recorded the two bank transfers dated
01/16/14 in the amounts of -3,070.45 LCY and -1,489.07 LCY as a single amount
of -4,559.52 LCY on 01/20/14. To make the bank reconciliation entry match the
bank statement, April creates a single bank transfer entry and then applies the
existing bank transfer entries.

To apply multiple existing entries to a single entry, follow these steps.

1. At the bottom of the Bank Acc. Reconciliation window, insert a new

line.
2. In the Transaction Date field, type 01/20/14.
3. Make sure that the Type is set to Bank Account Ledger Entry.
4. In the Description field, type Bank Transfers 01/16/14.
5. In the Document No. field, type BANK1, BANK2.
6. With the new line selected, in the Lines window, click Line, and select
the Apply Entries function.
7. Click the Applied field for both bank transfer lines.
8. Click OK.

Both the Statement Amount and Applied Amount fields are populated with -
4,559.52, the total of both transfer lines. The Difference field on the line and
Total Difference on the window are still 0.00. The reconciliation line will not stop
the bank reconciliation posting process.

Step 3: Recording Incorrect Transaction Amounts

If a bank statement contains an incorrect transaction, the following will occur:

• The transaction cannot be applied to a ledger entry.

• The bank reconciliation cannot be posted.

Scenario: April also notices that the bank, by mistake, recorded the 121.57 LCY
payment for the Accounting Systems Hotline as a 211.57 LCY payment. Because
of this error, when the bank reconciliation lines are suggested, the 121.57 LCY
payment is suggested and it is applied correctly to the bank ledger entry that is
entered in the program. However, the Statement Ending Balance of -1,281,892.77
LCY is based on a withdrawal of the 211.57 LCY payment. Therefore the
reconciliation cannot be posted.

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 Module 5: Cash Management
To resolve this issue, April decides to make adjustments in the bank reconciliation
and contact the bank later to report the error.

To resolve the incorrect bank statement line, follow these steps.

1. In the Bank Acc. Reconciliation window, select the line for

Document No. 2605 the Payment, Accounting Systems Hotline,
2014.
2. In the Type field, click the drop-down list and select Difference.
3. Click Yes to delete the application.

By removing the application, the ledger entry is still open when the bank
reconciliation is posted, similar to usual outstanding deposit entries.

The Total Difference field shows -121.57 LCY. If this amount is equal to the sum
of all lines where the Type field is Difference, the bank reconciliation can be
posted.

However, the bank reconciliation cannot post until the amount for the
reconciliation line is equal to the incorrect amount in the bank statement. You can
correct this by using either of the following methods:

• Adjust the Statement Amount to equal the amount on the bank

statement, in this case, -211.57 LCY.
• Add a line for the difference between the two amounts.

For this demonstration, a line is added for the difference between the two
amounts.

To add a line for the difference between the two amounts, follow these steps.

1. In the lines, right-click and select New Line.

2. In the Transaction Date field, type 01/31/14.
3. In the Document No. field, type 2605, the same as the original line.
4. In the Type field, click the drop-down list and select Difference.
5. In the Description field, type Correction, Document No. 2605.
6. In the Statement Amount field, type -90.00.

With either method, there is still an open ledger entry for -121.57 LCY that must
be applied when the bank corrects the error, typically during the next bank
reconciliation.

When you record transaction differences with this method, the advantage is that
the correct G/L bank account balances are retained in the program.

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The disadvantage is that as soon as the reconciliation is posted, users cannot
determine whether the differences are resolved or if other errors in the bank
statement are corrections of previous errors.

Step 4: Posting the Bank Reconciliation

The final step in the bank reconciliation process is posting. Before you post, you
must verify the following information in the Bank Acc. Reconciliation window,
and the following conditions must be met:

• The value in the Statement Ending Balance field must equal the
value in the Total Balance field.
• The Total Difference field equals the sum of all lines with the Type
field set to Difference.

You can confirm these requirements by printing the bank account statement test
report. To print this report, follow these steps.

1. In the Actions tab of the ribbon, click Test Report.

2. Click Preview.
3. Review and then close the report.

Scenario: April finishes all the steps of the bank reconciliation process, and after
she runs the test report to verify all posting requirements, she posts the
reconciliation.

1. In the Home tab of the ribbon, click Post.

2. Click Yes to post the reconciliation.
3. Close the Bank Acc. Reconciliation window.

Reviewing the Posted Bank Reconciliation

As soon as the reconciliation is posted, related bank account ledger entries are
modified as follows:

• The Open check box is cleared.

• The bank statement number is added.
• A bank account statement is created.

Scenario: After April posts the bank reconciliation, she reviews the bank account
entries and the posted statement.

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To view the bank account entries and statement, follow these steps.

1. In the navigation pane, click Cash Management, and then click Bank
Accounts.
2. Locate and select the WWB-OPERATING account.
3. In the Navigate tab of the ribbon, click Ledger Entries.
4. The following entries are marked as Open:
o The entries that are deleted from the Bank Acc. Reconciliation
window.
o The incorrect entry for -121.57 LCY that is unapplied.
o The entry dated 02/21/14. This entry is not part of this
reconciliation.
5. Close the Bank Account Ledger Entries window.
6. In the Navigate tab of the ribbon, click Statements.
7. Double-click the line for statement number 26.
8. Review the statement and then close the Bank Account Statement
and Bank Account Card windows.

FIGURE 5.8: BANK ACCOUNT LEDGER ENTRIES WINDOW

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Finance Essentials in Microsoft Dynamics® NAV 2013

Module Review
Module Review and Takeaways

A company must always be aware of its financial status and have its bank accounts
reconciled. The bank reconciliation process in Microsoft Dynamics NAV 2013
makes sure that a company’s transactions are always reconciled and that a user
can follow the balances on all the bank accounts.

Test Your Knowledge

Test your knowledge with the following questions.

1. Which of the following must occur before you post a bank reconciliation?

( ) The Bank Account Statement - Test Report is printed.

( ) The Total Difference field equals the sum of all lines with the Type
field set to Difference.

( ) The value in the Statement Ending Balance field must not equal the
value in the Total Balance field.

( ) There are unapplied entries.

2. Which of the following actions occur as soon as the bank reconciliation is

posted?

( ) The check mark in the Open field is removed for all posted entries.

( ) Posted general ledger entries are created.

( ) A new Bank Reconciliation Statement is automatically created for the

next bank reconciliation.

( ) The transfer to a general journal batch occurs.

3. To post the bank reconciliation, which fields must balance?

( ) Statement ending balance and balance

( ) Statement ending balance and total balance

( ) Total balance and balance

( ) Statement balance and statement ending balance

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 Module 5: Cash Management
4. On which two fields is the amount in the Difference field based on?

( ) Statement amount and total balance

( ) Statement amount and balance

( ) Applied amount and balance

( ) Statement amount and applied amount

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Finance Essentials in Microsoft Dynamics® NAV 2013

Test Your Knowledge Solutions

Module Review and Takeaways

1. Which of the following must occur before you post a bank reconciliation?

( ) The Bank Account Statement - Test Report is printed.

(√) The Total Difference field equals the sum of all lines with the Type
field set to Difference.

( ) The value in the Statement Ending Balance field must not equal the
value in the Total Balance field.

( ) There are unapplied entries.

2. Which of the following actions occur as soon as the bank reconciliation is

posted?

(√) The check mark in the Open field is removed for all posted entries.

( ) Posted general ledger entries are created.

( ) A new Bank Reconciliation Statement is automatically created for the

next bank reconciliation.

( ) The transfer to a general journal batch occurs.

3. To post the bank reconciliation, which fields must balance?

(√) Statement ending balance and balance

( ) Statement ending balance and total balance

( ) Total balance and balance

( ) Statement balance and statement ending balance

4. On which two fields is the amount in the Difference field based on?

( ) Statement amount and total balance

( ) Statement amount and balance

( ) Applied amount and balance

(√) Statement amount and applied amount

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MODULE 6: RECEIVABLES AND PAYABLES
MANAGEMENT: PAYMENT DISCOUNT AND
PAYMENT TOLERANCE

Module Overview
Granting payment discounts provides an incentive for customers to quickly pay
their outstanding amounts in full. Microsoft Dynamics NAV 2013 uses payment
terms to keep track of payment discounts that are given to customers or received
from vendors. Additionally, the payments are processed correctly by using the
payment discount amount. Setting up a payment discount includes selecting
between calculating a payment discount on amounts that both include or exclude
the value-added tax (VAT).

Differences can occur when the payment discount date passes, or when the
payment amount or payment discount amount does not match the charged
amount. Microsoft Dynamics NAV 2013 uses the payment discount tolerance and
the payment tolerance to process payment differences in a structured and
automated manner. This setup applies to both the receivables and the payables
application area.

Even without setting up a payment discount tolerance and a payment tolerance,

you can process payment differences on a manual and individual case basis.

Objectives

The objectives are:

• Set up Microsoft Dynamics NAV 2013 to use payment discounts.

• Process transactions for various situations that benefit from payment
discounts.
• Set up Microsoft Dynamics NAV 2013 to use a payment discount
tolerance.
• Process transactions for various situations that benefit from using a
payment discount tolerance.
• Set up Microsoft Dynamics NAV 2013 to use a payment tolerance.
• Process transactions for various situations that benefit from using a
payment tolerance.
• Review how a payment discount tolerance and a payment tolerance
are reflected in the detailed customer and vendor ledger entries.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Set Up Payment Discounts

Granting payment discounts provides an incentive for customers to quickly pay
their outstanding amounts in full. The different methods that are available to set
up payment discounts for an invoice include the following:

• If the payment discount is known at the time the invoice order is

entered, do one of the following:
o Select an existing payment term.
o Enter a new payment term for the invoice or order.
• If the payment discount is not determined until the invoice is paid:
o The customer can reduce the payment without negotiating a
payment discount.
o If the discount is acceptable, adjust the payment discount for the
invoice after it is posted, but before the payment is posted and
applied.

Payment discount amounts can also be calculated on credit memos. Then, users
can automatically reduce the payment discount given on invoices that the credit
memo is applied to.

A payment discount can be calculated on amounts that both exclude and include
VAT.

The setup is determined by the fields selected on the General Ledger Setup
page.

• Pmt. Disc. Excl. VAT – Excluding VAT

• Adjust for Payment Discount – Including VAT

Note: On the General Ledger Setup page, the Pmt. Disc. Excl. VAT and the
Adjust for Payment Disc check boxes are mutually exclusive. This means that only
one can contain a check mark. However, both can be empty at the same time.

The general ledger accounts for payment discounts must be set up differently,
depending on whether payment discounts are calculated on amounts including or
excluding VAT:

• Customer Posting Groups and Vendor Posting Groups – Excluding

VAT
• General Posting Setup – Including VAT

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance

Note: Payment discount accounts cannot be entered on the Customer or

Vendor Posting Groups page if the Adjust for Payment Disc. check box is
selected on the General Ledger Setup page. Similarly, payment discount accounts
cannot be entered on the General Posting Setup page if the Pmt. Disc. Excl. VAT
check box is selected.

Set Up Payment Discounts Calculated on Amounts

Excluding VAT

General Ledger Setup

You must first set up the Microsoft Dynamics NAV 2013 database to calculate
payment discount on amounts excluding VAT. To access the General Ledger
Setup page, follow these steps.

1. In the Search box, enter General Ledger Setup, and then click the
related link.
2. Expand the General FastTab.

FIGURE 6.1: GENERAL LEDGER SETUP – GENERAL FASTTAB

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3. Pmt. Disc. Excl. VAT – Select the check box if you want to calculate
payment discounts on amounts excluding VAT. Therefore, there will
be no VAT calculated on the payment discount amount, and the VAT
will be calculated on a lowered base amount. A VAT difference will
then occur between the calculated VAT and the VAT under typical
circumstances.
o When the check box is selected, the payment discount is
calculated on:
 The Amount field in sales and purchase documents.
 The Sales/Purch. (LCY) field in journals.
o When the check box is cleared, the payment discount is
calculated on:
 The Amount Incl. VAT field in sales and purchase
documents.
 The Amount field in journals.

Note: If journals are used to enter sales or purchase transactions and the
Pmt. Disc. Excl. VAT check box is selected an amount must be entered in the
Sales/Purch. (LCY) field in the journal. If an amount is not entered, the payment
discount is zero.

4. VAT Tolerance % - When the Pmt. Disc. Excl. VAT check box is
selected, you must also determine the maximum VAT difference that
is allowed to make sure that the VAT suggested on the invoice or the
order is the VAT calculated on the lowered base amount.

Note: Make sure that the percentage filled in in the VAT Tolerance % field is
the largest payment discount percentage.

For example, if you grant a payment discount of two percent to a customer, and
you only allow for a one percent VAT difference, the VAT suggested on the invoice
or the order will only differ one percent from the regular VAT.

If the invoice or the order is for a total amount of 100.00 local currencies (LCY), the
payment discount is 2.00 LCY, and the suggested VAT is 24.75 LCY, instead of the
expected 24.50 LCY.

Note: The VAT Tolerance % field is not available on the General Ledger
Setup page. You must add it through the Object Designer.

5. Click OK to close the General Ledger Setup page.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Set Up Customer and Vendor Posting Groups

To set up the payment discount accounts for customer posting groups, follow
these steps.

1. In the Search box, enter Customer Posting Groups, and then click
the related link.
2. For each customer posting group that uses payment discounts, do the
following:
o In the Payment Disc. Debit Acc. field, click the drop-down list
and select the payment discount account. The general ledger
account is used to post granted payment discount amounts when
you are posting sales payments for the selected customer posting
group.
o In the Payment Disc. Credit Acc. field, click the drop-down list
and select the payment discount account. The general ledger
account is used to post reductions in payment discount amounts
when you are posting sales payments for the selected customer
posting groups.

FIGURE 6.2: CUSTOMER POSTING GROUPS WINDOW

To set up the payment discount accounts for vendor posting groups, follow these
steps.

1. In the Search box, enter Vendor Posting Groups, and then click the
related link.
2. For each customer posting group that uses the payment discounts, do
the following:
o In the Payment Disc. Debit Acc. field, click the drop-down list
and select the payment discount account. The general ledger
account is used to post reductions in payment discount amounts

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Finance Essentials in Microsoft Dynamics® NAV 2013
when you are posting purchase payments for the selected vendor
posting group.
o In the Payment Disc. Credit Acc. field, click the drop-down list
and select the payment discount account. The general ledger
account is used to post granted payment discount amounts when
you are posting purchase payments for the selected vendor
posting groups.

FIGURE 6.3: VENDOR POSTING GROUPS WINDOW

Set Up Payment Discounts Calculated on Amounts

Including VAT

General Ledger Setup

If payment discounts are calculated on amounts including VAT, then VAT

recalculations might have to be made if the payment discount is taken.

To set up the program to recalculate tax amounts when payment discounts are
posted, follow these steps.

1. In the Search box, enter General Ledger Setup, and then click the
related link.
2. Expand the General FastTab.
3. Select the Adjust for Payment Disc. field to so that the feature
becomes available.

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Payment Tolerance

FIGURE 6.4: GENERAL LEDGER SETUP WINDOW – GENERAL FASTTAB

4. Click Ok to close the General Ledger Setup page.

Set Up VAT Posting Groups

1. In the Search box, enter VAT Posting Setup, and then click the
related link.
2. Use the Choose Columns feature to add the Adjust for Payment
Discount field.
3. For each relevant VAT Posting Group combination, select the Adjust
for Payment Discount field.

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FIGURE 6.5: VAT POSTING SETUP WINDOW

4. Close the VAT Posting Setup window.

Set Up General Posting Groups

To set up the payment discount accounts for general posting groups, follow these
steps.

1. In the Search box, enter General Posting Setup, and then click the
related link.
2. For each general posting group combination that uses a payment
discount, do the following:
o In the Sales Pmt. Disc. Debit Acc. field, click the drop-down list
and select the payment discount account. This is the general
ledger account that is used to post granted payment discount
amounts when you are posting payments for sales with the
selected combination of general business and product posting
groups.
o In the Sales Pmt. Disc. Credit Acc. field, click the drop-down list
and select the payment discount account. This is the general
ledger account that is used to post reductions in payment
discount amounts when you are posting payments for sales with
the selected combination of general business and product
posting groups.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
o In the Purch. Pmt. Disc. Debit Acc. field, click the drop-down list
and select the payment discount account. This is the general
ledger account that is used to post reductions in payment
discount amounts when you are posting payments for purchases
with the selected combination of general business and product
posting groups.
o In the Purch. Pmt. Disc. Credit Acc. field, click the drop-down
list and select the payment discount account. This is the general
ledger account that is used to post payment discount amounts
given by vendors when you are posting payments for purchases
with the selected combination of general business and product
posting groups.

FIGURE 6.6: GENERAL POSTING SETUP WINDOW

3. Click Close to close the General Posting Setup page.

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Finance Essentials in Microsoft Dynamics® NAV 2013
Set Up Payment Terms with Payment Discount

Payment discounts granted to customers or offered by vendors are determined by

the payment terms. After the payment terms are created, the Payment Terms
Code is assigned to the relevant customers and vendors and, or entered in the
header of the sales or purchase documents.

To access the Payment Terms page, follow these steps.

1. In the Search box, enter Payment Terms, and then click the related
link.

FIGURE 6.7: PAYMENT TERMS WINDOW

2. In the Discount Date Calculation field, fill in a date formula by which
the payment must be received to subtract the payment discount
amount. Meaning, to calculate the due date of the payment discount.
3. In the Discount % field, fill in the discount percentage that is granted
when the payment is received within the period specified by the
discount date.
4. Select the Calc. Pmt. Disc. on Cr. Memos check box, if you also want
to calculate the payment discount on credit memos with this payment
term.

The only payment term that is currently set up with discount capabilities is
1M(8D). This payment term is set up as follows:

• Payments are due within one month of the Document Date specified
on the posted invoice.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
• If full payment is received within eight days of the Document Date
specified on the posted invoice, a two percent discount is available.
• A payment discount cannot be calculated on credit memos with this
payment term because the Calc. Pmt. Disc. on Cr. Memos check box
is cleared.

Assign Payment Terms with a Payment Discount to

Customers and Vendors

When payment discounts are granted for specific customers or are offered by
specified vendors, the appropriate Payment Terms Code is assigned to the
customer or vendor. Then, when an order or invoice is created the following
actions occur:

• The Payment Terms Code is transferred to the header, together with

the Payment Discount % and Pmt. Discount Date.
• The applicable discount terms are automatically applied to the order
during posting.

To assign a Payment Terms Code to a customer, follow these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select the customer to assign a payment term.
3. Click Edit to open the Customer Card page.
4. Expand the Payments FastTab.
5. In the Payment Terms Code field, click the drop-down list and select
the relevant payment term.

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FIGURE 6.8: CUSTOMER CARD WINDOW – PAYMENTS FASTTAB

6. Click OK to close the Customer Card page.

To assign a Payment Terms Code to a vendor, follow these steps.

1. In the Search box, enter Vendors, and then click the related link.
2. Locate and select the vendor to assign a payment term.
3. Click Edit to open the Vendor Card page.
4. Expand the Payments FastTab.
5. In the Payment Terms Code field, click the drop-down list and select
the relevant payment term.
6. Click OK to close the Vendor Card page.

Or, you can also assign payment terms on the order or the invoice header if the
Payment Terms Code is not assigned on the customer or vendor, and, or
different terms must be assigned to a specific sales order or invoice.

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 Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Process Sales Payment Discounts
After a sales document is posted, the payment discount information for the Pmt.
Discount Date, Original Pmt. Disc. Possible, and the Remaining Pmt. Disc.
Possible is recorded on the customer ledger entry.

Microsoft Dynamics NAV 2013 checks the payment discount date of the applied
customer ledger entry or entries when users apply payments, refunds and credit
memos.

If the posting date of the application is the same or earlier than the payment
discount date of the applied entry, the remaining discount amount is subtracted
automatically from the remaining amount of the applied entry, if the applied
entry is fully applied.

Adjust a Customer Payment Discount

You can adjust the Pmt. Discount Date and the Remaining Disc. Possible
discount fields on the customer ledger entries.

You can adjust the payment discount dates and the amounts when the invoice is
posted without discount information, the discount date passed and you approve
the date change, and the discount amount is calculated incorrectly.

Demonstration: Post a Customer Payment with a Payment

Discount

Scenario: The Cannon Group PLC, customer 10000, in CRONUS International Ltd,
is set up with payment terms. These payment terms include a two percent
payment discount if it pays within eight days of the document date that is shown
on the invoices.

On January 26, 2014, Arnie, the accounts receivables administrator at CRONUS

International Ltd., receives a payment of 8,018.70 LCY from customer 10000, for
invoice 103001.

The full amount of invoice 103001 is 8,182.35 LCY. However, because The Cannon
Group PLC paid the invoice within eight days, it has taken the two percent
discount and reduced the payment by 163.65 LCY.

To process the discounted payment, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and click the related
link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/26/14.

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4. In the Document Type field, click the drop-down list and select
Payment.
5. In the Account Type field, click the drop-down list and select
Customer.
6. In the Account No. field, enter 10000.
7. Leave the Amount field blank.
8. On the Actions tab, click Apply Entries.
9. Select the line for invoice 103001.
10. On the Navigate tab, click Set Applies-to ID.
11. On the bottom of the Apply Customer Entries page, notice the
following fields:
o Amount to Apply – Contains the full remaining amount of the
invoice, without considering the payment discount.
o Pmt. Discount Amount – When the payment is made within the
discount period, the remaining discount amount will be shown
here.
o Applied Amount – The amount that will be applied to the
journal line, as soon as the journal is posted. When there is no
amount filled in on the journal line, the Applied Amount will
automatically be suggested on the journal line, as soon as the
Apply Customer Entries page is closed.
o Available Amount – The amount that is filled in on the journal
and the maximum that can be applied to.
o Balance – The difference between the applied amount and the
available amount.

Notice that the Pmt. Disc. Amount field on the bottom of the window contains
the discount amount of -163.65 and the Balance field contains a zero balance.
This is the result of the discount being subtracted from the payment amount.

12. Click OK to close the Apply Customer Entries page.

13. The Amount field on the journal line is now populated.
14. On the Actions tab, click Post.
15. Click Yes to post the journal lines.
16. Click OK.
17. Click OK to close the Cash Receipt Journal.

To review the posted customer ledger entries for this payment, follow these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select customer 10000.
3. On the Navigate tab, click Ledger Entries.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
4. Review the line for invoice 103001:
o The Original Amount and Amount fields contain the full
amount of the invoice.
o The Remaining Amount and Remaining Pmt. Disc. Possible
fields are zero.
5. Review the line for the payment dated 01/26/14:
o The Original Amount contains the payment amount.
o The Amount field contains the payment amount plus the
discount amount.
o The Remaining Amount is zero.
6. Select the line for the payment and on the Actions tab, click
Navigate.
7. Select the line for the general ledger entries and then click Show.

The payment discount amount is posted to the 9250 account, as it is specified by

the customer posting groups.

8. Click Close to close the General Ledger Entries page.

9. Click Close to close the Navigate page.
10. Click OK to close the Customer Ledger Entries page.

Demonstration: Posting Partial Customer Payments with

Payment Discounts

Scenario: Customer 40000, Deerfield Graphics, has an outstanding invoice for

payment of 1,328.88 LCY. If the invoice is paid by December 17, 2013, the
customer can take a 26.58 LCY discount.

On December 12, 2013, a payment of 651.15 LCY is sent. This payment is half of
the discounted amount (1,328.88 - 26.58 / 2 = 651.15). On December 17, 2013,
the remaining half of the payment is sent.

Arnie can successfully post both payments, by using the discount, because both
payments are received by December 17, 2013.

Note: Entries are posted in the year 2013 in this demonstration.

To process the first partial payment on an invoice with an available discount,

follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.

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3. In the Posting Date field, enter 12/12/13.
4. In the Document Type field, click the drop-down list and select
Payment.
5. In the Account Type field, click the drop-down list and select
Customer.
6. In the Account No. field, enter 40000.
7. In the Amount field, enter -651.15.
8. On the Actions tab, click Apply Entries.
9. On the Navigate tab, click Set Applies-to ID.
10. At the bottom of the page, notice the following:
o The Pmt. Disc. Amount field contains a zero balance.
o The Balance field at the bottom of the page is out of balance by
677.73 LCY. This is the amount for the other half that is due and
the full discount amount.
11. Click OK to close the Apply Customer Entries page.
12. On the Actions tab, click Post.
13. Click Yes to post the journal lines.
14. Click OK.

To process the remaining partial payment on an invoice with an available

discount, follow these steps.

1. In the Posting Date field, enter 12/17/13.

2. In the Document Type field, click the drop-down list and select
Payment.
3. In the Account Type field, click the drop-down list and select
Customer.
4. In the Account No. field, enter 40000.
5. In the Amount field, enter -651.15.
6. On the Actions tab, click Apply Entries.
7. On the Navigate tab, click Set Applies-to ID.
8. At the bottom of the page, notice the following:
o The Pmt. Disc. Amount field contains the remaining payment
discount possible of 26.58 LCY.
o The Balance field at the bottom of the page is now zero.
9. Click OK to close the Apply Customer Entries page.
10. On the Actions tab, click Post.
11. Click Yes to post the journal lines.
12. Click OK.
13. Click OK to close the Cash Receipt Journal page.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Because both payments are received by the date specified in the Pmt. Discount
Date field, the partial payment structure is acceptable.

Note: If an invoice is not fully paid within the discount date period, the
discount is not available. If you still want to grant the discount, you can do the
following:

• Change the Pmt. Discount Date before the payment is processed.

• Add an additional general ledger line to the cash receipt journal for the
payment discount amount and also apply this with the invoice.
• If the payment is already processed and the payment discount amount
remains as an open amount on the customer ledger entry, you can
manually post this amount to the payment discount account through a
general journal.

Demonstration: Add Discounts After Posting Sales

Transactions

Scenario: On January 21, 2014, customer 20000 set up a payment discount

agreement with CRONUS International Ltd. It will take a two percent discount if
payments are received within eight days of invoicing.

That same day, invoice 103002 is posted before the terms changed on the
Customer Card. On January 29, 2014, Arnie receives a payment of 6,832.34 LCY.
This payment is 139.44 LCY less than the invoice amount.

When Arnie reviews the invoice, he realizes that the correct payment terms are
not applied and that the difference is the two percent discount. Arnie changes the
discount fields on the customer ledger entries for this invoice and then posts the
discounted payment.

To change the customer ledger entries to specify acceptable discounts, follow

these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select customer 20000.
3. On the Navigate tab, click Ledger Entries.
4. On the line for invoice 103002, click the Pmt. Discount Date field.
5. Enter 01/29/14.
6. In the Remaining Pmt. Disc. Possible field, enter 139.44 LCY. Notice
that this amount must be entered in the same currency as the invoice.
7. Click OK to close the Customer Ledger Entries page.

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To process the discounted payment, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/29/14.
4. In the Document Type field, click the drop-down list and select
Payment.
5. In the Account Type field, click the drop-down list and select
Customer.
6. In the Account No. field, enter 20000.
7. In the Amount field, enter -6,832.34.
8. On the Navigate tab, click Apply Entries.
9. Select the line for invoice 103002.
10. On the Navigate tab, click Set Applies-to ID.
11. At the bottom of the page, notice the following:
o The Pmt. Disc. Amount field contains -139.44 LCY, the discount
amount.
o The Balance field contains a zero balance because the discount is
available within this posting date range.
12. Click OK to close the Apply Customer Entries window.
13. On the Actions tab, click Post.
14. Click Yes to post the journal lines.
15. Click OK.
16. Click OK to close the Cash Receipt Journal page.

Demonstration: Apply Posted Payments to Sales

Documents that Use Discounts

When you apply a payment or refund to entries while the payment or refund is
posted, Microsoft Dynamics NAV 2013 automatically includes payment discount
information. This payment discount information is included on both invoice and
credit memo entries when it calculates the payment amount or the refund.

Note: When you are applying posted payments and refunds to entries with
payment discount amounts, it is recommended to apply one payment or refund
with each application of posted entries.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Scenario: On January 25, 2014, a payment of 4,019.83 LCY is received from
customer 10000. It is the end of the day and Arnie cannot match this exact
amount with an invoice in the customer ledger entries. Therefore, he decides to
post the payment to the account and post the application when he can determine
the difference.

After posting the payment, he realizes that the payment is for invoice 103018. The
payment applies as follows:

• The invoice amount is 4,101.88 LCY.

• The two percent discount amount of 82.04 LCY is taken incorrectly as
82.05 LCY.
• The payment amount is then 4,019.83 LCY (4,101.88 LCY - 82.05 LCY).

Arnie also notices that the payment is two days past the discount date. He
discusses the situation with Phyllis, the accounting manager, who instructs him to
give the discount because this is one of the company's best customers.

Because CRONUS International Ltd. currently is not set up with payment tolerance
percentages, Arnie adjusts the Remaining Pmt. Disc. Possible amount to match
the discount taken and also changes the Pmt. Discount Date to January 25, 2014.

To save time, Arnie changes the payment discount values in the Apply Customer
Entries page and then applies and posts the application.

To process the payment, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/25/14.
4. In the Document Type field, click the drop-down list and select
Payment.
5. In the Account Type field, click the drop-down list and select
Customer.
6. In the Account No. field, enter 10000.
7. In the Amount field, enter -4,019.83.
8. On the Actions tab, click Post.
9. Click Yes to post the journal lines.
10. Click OK.
11. Click OK to close the Cash Receipt Journal page.

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Finance Essentials in Microsoft Dynamics® NAV 2013
To adjust, apply, and post the payment discount, follow these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select customer 10000.
3. On the Navigate tab, click Ledger Entries.
4. On the line for invoice 103018, click the Pmt. Discount Date field,
and enter 01/25/14.
5. In the Remaining Pmt. Disc. Possible field, enter 82.05.
6. Select the payment line dated 01/25/14, for -4019.83.
7. On the Actions tab, click Apply Entries.
8. Click the line for Document No. 103018.
9. On the Navigate tab, click Set Applies-to ID.
10. At the bottom of the page, notice the following:
o The Pmt. Disc. Amount field contains the -82.05 LCY, the
discount amount.
o The Balance field contains a zero balance. This results from the
discount being adjusted to match the discount and for i available
within this posting date range.
11. On the Navigate tab, click Post Application.
12. Click OK.
13. Click OK to the message that the application posted.
14. Click OK to close the Customer Ledger Entries page.

Applying Sales Credit Memos with Payment Discounts

When you are posting a credit memo with a payment discount amount that is
applied to an invoice, the Remaining Pmt. Disc Possible amount for the invoice
is reduced by the payment discount amount for the credit memo.

To apply a posted credit memo with a payment discount amount to an invoice,

follow these step.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select the relevant customer.
3. On the Navigate tab, click Ledger Entries.
4. Select the line with the relevant credit memo.
5. On the Home tab, click Apply Entries.
6. Select the line with the relevant invoice.
7. On the Navigate tab, click Set Applies-to ID.
8. On the Navigate tab, click Post Application.
9. Click OK to apply the entries.
10. Click OK to the message that the entries are posted.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
11. Click OK to close the Apply Customer Entries page.
12. Review the applied entries in the Customer Ledger Entries page.
Notice that the amount in the Remaining Pmt. Disc. Possible field
on the invoice line is reduced by the payment discount amount on
the credit memo.
13. Click OK to close the Customer Ledger Entries page.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Lab 6.1: Post a Customer Payment with a Discount

Scenario

On January 8, 2014, the accounts payable clerk for customer 10000, contacts you.
The clerk wants to know whether the two percent discount can still be taken on
Document No. 00-9 if the payment is received on 01/09/14. This date is one day
past the payment discount date. You state that it is acceptable, because this is one
of your best customers.

On January 9, 2014, you receive a payment of 49,762.93 LCY. Adjust the payment
discount date while applying the payment.

Exercise 1: Post a Customer Payment with a Discount

Task 1: Post a Customer Payment with a Discount

High Level Steps

1. Enter the information as it is specified in the scenario.
2. Adjust and apply the invoice as it is specified in the scenario.
3. Post the Cash Receipt Journal.

Detailed Steps
1. Enter the information as it is specified in the scenario.
a. On the navigation pane, click Departments.
b. Click Financial Management, click Receivables, and then click
Cash Receipt Journals.
c. Make sure that the BANK journal batch is selected.
d. In the Posting Date field, enter 01/09/14.
e. In the Document Type field, click the drop-down list and select
Payment.
f. In the Account Type field, click the drop-down list and select
Customer.
g. In the Account No. field, enter 10000.

2. Adjust and apply the invoice as it is specified in the scenario.

a. On the Actions tab, click Apply Entries.
b. Select the line for invoice 00-9.
c. In the Pmt. Discount Date field, enter 01/09/14.
d. On the Navigate tab, click Set Applies-to ID.
e. Click OK to close the Apply Customer Entries page.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance

3. Post the Cash Receipt Journal.

a. On the Actions tab, click Post.
b. Click Yes to post the journal lines.
c. Click OK.
d. Click OK to close the Cash Receipt Journal.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Lab 6.2: Apply Posted Partial Customer Payments with

Discounts
Scenario

On January 8, 2014, you receive a payment of 33,174.35 LCY from customer

10000. Even though you cannot determine what the payment applies to, you post
the payment to the customer account.

Afterward, you learn that the payment is for Document No. 00-16. Because the
payment is made on January 8, 2014, the full discount of 677.05 LCY is available.
However, a small error is made in the discount calculation and this has resulted in
the customer taking a larger discount. Because this is a good customer, adjust the
discount to match the amount taken: 678.00 LCY.

First, post the payment but do not apply it to an invoice. Then, adjust the discount
amount while applying the invoice to the payment.

Exercise 1: Apply Posted Partial Customer Payments with

Discounts

Task 1: Apply Posted Partial Customer Payments with Discounts

High Level Steps

1. Post the payment as it is specified in the scenario.
2. Apply the posted payment to the invoice as it is specified in the
scenario. Remember to adjust the payment discount amount.
3. Post the application.

Detailed Steps
1. Post the payment as it is specified in the scenario.
a. On the navigation pane, click Departments.
b. Click Financial Management, click Receivables, and then click
Cash Receipt Journals.
c. Make sure that the BANK journal batch is selected.
d. In the Posting Date field, enter 01/08/14.
e. In the Document Type field, click the drop-down list and select
Payment.
f. In the Account Type field, click the drop-down list and select
Customer.
g. In the Account No. field, enter 10000.
h. In the Amount field, enter -33,174.35.
i. On the Actions tab, click Post.

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Payment Tolerance
j. Click Yes to post the journal lines.
k. Click OK.
l. Click OK to close the Cash Receipt Journal.
2. Apply the posted payment to the invoice as it is specified in the
scenario. Remember to adjust the payment discount amount.
a. On the navigation pane, click Departments.
b. Click Financial Management, click Receivables, and then click
Customers.
c. Locate and select customer 10000.
d. On the Navigate tab, click Ledger Entries.
e. Select the line for invoice 00-16.
f. In the Remaining Pmt. Disc. Possible field, enter 678.00.
g. Select the payment line dated 01/08/14, for -33,174.35.
h. On the Actions tab, click Apply Entries.
i. Click the line for Document No. 00-16.
j. On the Navigate tab, click Set Applies-to ID.
k. At the bottom of the page, notice the following:
 The Pmt. Disc. Amount field contains -678.00 LCY, the
discount amount.
 The Balance field contains a zero balance because the
discount is adjusted to match the discount and for it to
be available within this posting date range.
3. Post the application.
a. On the Navigate tab, click Post Application.
b. Click OK.
c. Click OK to the message that the application posted.
d. Click OK to close the Customer Ledger Entries page.

Process Purchase Payment Discounts

In the Suggest Vendor Payments batch job of the Payment Journal, there are
some differences in the criteria that are used to make a payment when the Find
Payment Discounts check box is either selected or it is cleared. Based on this,
Microsoft Dynamics NAV 2013, suggests the following:

• If this check box is selected, then payments are made for:

o All open entries that have a Due Date on or before the date
entered in the Last Payment Date field.
o Any open vendor ledger entry that has a Pmt. Discount Date
between the Posting Date and the Last Payment Date.

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Finance Essentials in Microsoft Dynamics® NAV 2013
• If this check box is cleared, then payments are made for:
o Only those entries that have a Due Date on or before the Last
Payment Date.

Adjust Vendor Payment Discount

You can adjust the Pmt. Discount Date and the Remaining Pmt. Disc. Possible
discount fields on the vendor ledger entries.

You can adjust the payment discount dates and the amounts when the invoice is
posted without discount information, the discount date passed and the vendor
approves the date change, and when the discount amount is calculated
incorrectly.

Demonstration: Suggest Discounted Vendor Payment

Lines

Scenario: On January 25, 2014, a payment of 298.13 LCY is received from vendor
40000, Lewis Home Furniture, for invoice 55681. The invoice is for nine wooden
doors, item 70010.

This vendor has granted a two percent payment discount if the payment is
received within eight days of the invoice.

On February 1, 2014, April runs the Suggest Vendor Payments batch job for this
vendor with a last payment date of 02/15/14. The first time she runs the batch job,
she forgets to add a check mark in the Find Payment Discounts and the
payment is not suggested. She runs the batch job again and inserts a check mark
in the Find Payment Discounts check box. The discounted payment is suggested.

Note: In the General Ledger Setup page, the Pmt. Disc. Excl. VAT and
Adjust for Payment Discount check boxes are both cleared.

To post the invoice, follow these steps.

1. In the Search box, enter Purchase Invoices, and then click the
related link.
2. Click New.
3. In the Buy-from Vendor No. field, enter 40000.
4. In the Posting Date field, enter 01/25/14.
5. In the Vendor Invoice No. field, enter 55681.
6. Expand the Invoicing FastTab.
7. In the Payment Terms Code field, click the drop-down list and select
1M(8D).
8. Expand the Lines FastTab.

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Payment Tolerance
9. In the Type field, click the drop-down list and select Item.
10. In the No. field, enter 70010.
11. In the Quantity field, enter 9.
12. On the Actions tab, click Post.
13. Click Yes to post the invoice.
14. Click OK to close the Purchase Invoice page.

To suggest vendor payments without finding discounts, follow these steps.

1. In the Search box, enter Payment Journal, and then click the related
link.
2. Make sure that the BANK journal batch is selected.
3. On the Navigate tab, click Suggest Vendor Payments.
4. Expand the Options FastTab.
5. In the Last Payment Date field, enter 02/15/14.
6. Make sure that the Find Payment Discounts check box is cleared.
7. In the Posting Date field, enter 02/01/14.
8. In the Bal. Account Type field, click the drop-down list and select
Bank Account.
9. In the Bal. Account No. field, click the drop-down list, select WWB-
OPERATING and then click OK.
10. In the Bank Payment Type field, click the drop-down list and then
select Computer Check.
11. Expand the Vendor FastTab.
12. In the No. filter, enter 40000.
13. Click OK to run the Suggest Vendor Payments batch job.
14. Notice that the payment is not suggested. Because the invoice is not
due until 02/25/10, it is not suggested because the Find Payment
Discount check box did not prompt Microsoft Dynamics NAV 2013
to search for any discounts before the due date.
15. Click OK to close the Payment Journal page.

To suggest vendor payments with discounts, follow these steps.

1. In the Search box, enter Payment Journal, and then click the related
link.
2. Make sure that the BANK journal batch is selected.
3. On the Navigate tab, click Suggest Vendor Payments.
4. Expand the Options FastTab.
5. In the Last Payment Date field, enter 02/15/14.
6. Make sure that the Find Payment Discounts check box is selected.

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7. In the Posting Date field, enter 02/01/14.
8. In the Bal. Account Type field, click the drop-down list and select
Bank Account.
9. In the Bal. Account No. field, click the drop-down list, select WWB-
OPERATING and then click OK.
10. In the Bank Payment Type field, click the drop-down list and then
select Computer Check.
11. Expand the Vendor FastTab.
12. In the No. filter, enter 40000.
13. Click OK to run the Suggest Vendor Payments batch job.

One journal line is created for the invoice 108028.

14. In the Amount field, a payment amount for 292.17 LCY is suggested.
The original invoice amount is 298.13 LCY. The two percent discount
of 5.96 LCY is subtracted from the payment amount because the
Posting Date is within the payment discount range.
15. In the Applies-to Doc. No. field, click the drop-down list to open the
Apply Vendor Entries page.
16. Review the amount fields at the bottom of the page.
o Amount to Apply – Contains the full remaining amount of the
invoice, without considering the payment discount.
o Pmt. Discount Amount – When the payment is made within the
discount period, the remaining discount amount will be shown
here.
o Applied Amount – The amount that will be applied to the
journal line, after the journal is posted.
o Available Amount – The amount that is filled in on the journal
line and to which the maximum can be applied.
o Balance – The difference between the applied amount and the
available amount.
17. Click OK to close the Apply Vendor Entries page.
18. Delete the suggested payment journal line.
19. Click OK to close the Payment Journal page.

Demonstration: Suggest Vendor Payment Lines without a

Discount

Scenario: On February 15, 2014, April runs the Suggest Vendor Payments batch
job to find discounts for all payments due on or before February 28, 2014.

She reviews the payment for vendor 40000. Because the payment is not suggested
within the payment discount date, the discount is not applied to the payment.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
To suggest vendor payments without discounts, follow these steps.

1. In the Search box, enter Payment Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. On the Navigate tab, click Suggest Vendor Payments.
4. Expand the Options FastTab.
5. In the Last Payment Date field, enter 02/28/14.
6. Make sure that the Find Payment Discounts check box is selected.
7. In the Posting Date field, enter 02/15/14.
8. In the Bal. Account Type field, click the drop-down list and select
Bank Account.
9. In the Bal. Account No. field, click the drop-down list, select WWB-
OPERATING and then click OK.
10. In the Bank Payment Type field, click the drop-down list and then
select Computer Check.
11. Expand the Vendor FastTab.
12. In the No. filter, enter 40000.
13. Click OK to run the Suggest Vendor Payments batch job.

One journal line is created for invoice 55681.

14. In the Amount field, a payment amount for 298.13 LCY is suggested.
This is the full amount of the invoice.
15. In the Applies-to Doc. No. field, click the drop-down list to open the
Apply Vendor Entries page.
16. Review the amount fields at the bottom of the page.
17. Click OK to close the Apply Vendor Entries page.
18. Delete the suggested payment journal line.
19. Click OK to close the Payment Journal page.

Demonstration: Add Discounts after Posting Purchase

Transactions

Scenario: On February 3, 2014, April remembers to suggest vendor payments for

vendor 40000. She realizes that the payment discount date passed. Therefore,
April calls the vendor to ask whether she can still take the discount. The vendor
approves the discount, but April must send the payment by using overnight mail.

She changes the payment discount date on the vendor ledger entry and then she
runs the Suggest Vendor Payment batch job again.

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To change the payment discount date on the vendor ledger entry, follow these
steps.

1. In the Search box, enter Vendors, and then click the related link.
2. Locate and select vendor 40000.
3. On the Navigate tab, click Ledger Entries.
4. On the invoice line, in the Pmt. Discount Date field, enter 02/03/14.
5. Click OK to close the Vendor Ledger Entries page.

To run the Suggest Vendor Payments batch job, follow these steps.

1. In the Search box, enter Payment Journal, and then click the related
link.
2. Make sure that the BANK journal batch is selected.
3. On the Navigate tab, click Suggest Vendor Payments.
4. Expand the Options FastTab.
5. In the Last Payment Date field, enter 02/28/14.
6. Make sure that the Find Payment Discounts check box is selected.
7. In the Posting Date field, enter 02/03/14.
8. In the Bal. Account Type field, click the drop-down list and select
Bank Account.
9. In the Bal. Account No. field, click the drop-down list, select WWB-
OPERATING and then click OK.
10. In the Bank Payment Type field, click the drop-down list and then
select Computer Check.
11. Expand the Vendor FastTab.
12. In the No. filter, enter 40000.
13. Click OK to run the Suggest Vendor Payments batch job.

One journal line is created for invoice 55681.

14. In the Amount field, a 293.36 LCY payment is suggested. The original
invoice amount is 298.13 LCY. The two percent discount of 4.77 LCY is
subtracted from the payment amount because the Posting Date is
within the payment discount range.
15. Delete the suggested payment journal line.
16. Click OK to close the Payment Journal page.

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 Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Set Up a Payment Discount Tolerance and a Payment
Tolerance
Sometimes, a customer can underpay or overpay an invoice amount. When this
occurs, the following two options are available:

• Post the payments with a remaining amount. With this option, you
must close the remaining amount using other methods, such as
posting an adjustment and, or by contacting the customer for
additional payment.
• Set up payment tolerances to close entries where there is a difference
between the amount owed and the amount paid. With this option,
parameters of acceptable differences are used to post the amounts to
G/L accounts.

For accounts payables, payment tolerances are used to make payments to vendors
that have a slightly different invoice amount.

When you use a payment tolerance, you can do the following:

• Set the payment tolerance percentage, payment discount grace

period, and the maximum payment tolerance amount.
• Determine whether to receive a warning when an application is made
within the payment tolerance parameters set.
• Determine to which account to post the difference to keep track of
amounts and their frequency.
• Set up different payment tolerances for different currencies.
• Work with a payment tolerance on invoices and payments, credit
memos and refunds.
• Determine the customers who can use or be blocked from payment
tolerances.

In Microsoft Dynamics NAV 2013, there are two types of payment tolerance:

• Payment Discount Tolerance: This takes a payment discount even if

the payment discount date has passed.
• Payment Tolerance: This accepts a slightly larger or smaller amount
as full settlement of an outstanding invoice.

Set Up on Customer Cards

As a default, a payment tolerance can be used for all customers. This default can
be changed for a specific customer.

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To disable payment tolerances, follow these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select the customer to disable the payment tolerance, and
then click Edit.
3. Expand the Payments FastTab.
4. Select the Block Payment Tolerance check box.
5. You will receive a message that asks whether the payment tolerance is
to be removed from all open entries.
o Click Yes to remove the payment tolerance on open entries and
to restrict it from future invoices.
o Click No to maintain the payment tolerance on open entries but
restrict it from future invoices.
6. Click OK to close the Customer Card page.

Note: The Block Payment Tolerance check box applies to both the payment
discount tolerance and the payment tolerance.

To make a disabled payment tolerance available, clear the Block Payment

Tolerance check box on the Customer Card.

Set Up on Vendor Cards

As a default, a payment tolerance can be used for all vendors. This default can be
changed on the Vendor Card.

To make the payment tolerances unavailable, follow these steps.

1. In the Search box, enter Vendors, and then click the related link.
2. Locate and select the vendor to make the payment tolerance
unavailable, and then click Edit.
3. Expand the Payments FastTab.
4. Select the Block Payment Tolerance check box.
5. You will receive a message that asks whether the payment tolerance is
to be removed from all open entries.
o Click Yes to remove the payment tolerance on open entries and
to restrict it from future invoices.
o Click No to maintain the payment tolerance on open entries but
restrict it from future invoices.
6. Click OK to close the Vendor Card page.

Note: The Block Payment Tolerance check box is applied to both the
payment discount tolerance and the payment tolerance.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
To make a payment tolerance unavailable, clear the Block Payment Tolerance
field on the Vendor Card.

Set Up and Assign Payment Tolerance G/L Accounts

To post a tolerance to a G/L account that differs from the usual payment discount
account, the accounts must be created in the Chart of Accounts and set up on the
following:

• Customer Posting Groups and Vendor Posting Groups – When the

Adjust for Payment Discount check box is cleared on the General
Ledger Setup page.
• General Posting Setup – When the Adjust for Payment Discount
check box is selected on the General Ledger Setup page.

Note: The payment tolerance accounts can be used for both the payment
discount tolerance and the payment tolerance.

Set Up Customer and Vendor Posting Groups

To set up the payment discount accounts for customer posting groups, follow
these steps.

1. In the Search box, enter Customer Posting Groups, and then click
the related link.
2. For each customer posting group that uses payment discounts, do the
following:
o In the Payment Tolerance Debit Acc. field, click the drop-down
list and select the payment tolerance account. The general ledger
account is used to post the payment tolerance when you post
payments for sales.
o In the Payment Tolerance Credit Acc. field, click the drop-down
list and select the payment tolerance account. The general ledger
account is used to post the payment tolerance when you post
payments for sales.

To set up the payment discount accounts for vendor posting groups, follow these
steps.

1. In the Search box, enter Vendor Posting Groups, and then click the
related link.
2. For each customer posting group that uses payment discounts, do the
following:

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o In the Payment Tolerance Debit Acc. field, click the drop-down
list and select the payment discount account. The general ledger
account is used to post the payment tolerance when you post
payments for purchases.
o In the Payment Tolerance Credit Acc. field, click the drop-down
list and select the payment discount account. The general ledger
account is used to post the payment tolerance when you post
payments for purchases.

Set Up General Posting Groups

To set up the payment discount accounts for general posting groups, follow these
steps.

1. In the Search box, enter General Posting Setup, and then click the
related link.
2. For each general posting group combination that uses payment
discount, do the following:
o In the Sales Pmt. Tol. Debit Acc. field, click the drop-down list
and select the payment tolerance account. This is the general
ledger account that is used to post the payment tolerance when
you post payments for sales with this particular combination of
business group and product group.
o In the Sales Pmt. Tol. Credit Acc. field, click the drop-down list
and select the payment tolerance account. This is the general
ledger account that is used to post the payment tolerance when
you post payments for sales with this particular combination of
business group and product group.
o In the Purch. Pmt. Tol. Debit Acc. field, click the drop-down list
and select the payment tolerance account. This is the general
ledger account that is used to post the payment tolerance when
you post payments for purchases with this particular combination
of business group and product group.
o In the Purch. Pmt. Tol. Credit Acc. field, click the drop-down list
and select the payment tolerance account. This is the general
ledger account that is used to post the payment tolerance when
you post payments for purchases with this particular combination
of business group and product group.

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 Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Set Up a Payment Discount Tolerance
For a payment discount to be taken after the payment discount date passed, the
following setup is available:

• Set up the payment tolerance general ledger accounts on

customer/vendor posting groups or general posting groups.
• Set up companywide payment discount tolerance parameters on the
General Ledger Setup page.
• The payment discount tolerance can be made available or unavailable
for individual customers or vendors.

Set Up a Payment Discount Tolerance in General Ledger

Setup

To access the companywide payment discount tolerance parameters, follow these

steps.

1. In the Search box, enter General Ledger Setup, and then click the
related link.
2. Expand the Application FastTab.

FIGURE 6.9: GENERAL LEDGER SETUP WINDOW – APPLICATION FASTTAB

3. Pmt. Disc. Tolerance Warning – If this field is selected the system
generates a warning message when an application is made between
the payment discount date and the payment discount tolerance date.
Select to accept or decline the payment discount tolerance.

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If the payment discount tolerances are usually allowed, clear this
check box. Microsoft Dynamics NAV 2013 will then automatically post
the application as a payment discount tolerance.
4. Pmt. Disc. Tolerance Posting – Identifies the type of G/L accounts to
post the payment discount tolerance. There are two selections for
posting:
o Payment Tolerance Accounts –The payment discount tolerance
is posted to a special G/L account set up for the payment
tolerance.
o Payment Discount Accounts – The payment discount tolerance
is posted as a payment discount.
5. Payment Discount Grace Period – Determines the number of days
that a payment or refund can pass the payment discount due date
and still receive the payment discount. Specified as a date formula.
For example, to allow five days, enter 5D.
6. You will receive a message that asks you to change all open entries
for all customers and vendors that are not blocked. (Where the Block
Payment Tolerance check box is clear.)
o Yes – The Pmt. Disc. Tolerance Date field on all applicable open
customer and vendor entries is updated. The payment discount
tolerance date is calculated as the payment discount date plus
the payment discount grace period.
o No – The payment discount tolerance will only be calculated for
future customer and vendor entries.
7. Click OK to close the General Ledger Setup page.

Demonstration: Set Up a Payment Discount Tolerance

Scenario: Cassie, the accountant at CRONUS International Ltd., is asked to set up

a payment discount tolerance because of the many late payments with payment
discounts.

The company is also being requested to do the following:

• Receive notification if there is a payment discount tolerance.

• Use special accounts for the tolerance postings.
• Give a payment discount grace period of five days.

To set up the payment discount tolerance parameters, follow these steps.

1. In the Search box, enter General Ledger Setup, and then click the
related link.
2. Expand the Application FastTab.
3. Select the Pmt. Disc. Tolerance Warning check box.

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 Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
4. Make sure that the Pmt. Disc. Tolerance Posting field is set to
Payment Tolerance Accounts.
5. In the Payment Discount Grace Period field, enter 5D.
6. Click Yes to update the change to existing customer and vendor
ledger entries.
7. Click OK to close the General Ledger Setup page.

Process the Payment Discount Tolerance

Adjust the Payment Discount Tolerance

You can adjust the Pmt. Disc. Tolerance Date field on the customer and vendor
ledger entries:

You can adjust the payment discount tolerance dates when the following actions
occur:

• The invoice posted without discount information.

• When payment discount tolerance parameters are not set up and the
discount date passed and you approved the date change.
• When payment discount tolerance parameters are set up and the
discount tolerance date passed and you approved the date change.

Note: You can change the Pmt. Discount Date or the Pmt. Disc. Tolerance
Date field.

When you change the Pmt. Discount Date, the discount amount will be
automatically subtracted and it will be posted on the Payment Discount
Accounts.

When you change the Pmt. Disc. Tolerance Date, the discount amounts must be
manually subtracted. A payment discount warning can appear, depending on the
setup. Additionally, the discount amount will be posted on the Payment Tolerance
Accounts or on the Payment Discounts Accounts, depending on the setup on the
General Ledger Setup page.

Demonstration: Customer Payment Discount Taken Past

the Discount Date

Scenario: On January 10, 2014, Arnie, the Account Receivable assistant, receives a
payment of 49,762.93 LCY from The Cannon Group PLC, for invoice 00-9.
However, the invoiced amount is 50,778.50 LCY.

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Finance Essentials in Microsoft Dynamics® NAV 2013
The Cannon Group PLC has taken the payment discount two days past the
discount date of January 8, 2014. Because CRONUS International Ltd. has set up a
grace period of five days, this discount is acceptable.

To post the payment by using the tolerance, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/10/14.
4. In the Document Type field, click the drop-down list and select
Payment.
5. In the Account Type field, click the drop-down list and select
Customer.
6. In the Account No. field, enter 10000.
7. In the Amount field, enter -49,762.93.
8. On the Actions tab, click Apply Entries.
9. Select the line for Document No. 00-9.
10. On the Navigate tab, click Set Applies-to ID.

Notice that the Balance field at the bottom of the window contains a difference
of -1,015.57 LCY.

11. Click OK to close the Apply Customer Entries page.

The Payment Discount Tolerance Warning page appears, with the options of
accepting or declining the late payment discount.

12. To accept the late payment discount, select the Post as Payment
Discount Tolerance option.
13. Click Yes to close the Payment Discount Tolerance Warning page
14. On the Actions tab, click Post.
15. Click Yes to post the journal lines.
16. Click OK.
17. Click OK to close the Cash Receipt Journal page.

Demonstration: Vendor Payment Discount Taken Past the

Discount Date

Scenario: As of February 5, 2014, the invoice for vendor 40000 is not yet paid.
April contacts the vendor who guarantees her that it is fine to take the discount.

Instead of adjusting the discount fields, and because a payment tolerance is set
up, April suggests vendor payments and then changes the amount to the
discounted amount of 292,16 LCY.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
In this demonstration, the payment is not printed or posted.

To suggest vendor payments with discounts, follow these steps.

1. In the Search box, enter Payment Journal, and then click the related
link.
2. Make sure that the BANK journal batch is selected.
3. On the Navigate tab, click Suggest Vendor Payments.
4. Expand the Options FastTab.
5. In the Last Payment Date field, enter 02/25/14.
6. Make sure that the Find Payment Discounts check box is selected.
7. In the Posting Date field, enter 02/05/14.
8. In the Bal. Account Type field, click the drop-down list and select
Bank Account.
9. In the Bal. Account No. field, click the drop-down list, select WWB-
OPERATING and then click OK.
10. In the Bank Payment Type field, click the drop-down list and then
select Computer Check.
11. Expand the Vendor FastTab.
12. In the No. filter, enter 40000.
13. Click OK to run the Suggest Vendor Payments batch job.

One journal line is created for invoice 55681.

14. In the Amount field, a payment for 296.93 LCY is suggested. This is
the full amount of the invoice. Change the amount to 292.16 LCY and
press TAB or ENTER.

The Payment Discount Tolerance Warning page appears, with the

options of accepting or declining the late payment discount.

15. To accept the late payment discount, select the Post as Payment
Discount Tolerance option.
16. Click Yes to close the Payment Discount Tolerance Warning page.
17. When the payment is posted, the invoice and the payment are closed
without remaining amounts. However, for the following
demonstrations, delete the payment journal line.
18. Click OK to close the Payment Journal page.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Set Up a Payment Tolerance

Set Up a Payment Tolerance in General Ledger Setup

To access the companywide payment discount tolerance parameters, follow these

steps.

1. In the Search box, enter General Ledger Setup, and then click the
related link.
2. Expand the Application FastTab.
3. Payment Tolerance Warning – If this field is selected, the system
generates a warning message when an application is made and a
balance is within the allowed payment tolerance amount. You can
accept or decline the payment tolerance. If payment tolerances are
usually allowed, clear this check box. Microsoft Dynamics NAV 2013
will then automatically post the application as a payment tolerance.
4. Payment Tolerance Posting – Identifies the G/L accounts to post a
payment tolerance. There are two selections for posting:
o Payment Tolerance Accounts –The payment tolerance is posted
to a special G/L account set up for a payment tolerance.
o Payment Discount Accounts – The payment tolerance is posted
as a payment discount.

The Payment Tolerance Percentage and Maximum Payment Tolerance

Amount fields cannot be edited, and they can only be changed through the
Change Payment Tolerance batch job.

To change the payment tolerance, follow these steps.

1. On the Actions tab, click Change Payment Tolerance.

2. Select the All Currencies check box, if the Payment Tolerance
Percentage and Max. Payment Tolerance Amount applies for all
currencies.
3. If the All Currencies check box is clear, you can indicate a specific
currency in the Currency Code field for which the Payment
Tolerance Percentage and Max. Payment Tolerance Amount is
applicable.

If you leave this field blank, the parameters are applicable for the local currency.

4. Payment Tolerance Percentage – Determines the percentage that

the payment or refund can differ from the amount on the invoice or
credit memo.
5. Max. Payment Tolerance Amount – Specifies the maximum allowed
amount that the payment or refund can differ from the amount on
the invoice or credit memo.

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FIGURE 6.10: CHANGE PAYMENT TOLERANCE BATCH JOB

6. Click OK to close the Change Payment Tolerance page.

7. You will receive a message that asks you to change all open entries
for all customers and vendors that are not blocked. (Where the Block
Payment Tolerance check box is clear.)
o Yes – The Max. Payment Tolerance field on all applicable open
customer and vendor entries is updated. The payment tolerance
percentage is calculated and taken as the payment tolerance
amount, unless the maximum payment tolerance amount is a
reduced amount.
o No – The payment discount tolerance will only be calculated for
future customer and vendor entries.
8. After the payment tolerance is set up for the local currency, the
Payment Tolerance Percentage and Max. Payment Tolerance
Amount will appear on the General Ledger Setup page.
9. Click OK to close the General Ledger Setup page.

Set Up a Payment Tolerance on a Currency Card

The General Ledger Setup page only displays the payment tolerance parameters
set up for the local currency. The payment tolerance parameters set up for the
foreign currencies can be viewed on the Currencies page.

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To access the Currencies page, follow these steps.

1. In the Search box, enter Currencies, and then click the related link.
2. The Payment Tolerance % and Max. Payment Tolerance Amount
fields are available, but they can only be edited through the Change
Payment Tolerance batch job. (You can access this through the
Ribbon.)

Demonstration: Set Up a Payment Tolerance

Scenario: Cassie, the accountant at CRONUS International Ltd., is asked to set up

a payment tolerance because of the many underpayments received based on
payment discounts.

Your company has decided to give a one percent payment tolerance for payment
amounts. However, the tolerance cannot exceed 50.00 LCY.

The company is also requesting to receive notification if there is a payment

tolerance and to use special accounts for tolerance postings.

To set up the tolerance parameters, follow these steps.

1. In the Search box, enter General Ledger Setup, and then click the
related link.
2. Expand the Application FastTab.
3. Select the Payment Tolerance Warning check box.
4. Make sure that the Payment Tolerance Posting field is set to
Payment Tolerance Accounts.
5. On the Actions tab, click Change Payment Tolerance.
6. Clear the All Currencies check box.
7. Leave the Currency Code field blank.
8. In the Payment Tolerance % field, enter 1.
9. In the Max. Pmt. Tolerance Amount field, enter 50.
10. Click OK to run the batch job.
11. Click Yes to update the change to existing customer and vendor
ledger entries.
12. Notice that the Payment Tolerance % and Max. Pmt. Tolerance
Amount fields on the General Ledger Setup page contain the values
entered in the Change Payment Tolerance batch job.
13. Click OK to close the General Ledger Setup page.

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 Module 6: Receivables and Payables Management: Payment Discount and
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Lab 6.3: Set Up a Payment Tolerance
Scenario

The Chief Financial Officer (CFO) at CRONUS International Ltd. discovered that the
existing tolerance is too strict and he or she created too many open balances for
amounts that are not significant. As the accounting manager, you are asked to
change the existing tolerance to allow a three percent overpayment, and, or
underpayment of invoices, with a maximum tolerance of 200.00 LCY.

The other tolerance parameters do not have to change. But all open ledger entries
must be updated to reflect the new tolerance.

Exercise 1: Set Up a Payment Tolerance

Task 1: Set Up a Payment Tolerance

High Level Steps

1. Set Up a Payment Tolerance in General Ledger Setup.

Detailed Steps
1. Set Up a Payment Tolerance in General Ledger Setup.
a. On the navigation pane, click Departments.
b. Click Administration, and then click Application Setup.
c. On the Application Setup page, click Financial Management,
click Finance, and then click General Ledger Setup.
d. Expand the Application FastTab.
e. Make sure that the Payment Tolerance Warning check box is
selected.
f. On the Actions tab, click Change Payment Tolerance.
g. Clear the All Currencies check box.
h. Leave the Currency Code field blank.
i. In the Payment Tolerance % field, enter 3.
j. In the Max. Pmt. Tolerance Amount field, enter 200.
k. Click OK to run the batch job.
l. Click Yes to update the change to existing customer and vendor
ledger entries.

Notice that the Payment Tolerance % and Max. Pmt. Tolerance Amount fields
on the General Ledger Setup page contain the values entered in the Change
Payment Tolerance batch job.

m. Click OK to close the General Ledger Setup page.

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Process a Payment Tolerance

Adjust a Payment Tolerance

You can adjust the Max. Payment Tolerance field on the customer and vendor
ledger entries.

You can adjust the payment tolerance amount, when no payment tolerance
parameters are set up and you approve the change for the amount. You can also
adjust the payment tolerance amount when the payment discount is calculated
incorrectly and you approve the change for the amount, and when the payment
tolerance parameters are set up and the payment amount differs from the
parameters, and you approve the change for the amount.

Note: When the paid discount amount is incorrect, you can change the
Remaining Pmt. Disc. Possible or the Max. Payment Tolerance field.

When you change the Remaining Pmt. Disc. Possible the discount amount will be
automatically subtracted, and the discount amount will be posted on the Payment
Discount Accounts.

When you change the Max. Payment Tolerance field, the difference in the
discount amount must be manually subtracted. A payment warning can appear,
depending on the setup, and the difference in the discount amount will be posted
on the Payment Tolerance Accounts or the Payment Discount Accounts,
depending on the setup on the General Ledger Setup page.

Demonstration: Process an Incorrect Customer Payment

Scenario: On January 30, 2014, Arnie receives a payment for 63,470.00 LCY from
The Cannon Group PLC, for invoice 00-11. However, the invoice amount is
63,473.13 LCY.

Although a discount of 1,269.46 LCY existed, the discount due date, and the
discount tolerance due date have expired. Arnie realizes that the difference in the
payment amount is an error. However, because CRONUS International Ltd. set up
a three percent payment tolerance, this payment difference is acceptable.

To post the payment by using the tolerance, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/30/14.

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4. In the Document Type field, click the drop-down list and select
Payment.
5. In the Account Type field, click the drop-down list and select
Customer.
6. In the Account No. field, enter 10000.
7. In the Amount field, enter -63,470.00.
8. On the Actions tab, click Apply Entries.
9. Select the line for Document No. 00-6.
10. On the Navigate tab, click Set Applies-to ID.

Notice that the Balance field at the bottom of the page contains the 3.13 LCY
difference.

11. Click OK to close the Apply Customer Entries page.

12. The Payment Tolerance Warning page appears, with the options of
posting the difference as a payment tolerance or leaving it as a
remaining amount on the customer account.
To accept the tolerance, click the Post the Balance as Payment
Tolerance option.
13. Click OK to close the Payment Tolerance Warning page.
14. On the Actions tab, click Post.
15. Click Yes to post the journal lines.
16. Click OK.
17. Click OK to close the Cash Receipt Journal page.

Demonstration: Customer Payment Discount Calculated

Incorrectly

Scenario: On January 7, 2014, Arnie receives a payment of 66,181.31 LCY from

The Cannon Group PLC, for invoice 00-6. However, the invoice amount is
67,704.67 LCY.

Arnie reviews the possible discount amounts and notices that, although the
payment is received within the discount period, the amount is calculated
incorrectly.

The Cannon Group PLC has taken a two and one quarter percent discount instead
of two percent. However, because CRONUS International Ltd. has set up a three
percent payment tolerance, this discount is acceptable.

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To post the payment by using the tolerance, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/07/14.
4. In the Document Type field, click the drop-down list and then select
Payment.
5. In the Account Type field, click the drop-down list and then select
Customer.
6. In the Account No. field, enter 10000.
7. In the Amount field, enter -66,181.31.
8. On the Actions tab, click Apply Entries.
9. Select the line for Document No. 00-6.
10. On the Navigate tab, click Set Applies-to ID.

Notice that the Balance field at the bottom of the page contains the -1,523.36
LCY difference.

11. Click OK to close the Apply Customer Entries page.

12. The Payment Tolerance Warning page appears, with the options of
posting the difference as a payment tolerance or leaving it as a
remaining amount on the customer account.
To accept the tolerance, click the Post the Balance as Payment
Tolerance option.
13. Click OK to close the Payment Tolerance Warning page.
14. On the Actions tab, click Post.
15. Click Yes to post the journal lines.
16. Click OK.
17. Click OK to close the Cash Receipt Journal page.

Note: Instead of handling the incorrect discount amount as a payment

tolerance, you can also change the Remaining Pmt. Disc. Possible field on the
customer ledger entry for invoice 00-6.

Then, the access discount amount is handled as a regular discount amount and it is
automatically subtracted from the initial amount of the invoice, and it posts on the
Payment Discount Accounts.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
Demonstration: Incorrect Totaling of Two Sales Invoices

Scenario: On January 30, 2014, Arnie receives a payment of 116,564.07 LCY from
the John Haddock Insurance Co. for the following invoices:

• Document No. 00-13 – 40,399.29 LCY

• Document No. 00-15 – 76,167.75 LCY

When Arnie posts the payment, he realizes that the payment is 2.97 LCY less than
the total of the two invoices. However, because this is within the payment
tolerance range, he continues with posting to close the entries.

To post the payment by using the tolerance, follow these steps.

1. In the Search box, enter Cash Receipt Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. In the Posting Date field, enter 01/30/14.
4. In the Document Type field, click the drop-down list and then select
Payment.
5. In the Account Type field, click the drop-down list and then select
Customer.
6. In the Account No. field, enter 30000.
7. In the Amount field, enter -116,564.07.
8. On the Actions tab, click Apply Entries.
9. Select the line for Document No. 00-13.
10. On the Navigate tab, click Set Applies-to ID.
11. Select the line for Document No. 00-15.
12. On the Navigate tab, click Set Applies-to ID.

Notice that the Balance field at the bottom of the window contains
the 2.97 LCY difference.

13. Click OK to close the Apply Customer Entries page.

The Payment Tolerance Warning page appears.

14. To accept the tolerance, select the Post the Balance as Payment
Tolerance option.
15. Click OK.
16. On the Actions tab, click Post.
17. Click Yes to post the journal lines.

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18. Click OK.
19. Click OK to close the Cash Receipt Journal page.

To review the posted entries, follow these steps.

1. On the Receivables page, click Customers.

2. Locate and select customer 30000.
3. Click Ledger Entries.

Notice that the Remaining Amount is zero for:

o Document No. 00-13

o Document No. 00-15
o Payment line dated 01/30/10

4. Click the payment line and in the Home tab, click Detailed Ledger
Entries.
5. Review the entry lines:
o The first line is the Initial Entry of the payment and it contains the
payment amount.
o The second line is the Payment Tolerance and it contains the
accepted payment tolerance amount.
o The third line is the Application and it contains the net amount of
the two lines that match the actual net amount of the two
invoices.
6. Close the Customer Ledger Entries window.

If the difference is not posted as a payment tolerance, then the 2.97 LCY balance
is displayed as a remaining amount on the line for invoice 00-15 because it is the
last invoice applied. Accept the tolerance to close the invoices and payment.

Demonstration: Adjust the Vendor Payment Amount to

Reflect a Payment Tolerance

Scenario: Invoice 108021 from vendor 30000, CoolWood Technologies, posted on

January 13, 2014, without discounts. As of January 1, 2014, all invoices receive a
one percent discount if the invoice is paid within 10 days.

On January 21, 2014, the Suggest Vendor Payments report is run for this vendor.
You check the amount to make sure that the discount is taken and you find that it
is not set up on the invoice. Because the discount amount is within the tolerance,
you decide to change the amount on the Payment Journal and accept the
tolerance.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
To suggest vendor payments with discounts, follow these steps.

1. In the Search box, enter Payment Journals, and then click the
related link.
2. Make sure that the BANK journal batch is selected.
3. On the Navigate tab, click Suggest Vendor Payments.
4. Expand the Options FastTab.
5. In the Last Payment Date field, enter 01/31/14.
6. Make sure that the Find Payment Discounts check box is selected.
7. In the Posting Date field, enter 01/20/14.
8. In the Bal. Account Type field, click the drop-down list and then
select Bank Account.
9. In the Bal. Account No. field, click the drop-down list and then select
WWB-OPERATING.
10. In the Bank Payment Type field, click the drop-down list and then
select Computer Check.
11. Expand the Vendor FastTab.
12. In the No. filter, enter 30000.
13. Click OK.

Notice that the payment is for the full amount of the invoice:
19,500.00 LCY.

14. Delete the other lines from the journal.

15. In the Amount field, enter 19,305.00 and press TAB or ENTER.

You will receive the Payment Tolerance Warning message.

16. To accept the tolerance, select the Post the Balance as Payment
Tolerance option.
17. Click OK.

The amount is changed to 19,305.00 LCY. When the payment is

posted, the invoice and the payment are closed without remaining
amounts.

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Lab 6.4: Process a Customer Payment Tolerance

Scenario

At the end of December 2013, customer 20000, Selangorian Ltd., signed an

agreement to receive a two percent discount on all payment received within eight
days of the invoice's Document Date. Before the change could be made on the
Customer Card, Document No. 00-14 posted. Your first step is to add the
following to this invoice:

• Discount date of January 8, 2014

• Discount amount of 761.68 LCY

On January 7, 2014, you receive a payment of 37,226.99 LCY for the invoice, and
this payment is within the discount period. Therefore, the discount amount taken
(856.89 LCY) is larger than the granted amount (761.68 LCY).

Although the underpayment falls within the acceptable tolerance range, the
accounting manager decides that the customer is responsible for this difference
because the customer used a two and one quarter percent discount instead of the
allowed two percent.

Therefore, you have to post the payment with a remaining amount. Later, you will
contact the customer for an additional payment and remind the customer of the
discount terms.

Review the posted customer ledger entry for the payment.

Exercise 1: Process a Customer Payment Tolerance

Task 1: Process a Customer Payment Tolerance

High Level Steps

1. For customer 20000, update the payment discount date and the
amount as it is specified in the scenario.
2. Process the customer payment as it is specified in the scenario.
3. Review the posted customer ledger entry.

Detailed Steps
1. For customer 20000, update the payment discount date and the
amount as it is specified in the scenario.
a. On the Navigation Pane, click Departments.
b. Click Financial Management, click Receivables, and then click
Customers.
c. Select customer 20000.
d. On the Navigate tab, click Ledger Entries.

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Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
e. Select the entry for invoice 00-14.
f. In the Pmt. Discount Date field, enter 01/08/14.
g. In the Remaining Pmt. Discount Possible field, enter 761.68.
h. Click OK to close the Customer Ledger Entries page.
2. Process the customer payment as it is specified in the scenario.
a. On the Navigation Pane, click Departments.
b. Click Financial Management, click Receivables, and then click
Cash Receipt Journals.
c. Make sure that the BANK journal batch is selected.
d. In the Posting Date field, enter 01/07/14.
e. In the Document Type field, click the drop-down list and select
Payment.
f. In the Account Type field, click the drop-down list and select
Customer.
g. In the Account No. field, enter 20000.
h. In the Amount field, enter -37,226.99.
i. On the Home tab, click Apply Entries.
j. Select the line for Document No. 00-14.
k. On the Home tab, click Set Applies-to ID.

Notice that the Balance field at the bottom of the page contains a difference of
856.89 LCY.

l. Click OK to close the Apply Customer Entries page.

m. The Payment Tolerance Warning page appears. To decline the
tolerance, click the Leave a Remaining Amount option.
n. Click Yes to close the Payment Tolerance Warning page.
o. On the Actions tab, click Post.
p. Click Yes to post the journal lines.
q. Click OK.
r. Click OK to close the Cash Receipt Journal page.
3. Review the posted customer ledger entry.
a. On the navigation pane, click Departments.
b. Click Financial Management, click Receivables, and then click
Customers.
c. Select customer 20000.
d. On the Navigate tab, click Ledger Entries.
e. Select the entry for invoice 00-14. Notice that the remaining
amount is 856.89 LCY and not 95.21 LCY. Because this is a partial
payment, the payment discount amount is not subtracted.

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Lab 6.5: Adjust the Vendor Payment Discount Amount

Scenario

An agreement to receive a two percent discount on all payment received within

eight days of the invoice's Document Date, is signed with vendor 10000. Before
the change is made on the vendor card, invoice 108023 posts. Your first step is to
add the following to this invoice:

• Discount date of January 23, 2014

• Discount amount of -316.92 LCY

On January 21, 2014, you run the Suggest Vendor Payments batch job.

However, you are notified that the discount is actually two and one-half percent,
not two percent. You adjust the suggested payment amount from 15,529.08 LCY
to the correct amount of 15,449.85 LCY and accept the payment tolerance
warning.

Exercise 1: Adjust the Vendor Payment Discount Amount

Task 1: Adjust the Vendor Payment Discount Amount

High Level Steps

1. Process the vendor payment as it is specified in the scenario.

Detailed Steps
1. Process the vendor payment as it is specified in the scenario.
a. On the Navigation Pane, click the Departments button, click
Financial Management, click Payables, and then select
Payment Journals.
b. Make sure that the BANK journal batch is selected.
c. On the Navigate tab, click Suggest Vendor Payments.
d. Expand the Options FastTab.
e. In the Last Payment Date field, enter 01/31/14.
f. Make sure that the Find Payment Discounts check box is
selected.
g. In the Posting Date field, enter 01/21/14.
h. In the Bal. Account Type field, click the drop-down list and then
select Bank Account.
i. In the Bal. Account No. field, click the drop-down list and then
select WWB-OPERATING.
j. In the Bank Payment Type field, click the drop-down list and
then select Computer Check.

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 Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
k. Expand the Vendor FastTab.
l. In the No. filter, enter 10000.
m. Click OK.
n. Select the payment journal line for invoice 108023. Notice that
the payment is for the incorrect discounted amount of 15,529.08
LCY.
o. In the Amount field, enter 15449.85 and press TAB or ENTER.

The Payment Tolerance Warning page appears.

p. To accept the tolerance, select the Post the Balance as Payment

Tolerance option.
q. Click OK.

Review the Posted Payment Discount Tolerance and

the Payment Tolerance Entries
When users apply entries and post balances as a payment tolerance or a payment
discount tolerance, the system posts a separate Detailed Customer Ledger Entry
with the tolerance amount.

The Entry Types for the tolerance entries include the following:

• Payment Discount Tolerance: Contains the discount amount that is

allowed even though the payment discount passed.
• Payment Tolerance: Contains the underpayment or the
overpayment amount that is accepted to close the applied entries.

If Microsoft Dynamics NAV 2013 is set up to adjust VAT amounts for payment
discounts, the VAT amounts are also adjusted for any tolerance that is allowed.

Demonstration: Review a Posted Customer Payment

Discount Taken Past the Due Date

To review the posted entries from the Demonstration: Customer Payment

Discount Taken Past the Discount Date, follow these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select customer 10000.
3. On the Navigate tab, click Ledger Entries.
4. Locate and select the ledger entry for invoice 00-9. The Remaining
Amount is zero.
5. On the Navigate tab, click Applied Entries.

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Finance Essentials in Microsoft Dynamics® NAV 2013
The corresponding payment line dated 01/10/14 is shown.

6. On the Navigate tab, click Detailed Ledger Entries.

7. Review the lines, and notice the values in the Entry Type field:
o The first line is the Initial Entry of the payment and it contains
the payment amount.
o The second line is the Payment Discount Tolerance and it
contains the accepted payment discount amount.
o The third line is the Application and it contains the net amount
of the two lines that match the invoice total.
8. Click Close to close the Detailed Cust. Ledg. Entries page.
9. Click Close to close the Applied Customer Entries page.
10. Click OK to close the Customer Ledger Entries page.

If the difference is not posted as a discount tolerance, then the 1,015.57 LCY
balance is displayed as a remaining amount on the invoice line. Accept the late
payment discount to close the invoice and payment.

Demonstration: Review a Customer Payment Discount

Calculated Incorrectly

To review the posted entries from the Demonstration: Customer Payment

Discount Calculated Incorrectly, follow these steps.

1. On the Receivables page, click Customers.

2. Locate and select customer 10000.
3. Click Ledger Entries.
4. Notice that the Remaining Amount is zero for:
o Document No. 00-6
o Payment line dated 01/07/10
5. Click the payment line and then click Detailed Ledger Entries.
6. Review the lines, and notice the values in the Entry Type field:
o The first line is the Initial Entry of the payment and it contains the
payment amount.
o The second line is the Payment Tolerance and it contains the
payment tolerance amount of the additional discount taken.
o The third line is the Payment Discount and it contains the original
payment discount amount.
o The fourth line is the Application and it contains the net amount
of the three lines that match the invoice total.
7. Close the Customer Ledger Entries and Customer Card windows.

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 Module 6: Receivables and Payables Management: Payment Discount and
Payment Tolerance
If the difference is not posted as a payment tolerance, then the 1,523.36 LCY is
displayed as a remaining amount on the invoice line. Accept the tolerance to close
the invoice and payment.

Review Customer and Vendor Statistics

To obtain an overview of the payment tolerance that is allowed over time for a
specific customer or vendor, statistics provide periodic and cumulative totals in
relation to the payment amounts, in the local currency (LCY).

To view a customer's statistics, follow these steps.

1. In the Search box, enter Customers, and then click the related link.
2. Locate and select the customer to review.
3. On the Navigate tab, click Statistics.
4. Expand the Sales FastTab. The fields related to discounts and
tolerances are as follows:
o Pmt. Discounts (LCY) – Contains the LCY value of the discounts
that are taken on or before the Pmt. Discount Date.
o Pmt. Disc. Tol. (LCY) – Contains the LCY value of the discounts
that are taken after the Pmt. Discount Date but within the
payment discount grace period.
o Pmt. Tolerances (LCY) – Contains the LCY value of
underpayments and overpayments that are accepted in relation
to the customer.
5. Click Close to close the Customer Statistics window.

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Module Review
Module Review and Takeaways

You can use a payment discount in sales and purchases to keep track of granted
payment discounts and to automatically process payments with discounts.

You can use a payment discount tolerance and a payment tolerance in sales or
purchases to set up tolerance parameters to automatically process payment
differences. However, you can still intervene and decide on the most suitable
approach based on each case.

Test Your Knowledge

Test your knowledge with the following questions.

1. On the General Ledger Setup window, what check box must contain a check
mark so that you can enter payment discount accounts in the Customer
Posting Groups window?

( ) Adjust for Payment Disc.

( ) Pmt. Disc. Incl. VAT

( ) Pmt. Disc. Excl. VAT

( ) Use Payment Disc.

2. On the General Ledger Setup window, what check box must contain a check
mark so that you can enter payment discount accounts in the General Posting
Setup window?

( ) Adjust for Payment Disc.

( ) Pmt. Disc. Incl. VAT

( ) Pmt. Disc. Excl. VAT

( ) Use Payment Disc.

3. What do you select in the Payment Terms window, to grant a payment

discount of three percent if payment is received within ten days of the
document date?

( ) Enter D10 in the Discount Date Calculation field, and 3 in the

Discount % Field.

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Payment Tolerance

( ) Enter 10D in the Discount Date Calculation field, and 3 in the

Discount % Field.

( ) Enter 10D in the Discount Date Calculation field, and .03 in the
Discount % Field.

( ) Enter D10 in the Discount Date Calculation field, and .03 in the
Discount % Field.

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Test Your Knowledge Solutions

Module Review and Takeaways

1. On the General Ledger Setup window, what check box must contain a check
mark so that you can enter payment discount accounts in the Customer
Posting Groups window?

( ) Adjust for Payment Disc.

( ) Pmt. Disc. Incl. VAT

(√) Pmt. Disc. Excl. VAT

( ) Use Payment Disc.

2. On the General Ledger Setup window, what check box must contain a check
mark so that you can enter payment discount accounts in the General Posting
Setup window?

(√) Adjust for Payment Disc.

( ) Pmt. Disc. Incl. VAT

( ) Pmt. Disc. Excl. VAT

( ) Use Payment Disc.

3. What do you select in the Payment Terms window, to grant a payment

discount of three percent if payment is received within ten days of the
document date?

( ) Enter D10 in the Discount Date Calculation field, and 3 in the

Discount % Field.

(√) Enter 10D in the Discount Date Calculation field, and 3 in the Discount
% Field.

( ) Enter 10D in the Discount Date Calculation field, and .03 in the
Discount % Field.

( ) Enter D10 in the Discount Date Calculation field, and .03 in the
Discount % Field.

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MODULE 7: RECEIVABLES MANAGEMENT:
REMINDERS AND FINANCE CHARGE MEMOS

Module Overview
The Receivables Management application area also has a collections management
feature to keep track of reminders and other finance charge memos. It includes
checking whether amounts due are paid on time. If customers have overdue
payments, you must determine when and how to send reminders. Additionally,
you might have to debit their accounts for interest and, or fees.

In Microsoft Dynamics NAV 2013, you can generate reminders and finance charge
memos.

Reminders are used to prompt customers to pay overdue amounts and to inform
them of any additional fees payable.

If customers refuse to pay overdue amounts after they have received the
reminders, a finance charge memo can be issued that contains interest charges
and, or additional fees. However, the interest charges can also be added directly
on the reminders.

Note: To successfully perform all demonstrations in this course, the profile

and corresponding role center for the Accounts Receivables Administrator must be
assigned to your user ID.

Also, a clean Microsoft Dynamics NAV 2013 database must be used.

Objectives

The objectives are:

• Explain why and when Reminders and Finance Charge Memos are
used.
• Set up Microsoft Dynamics NAV 2013 to use reminders.
• Explain how to create and issue reminders.
• Set up Microsoft Dynamics NAV 2013 to use finance charge memos.
• Explain how to create and issue finance charge memos.

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Set Up and Assign Reminder Terms

Reminder terms specify when and how reminders are created. As soon as the
reminder terms are created, the Reminder Term Code is assigned to the relevant
customers.

A reminder term contains different reminder levels and determines how many
reminders are sent to a customer. Each level will determine when and how the
reminder is created. Typically, the first reminder for an invoice will have a different
look than the second and third reminder.

For example, a Reminder Term Code can be set up with three reminder levels
and it can have no more than five reminders.

• In Microsoft Dynamics NAV 2013, a given overdue invoice can appear

on no more than five reminders. The first reminder will be created
according to the conditions set up on level 1, the second on level 2,
and the rest on level 3. This means that the third, fourth and fifth
reminder will look identical.
• As soon as one of the overdue invoices appears on five reminders, all
reminders to the customer are blocked until that particular invoice is
paid. Even if the customer has other overdue invoices that have not
yet reached the maximum, additional reminders cannot be created.
Typically, this is when a company hands over the customer dossier to
a layer or another external collections company that will handle the
collection of all overdue invoices. By doing this, the company no
longer has to keep sending reminders to that customer.

Reminder Terms

To access the Reminder Terms page, follow these steps.

1. On the navigation pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Reminder Terms.

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Module 7: Receivables Management: Reminders and Finance Charge Memos

FIGURE 7.1: REMINDER TERMS WINDOW

The Reminder Terms page contains the fields shown in the following table.

Field Description
Code Unique identifier of the reminder.

Description Short description of the reminder.

Max. No. of Reminders Identifies the maximum number of reminders that

can be created for an invoice.

Post Interest If this check box is selected, any interest listed on the
reminder will be posted to the G/L and customer
accounts when the reminder is issued. The interest
becomes an open customer ledger entry. Then the
reminder can be created, and the interest can be
calculated when the entry becomes overdue.

Post Additional Fee If this check box is selected, any additional fee listed
on the reminder will be posted to the G/L and
customer accounts when the reminder is issued. The
additional fee becomes an open customer ledger
entry. Then the reminder can be created when the
entry becomes overdue.

Minimum Amount Identifies the minimum amount that must be owed

before a reminder is created.

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Reminder Levels

Reminder levels are used to define when reminders can be created and what
charges and texts they must include.

To access the Reminder Levels page, follow these steps.

1. On the Reminder Terms page, select a reminder term.

2. On the Home tab, click Levels, to view the reminder levels of the
selected reminder term.

FIGURE 7.2: REMINDER LEVELS WINDOW FOR REMINDER TERM DOMESTIC

The Reminder Levels page contains the fields shown in the following table.

Field Description
No. Identifies the level of the selected Reminder Term. The next
consecutive number is automatically generated when a new
level is added. Level 1 is the first reminder that is sent for an
overdue amount. Level 2 is the second reminder, and so on.
• When reminders are created, Microsoft Dynamics NAV 2013
keeps track of how many reminders are created and uses
the current level number to determine which conditions
apply.
• When a reminder is issued on the last level, the terms of this
level apply to any succeeding reminders that are created.

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Module 7: Receivables Management: Reminders and Finance Charge Memos
Field Description
Grace Period Specifies the time that must pass from the due date of the
original overdue invoice or from the due date of the previously
issued reminder before a reminder is created.
• The first reminder will be created, if the document date on
the reminder header is after the due date of the open
customer ledger entry. This represents the outstanding
overdue invoice, plus the grace period for the first level.
• Any succeeding reminders are created if the document date
is after the due date of the last issued reminder plus the
grace period.

Due Date Indicates the date formula used to determine how the due date
Calculation is calculated on the reminder. The due date is calculated from
the document date.

Calculate If this check box is selected, interest is calculated on the

Interest reminder lines and is displayed on the reminder. Interest is
calculated based on the Finance Charge Terms Code selected on
the customer card.

Note: For more information, refer to the “Calculate

Interest on Reminders lesson.”

Additional Identifies the amount of the additional fee in the LCY that will
Fee (LCY) be displayed on the reminder.

Note: Additional fees can also be entered in other

currencies. This will be explained in the “Reminders and
Currency topic.”

The following table shows how grace periods and due date calculations are used
on an invoice due January 29 (01/29).

Rem. Invoice Due Grace First Possible Due Date Reminder

Level Date / Period in Document Calc. in Due Date
Prior Reminder Rem. Date of Rem.
Due Date Terms Reminder Terms

1 01/29 3D 02/02 5D 02/07

2 02/07 5D 02/13 1W 02/20

3 02/20 5D 02/26 2D 02/28

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The first reminder can be created on February, 2, because the invoice is due on
January, 29. Adding three days brings the date to February, 1. This is still part of
the grace period that must be completely passed before the reminder can be
created.

Note: February 2 is the first date the reminder can be created. The user will
determine when he or she creates the reminder. When the user creates the
reminder on February 5, this date will be the document date of the reminder and
the reminder due date will be February 10, and so on.

The “Create and Issue Reminders” lesson will discuss how the user deals with the
reminder process.

Reminders and Currency

Additional fees can also be created for each reminder level in foreign currencies.

To access the Currencies for Reminder Level page, follow these steps.

1. On the Reminder Levels page, select a reminder level.

2. On the Navigate tab, click Currencies.

FIGURE 7.3: CURRENCIES FOR REMINDER LEVEL WINDOW FOR REMINDER

LEVEL 1 OF REMINDER CODE DOMESTIC
3. Create a new line for each foreign currency that you want to set up
additional fees for.
4. In the Currency Code field, enter the foreign currency.

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Module 7: Receivables Management: Reminders and Finance Charge Memos
5. In the Additional Fee field, enter the amount of the additional fee in
the foreign currency.
6. Click OK to close the Currencies for Reminder Level page.

Note: The user is responsible and should consider the exchange rate when he
or she updates the Currencies for Reminder Level page, when the exchange rate
changes significantly.

Beginning and Ending Text

Information related to the beginning and ending text lines includes the following.

• They can be added for each reminder level of each reminder term.
• They contain instructions on the payment and the result of non-
payment.
• They include several predefined text variables.

To access the Reminder Text – Beginning and Reminder Text – Ending page,
follow these steps.

1. On the Reminder Levels page, select a reminder level.

2. On the Navigate tab, click Beginning Text or Ending Text.

FIGURE 7.4: REMINDER TEXT – ENDING FOR REMINDER LEVEL 1 OF

REMINDER CODE DOMESTIC

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3. Add as many text lines as you must. You can also use predefined text
variables that the program will replace with the appropriate
information before the reminder is printed.
4. Click OK to close the Reminder Text – Beginning or Reminder Text
– Ending page.
5. Click OK to close the Reminder Levels page.

You can use the following text variables on both pages.

Text Variable Information

%1 Document date (from the reminder header)

%2 Due date (from the reminder header)

%3 Interest rate (from finance charge term)

%4 Remaining amount (from the reminder header)

%5 Interest amount (from the reminder header)

%6 Additional fee (from the reminder header)

%7 Total (remaining amount + interest amount + additional fee
+ value-added tax (VAT)

%8 Reminder level (from the reminder header)

%9 Currency code (from the reminder header)

%10 Posting date (from the reminder header)

Assign Reminder Terms

To assign the Reminder Term Code to a customer card, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Customers.
3. Select a customer and then click Edit to open the Customer Card
page.
4. Expand the Payments FastTab.
5. In the Reminder Terms Code field, enter the reminder term.
6. Click OK to close the Customer Card page.

Demonstration: Set Up and Assign a Reminder Term

Scenario: Arnie is informed that a new reminder term must be set up for
customers who consistently pay after the due date. The name of this reminder
term is Late, with a description of Consistently Late Payers.

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Module 7: Receivables Management: Reminders and Finance Charge Memos
This reminder term contains three levels. These levels include the criteria in the
following table. The amounts are in local currency (LCY).

Level Grace Due Additional Beginning Ending Text

Period Date Fee Text
1 3 days 5 days 10.00 Please remit
payment
immediately.

2 5 days 1 week 15.00 Payment is due

(due date from
the header).
Remit payment
immediately.

3 5 days 2 days 20.00 This is the

(reminder level
from the
header)
reminder you
have already
sent.
Your account is
delinquent and
is sent to a
collection
agency.

Additional fees are not posted to customer or G/L accounts and interest must be
calculated for all levels but is also not posted.

When Arnie is finished, he assigns this Reminder Terms Code to customer 20000,
Selangorian, Ltd.

To set up the reminder term and corresponding reminder levels, follow these
steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Reminder Terms.
4. Click New to insert a line.
5. In the Code field, enter LATE.
6. In the Description field, enter Consistently Late Payers.
7. On the Actions Tab, click Levels.
8. For level 1, in the Grace Period field, enter 3D.

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9. In the Due Date field, enter 5D.
10. Select the Calculate Interest check box.
11. In the Additional Fee field, enter 10.
12. On the Navigate tab, click Beginning Text.
13. In the first line, enter Please remit payment immediately.
14. Click OK to close the Reminder Text – Beginning page.
15. Click the next line.
16. For level 2, in the Grace Period field, enter 5D.
17. In the Due Date field, enter 1W.
18. Select the Calculate Interest check box.
19. In the Additional Fee field, enter 15.
20. On the Navigate tab, click Ending Text.
21. In the first line, enter “Payment was due %2. Remit payment
immediately.”
22. Click OK to close the Reminder Text – Ending page.
23. Click the next line.
24. For level 3, in the Grace Period field, enter 5D.
25. In the Due Date field, enter 2D.
26. Select the Calculate Interest check box.
27. In the Additional Fee field, enter 20.
28. On the Navigate tab, click Ending Text.
29. In the first line, enter “This is the %8 reminder we have sent.”
30. In the second line, enter "Your account is delinquent and is sent to a
collection agency."
31. Click OK to close the Reminder Text – Ending page.
32. Click OK to close the Reminder Levels page.
33. Click OK to close the Reminder Terms page.

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Module 7: Receivables Management: Reminders and Finance Charge Memos

FIGURE 7.5: SET UP REMINDER TERM LATE WITH 3 REMINDER LEVELS AND
REMINDER TEXT

To assign the reminder term to customer 20000, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Customers.
3. Select customer 20000.
4. Click Edit.
5. Expand the Payments FastTab.
6. In the Reminder Terms Code field, enter LATE.
7. Click OK to close the Customer Card page.

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Lab 7.1: Set Up and Assign a Reminder Term

Scenario

CRONUS International Ltd. has three troublesome customers who are consistently
late on paying invoices. As the accounts receivable administrator, you are asked to
set up a new reminder term named TOP3, with a description of Top 3 Late Payers.

You also have to send a reminder every 14 days, with no more than four
reminders before the account is sent to collections. This reminder only includes
one level with an ending text that informs the customer of the current reminder
number and that after the fourth notice, the account will be sent to collections.

When the Reminder Term is set up, assign it to the following customers: 10000,
40000, and 50000.

Note: Use the appropriate text variable to designate the reminder number in
the ending text.

Exercise 1: Set Up and Assign a Reminder Term

Task 1: Set Up and Assign a Reminder Term

High Level Steps

1. Set up the reminder term and corresponding reminder level as
described in the scenario.
2. Assign the new reminder terms to the customers as described in the
scenario.

Detailed Steps
1. Set up the reminder term and corresponding reminder level as
described in the scenario.
a. On the Navigation Pane, click Departments.
b. Click Administration, and then click Application Setup.
c. On the Application Setup page, click Financial Management >
Finance > Reminder Terms.
d. Click New to insert a line.
e. In the Code field, enter TOP3.
f. In the Description field, enter Top 3 Late Payers.”
g. In the Max. No. of Reminders field, enter 4.
h. On the Actions Tab, click Levels.
i. For level 1, in the Grace Period field, enter 14D.
j. On the Navigate tab, click Ending Text.

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Module 7: Receivables Management: Reminders and Finance Charge Memos
k. In the first line, enter "This is reminder number %8."
l. In the second line, enter “After the fourth reminder, your account
will be sent to collections.”
m. Click OK to close the Reminder Text – Ending page.
n. Click OK to close the Reminder Levels page.
o. Click OK to close the Reminder Terms page.

2. Assign the new reminder terms to the customers as described in the

scenario.
a. On the Navigation Pane, click Home.
b. Click Customers.
c. Select customer 10000.
d. Click Edit.
e. Expand the Payments FastTab.
f. In the Reminder Terms Code field, enter “TOP3.”
g. Repeat steps 2 through 6 for customer 40000 and 50000.
h. Click OK to close the Customer Card page.

Set Up and Assign Number Series for Reminders and

Issued Reminders
Companies must set up a number series for reminder documents, as follows.

• Reminders
• Issued Reminders

Note: How to set up the number series is covered in the course Application
Setup in Microsoft Dynamics NAV 2013.

To assign the reminder number series, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Sales & Receivables Setup.
4. Expand the Numbering FastTab.
5. In the Reminder Nos. field, enter the number series to use to assign
numbers to reminders when they are created.
6. In the Issued Reminder Nos. field, enter the number series to use to
assign numbers to reminders when they are issued.

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FIGURE 7.6: SALES & RECEIVABLES SETUP WINDOW– NUMBERING

FASTTAB

7. Click OK to close the Sales & Receivables Setup page.

Create and Issue Reminders

In Microsoft Dynamics NAV 2013, a reminder resembles an invoice. To create a
reminder, a reminder header and one or more reminder lines must be filled in.

You can create reminders by using either of the following methods.

• Automatically create reminders by using the Create Reminders batch

job. Typically this method is used when generating reminders for all
customers.
• Manually fill in a header and use the Suggest Reminder Lines batch
job to fill in the lines. Typically this method is used when only one
reminder is needed for a single customer.

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Module 7: Receivables Management: Reminders and Finance Charge Memos
Reminder Process without Interest Calculation

FIGURE 7.7: REMINDERS PROCESS WITHOUT INTEREST CALCULATION

Create Reminders Batch Job

The Create Reminders batch job uses information from the customer card to
determine the relevant terms for the reminder. There are other extensive options,
such as the following.

• Applying several predefined text options

• Flexible interest rates
• Other fees when you are creating reminders for customers
• Choosing whether interest and, or fees must be posted to the relevant
G/L and customer accounts

To create reminders by using the Create Reminders batch job, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Reminders.
3. On the Actions tab, click Create Reminders.

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FIGURE 7.8: CREATE REMINDERS WINDOW

Options FastTab

The Options FastTab contains the fields shown in the following table.

Field Description
Posting Date Date that is listed as the posting date on the header of
the reminder.

Document Date Date that is listed as the document date on the header of
the reminder. This date is used for any interest
calculations and to determine the reminder’s due date.

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Field Description
Only Entries with If this field is selected, the batch job only inserts open
Overdue Amounts customer ledger entries with a due date earlier than the
document date.
If this field is clear, the bottom of the reminder contains
the amounts that are owed by the customer but are not
yet overdue.

Use Header Level If this field is selected, the reminder level of the reminder
header is used to determine whether to calculate interest
for a specific reminder line.
If this field is clear, the reminder level on each reminder
line is used to determine whether interest must be
calculated.

Note: For more information, refer to the “Calculate

Interest on Reminders” lesson.

Customer FastTab and Cust. Ledger Entry FastTab

Use these filter options to filter the information that is used to create the
reminders.

Without filters, the following applies.

• Reminders are only created for customers who have outstanding

balances.
• Reminders are created for each currency for which the customer has
overdue customer ledger entries. Reminder lines are only created for
the customer ledger entries that are in the currency represented by
the currency code on the reminder header.
• Reminder lines are created for all overdue open customer ledger
entries, regardless of the document type of the entry. This means
reminder lines are created for invoices, and also for payments, credit
memos, refunds, finance charge memos and reminders.

Create Reminders Manually

You can manually create reminders directly on the Reminders page. After you
create the header, you can add invoice lines by using the Suggest Reminder
Lines batch job.

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The Suggest Reminder Lines batch job creates reminder lines by using options
similar to those in the Create Reminders batch job.

• Suggest only overdue amounts

• Include entries on hold
• Filter customer ledger entries

Note: To calculate interest based on the reminder level in the header, select
the Use Header Level check box in the reminder header before you run the
Suggest Reminder Lines batch job.

To create reminders manually, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Reminders.
3. Click New.
4. In the Customer No. field, enter the relevant customer.
5. In the Posting Date field, enter the date this reminder is to be issued.
6. In the Document Date field, enter the date the reminder is created.
Remember that this date is used to:
o Determine whether a reminder is created.
o Calculate interest.
o Calculate the due date of the reminder.
7. Select the Use Header Level check box to base the interest
calculations on the header level, instead of the line level.
8. Click Suggest Reminder Lines.
9. Expand the Options FastTab.
10. Select the Only Entries with Overdue Amounts check box to
include only overdue open customer ledger entries in the reminder
lines.
11. Select the Include entries On Hold check box to include open
customer ledger entries that contain a value in the On Hold field.
12. Click the Cust. Ledger Entry FastTab.
13. If you must, filter on the document types or other fields to include or
exclude information from the reminder lines.
14. Click OK to generate the reminder lines.
15. Click OK to close the Reminder page.

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Module 7: Receivables Management: Reminders and Finance Charge Memos
Update Reminder Text Batch Job

Change the beginning and ending text on reminders by using the Update
Reminder Text batch job. This batch job changes the text that is associated with
the current reminder level of the reminder term, to the text that is associated with
a different level of the same reminder term. The user can also choose to update
the associated additional fee.

To change the reminder text, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Reminders.
3. Select a reminder with the header and lines that are created and then
click Edit.
4. On the Actions tab, click Update Reminder Text.
5. Expand the Options FastTab.
6. In the Reminder Level field, enter the level number that contains the
preferred text.
7. Select the Update Additional Fee check box, if you want to change
the additional fee from the amount of the current reminder level to
the amount of the new reminder level.

FIGURE 7.9: UPDATE REMINDER TEXT BATCH JOB

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8. Click OK to run the batch job.
9. The reminder lines are now updated with the new text. The reminder
level of the header is also updated.
10. Click OK to close the Reminder page.

Issue Reminders

After the reminder header and associated reminder lines are created, the reminder
must be issued. This is the process for how to post the reminders. Actual posting
to the customer and G/L account will only occur when the Post Additional Fee
and, or the Post Interest check boxes are selected on the reminder term of the
reminder header.

Before issuing reminders, a test report can be run to review the pre-printed
document.

To issue one reminder and run the test report, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Reminders.
3. Select a reminder and then click Edit.
4. On the Actions tab, click Test Report.
5. Click Preview to view the document on the screen or click Print to
print the document for review.
6. Close the Print Preview page.
7. On the Actions tab, click Issue.
8. Expand the Options FastTab.
9. Select the Print check box to print the issued reminder.

Note: You can always (re)print the document from the Issued Reminder List
page.

10. Select the Replace Posting Date check box to change the existing
posting date on the reminder header.
11. If you want to replace the posting date, enter the new posting date in
the Posting Date field.
12. Expand the Reminder FastTab.
13. The No. filter contains the reminder number of the selected reminder.
By changing this filter that you can group reminders and issue them
together.
14. Click OK.

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To issue multiple reminders, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Reminders.
3. On the Reminders list page, select all relevant reminders.
4. On the Actions tab, click Issue.
5. Click the Options FastTab and complete it as is required.
6. Click OK.

When you issue a reminder, the following results will occur within the database.

• An Issued Reminder document is created and can be located on the

Navigation Pane, by clicking Posted Documents and then by
clicking Issued Reminders. The issued reminder header contains the
due date, to be used when the next reminder can be created. The
issued reminder lines contain the No. of Reminders field, to be used
when only the maximum number of reminders is allowed.
• Reminder/Fin.Charge Entries are created for each reminder line
representing an overdue open customer ledger entry.
• The Last Issued Reminder Level field of overdue open customer
ledger entries is updated.
• New open customer ledger entries are created when the additional
fee and interest are set up to be posted.
• G/L entries are created when the additional fee and interest are set up
to be posted.

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Lab 7.2: Create and Issue Reminders

Scenario

It is the beginning of March, 2014, and reminders must be created and issued for
past due customer entries as of February 28, 2014, by using the conditions of the
header level to all reminder lines.

Issue reminders for customers 43687129 and 47563218 only, without printing or
changing the posting date.

Exercise 1: Step by step

Exercise Scenario
1. On the Navigation Pane, click the Departments button, click
Financial Management > Periodic Activities > Receivables, and
then select Reminders.
2. Click Create Reminders.
3. Click the Options FastTab.
4. In the Posting Date field, enter 02/28/10.
5. In the Document Date field, enter 02/28/10.
6. Make sure that the Only Entries with Overdue Amounts check box
contains a check mark.
7. Put a check mark in the Use Header Level check box.
8. Click OK.
9. Locate and select the reminder for customer 43687129.
10. Click Issue.
11. Click OK.
12. Locate and select the reminder for customer 47563218.
13. Click Issue.
14. Click OK.
15. Close the Reminder window.
16. In the Periodic Activities folder, click Issued Reminders.
17. Locate and review the issued reminders for customers 43687129 and
47563218.

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Exercise 2: Create and Issue Reminders

Task 1: Create and Issue Reminders

High Level Steps

1. Run the Create Reminders batch job as specified in the scenario.
2. Issue the reminders as they are specified in the scenario.

Detailed Steps
1. Run the Create Reminders batch job as specified in the scenario.
a. On the Navigation Pane, click Home.
b. Click Reminders.
c. On the Actions tab, click Create Reminders.
d. In the Posting Date field, enter 02/28/14.
e. In the Document Date field, enter 02/28/14.
f. Select the Only Entries with Overdue Amounts check box.
g. Select the Use Header Level check box.
h. On the Customer FastTab, in the No. filter, enter
43687129|47563218.
i. Click OK.
2. Issue the reminders as they are specified in the scenario.
a. On the Navigation Pane, click Home.
b. Click Reminders.
c. Select the two newly created reminders.
d. On the Actions tab, click Issue.
e. Click OK.

Set Up and Assign Finance Charge Terms

Finance charge terms specify when and how finance charge memos are created.
As soon as the finance charge terms are created, the Fin. Charge Term Code is
assigned to the relevant customers.

Finance Charge Terms

To access the Finance Charge Terms page, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Finance Charge Terms.

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FIGURE 7.10: FINANCE CHARGE TERMS WINDOW

The Finance Charge Terms window contains the fields shown in the following
table:

Field Description
Code Unique code of the finance charge term.

Description Short description of the finance charge term.

Interest Determines which entries are used in the interest calculation

Calculation on finance charge memos.
The options are:
• Open entries
• Closed entries
• All entries

Interest Determines the interest calculation method for this set of

Calculation finance charge terms.
Method The options are:
• Balance Due Method – The finance charge is a
percentage of the overdue amount. Finance charge =
overdue amount * (interest rate/100)
• Average Daily Balance Method – This method
considers how many days the payment is overdue for
open entries or how many days it is overdue when closed
entries are paid.

Finance charge = overdue amount * (days overdue/interest

period)*(interest rate/100)

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Field Description
Interest Rate Identifies the finance charge percentage charged when this
finance charge type is used.

Interest Period Identifies the number of days related to the interest rate. For
(days) example, 12 percent for 360 days or one percent for 30 days.

Minimum Specifies the minimum interest charge in the local currency

Amount (LCY) (LCY).

Additional Fee Identifies a charge in addition to the finance charge.

Grace Period Determines the number of days the customer ledger entry
could go unapplied before a finance charge is assessed.
• The first finance charge memo will be created, if the
document date on the finance charge memo header is
after the due date of the customer ledger entry, plus the
grace period.
• Any succeeding finance charge memos are created if the
document date is after the due date of the last issued
finance charge memo plus the grace period.

Due Date Indicates the date formula that is used to determine how the
Calculation due date is calculated on the finance charge memo. The due
date is calculated from the document date.

Line Identifies a description to be used in the Description field on

Description the finance charge memo lines. Text variables can be used in
this description.

Post Interest If this check box is selected, any interest listed on the finance
charge memo will be posted to the G/L and customer
accounts when the finance charge memo is issued. The
interest becomes an open customer ledger entry, for which a
finance charge memo can be created and again interest can
be calculated for, when the entry becomes overdue.

Post Additional If this check box is selected, any additional fee listed on the
Fee finance charge memo will be posted to the G/L and customer
accounts when the finance charge memo is issued. The
additional fee becomes an open customer ledger entry, for
which a finance charge memo can be created, when the
entry becomes overdue.

The following text variables can be used:

Text Variable Information

%1 Description on the customer ledger entry

%2 Document type on the customer ledger entry

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Text Variable Information
%3 Document number on the customer ledger entry

%4 Interest rate

%5 Amount on the customer ledger entry

%6 Remaining amount on the customer ledger entry

%7 Due date on the customer ledger entry

%8 Currency code from the finance charge memo header

Finance Charge Terms and Currency

Additional fees can also be created in foreign currencies.

To access the Currencies for Fin. Chrg Terms page, follow these steps.

1. On the Finance Charge Terms page, select a finance charge term.

2. On the Navigate tab, click Currencies.

FIGURE 7.11: CURRENCIES FOR FIN. CHRG TERMS WINDOW FOR FINANCE
CHARGE TERM 1.5 DOM.

3. Create a new line for each foreign currency that you want to set up
additional fees for.
4. In the Currency Code field, enter the foreign currency.

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5. In the Additional Fee field, enter the amount of the additional fee in
the foreign currency.
6. Click OK to close the Currencies for Fin. Chrg Terms page.

Beginning and Ending Text

Information related to the beginning and ending text lines includes the following.

• They can be added for each finance charge term.

• They contain instructions on the payment and the result of non-
payment.
• They include several predefined text variables.

To access the Finance Charge Text pages, follow these steps.

1. On the Finance Charge Terms page, select a finance charge term.

2. On the Navigate tab, click Beginning Text or Ending Text.

FIGURE 7.12: FINANCE CHARGE TEXT – ENDING TEXT FOR FINANCE

CHARGE TERM 1.5 DOM.

3. Add as many text lines as you must have. You can also use predefined
text variables that the program will replace with the appropriate
information before the finance charge memo is printed.
4. Click OK to close the Finance Charge Text page.

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You can use the following text variables on both text pages.

Text Variable Information

%1 Document date (from the finance charge memo header)

%2 Due date (from the finance charge memo header)

%3 Interest rate (from the finance charge term)
%4 Remaining amount (from the finance charge memo
header)

%5 Interest amount (from the finance charge memo header)

%6 Additional fee (from the finance charge memo header)

%7 Total (remaining amount + interest amount + additional
fee + VAT

%8 Currency code (from the finance charge memo header)

%9 Posting date (from the finance charge memo header)

Assign Finance Charge Terms

To assign the Fin. Charge Term Code to a customer card, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Customers.
3. Select a customer and then click Edit to open the Customer Card
page.
4. Expand the Payments FastTab.
5. In the Fin. Charge Term Code field, enter the finance charge term.
6. Click OK to close the Customer Card page.

Demonstration: Set Up and Assign a Finance Charge Term

Scenario: Two days ago, Arnie set up new reminder terms for customers who
consistently pay late. He now must set up a Finance Charge Term for these
customers that will use the following criteria.

• Interest is calculated on open customer entries by using the Average

Daily Balance method.
• Interest rate is 11 percent, with an interest period of 360 days.
• Includes the following line description: (Interest rate) % finance
charge of (Remaining amount on the customer ledger entry).
• Only calculated interest is posted.

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• Includes the following ending text: Please pay the total of (Total
(Remaining Amount + Interest Amount + Additional Fee + VAT).

In this demonstration, the 11 LATE Finance Charge Term is set up and then
assigned to customer 20000.

To set up the finance charge term, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Finance Charge Terms.
4. Click New to open a new Finance Charge Term Card page.
5. In the Code field, enter 11 Late.
6. In the Description field, enter Consistently Late Payers.
7. In the Line Description field, enter %4% finance charge of %6.
8. In the Interest Rate field, enter 11.
9. Select the Interest Calculation field to view all the options and then
select Open Entries.
10. Select the Interest Calculation Method field to view all the options
and then select Average Daily Balance.
11. In the Interest Period (Days) field, enter 360.
12. Select the Post Interest check box.
13. Clear the Post Additional Fee check box.

FIGURE 7.13: NEW FINANCE CHARGE TERM CARD WINDOW

14. Click OK to close the new Finance Charge Term Card page

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15. Select the new finance charge term.
16. On the Navigate tab, click Ending Text.
17. In the first line, enter "Please pay the total of %7."
18. Click OK to close the Finance Charge Text page.

To assign the finance charge term to customer 20000, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Customers.
3. Select customer 20000 and then click Edit to open the Customer
Card page.
4. Expand the Payments FastTab.
5. In the Fin. Charge Term Code field, enter 11 LATE.
6. Click OK to close the Customer Card page.

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Module 7: Receivables Management: Reminders and Finance Charge Memos

Lab 7.3: Set Up and Assign a Finance Charge Term

Scenario

In Lab 7.1, you set up the TOP3 reminder term. Now, a finance charge term is
being assigned to these customers.

Set up a Finance Charge Term for these customers by using the following criteria.

• Code: 10 TOP3, Description: Top 3 Late Payers.

• Interest is calculated on all customer entries by using the Average
Daily Balance method.
• Use a 10 percent interest rate with an interest period of 180 days.
• Additional Fee of 20.00
• Includes the following line description: (Interest rate) % finance
charge of (Remaining amount on the customer ledger entry).
• Calculated interest and Additional Fees are posted.
• Includes the following ending text: Please pay the total of (all
amounts including interest and fees).

When the Finance Charge Term is set up, assign it to the following customers:
10000, 40000, and 50000.

Exercise 1: Set Up and Assign a Finance Charge Term

Task 1: Set Up and Assign a Finance Charge Term

High Level Steps

1. Set up the finance charge term according to the scenario.
2. Assign the 10 TOP3 finance charge term to the customers as
described in the scenario.

Detailed Steps
1. Set up the finance charge term according to the scenario.
a. On the Navigation Pane, click Departments.
b. Click Administration, and then click Application Setup.
c. On the Application Setup page, click Financial Management >
Finance > Finance Charge Terms.
d. Click New to open a new Finance Charge Term Card page.
e. In the Code field, enter 10 TOP3.
f. In the Description field, enter “TOP3 Late Payers.”
g. In the Line Description field, enter %4% finance charge of %6.
h. In the Additional Fee field, enter 20.

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i. In the Interest Rate field, enter 10.
j. Select the Interest Calculation field to view all the options and
select All Entries.
k. Select the Interest Calculation Method field to view all the
options and select Average Daily Balance.
l. In the Interest Period (Days) field, enter 180.
m. Select the Post Interest check box.
n. Select the Post Additional Fee check box.
o. Click OK to close the new Finance Charge Term Card page.
p. Select the 10 TOP3 finance charge term.
q. On the Navigate tab, click Ending Text.
r. In the first line, enter "Please pay the total of %7."
s. Click OK to close the Finance Charge Text page.

2. Assign the 10 TOP3 finance charge term to the customers as

described in the scenario.
a. On the Navigation Pane, click Home.
b. Click Customers.
c. Select customer 10000 and then click Edit to open the Customer
Card page.
d. Expand the Payments FastTab.
e. In the Fin. Charge Term Code field, enter 10 TOP3.
f. Click OK to close the Customer Card page.
g. Repeat steps 3 through 6 for customers 40000 and 50000.

Set Up and Assign Number Series for Finance Charge

Terms
Companies must set up a number series for finance charge memo documents, as
follows.

• Finance Charge Memos

• Issued Finance Charge Memos

Note: How to set up the number series is covered in the course Application
Setup in Microsoft Dynamics NAV 2013.

To assign the reminder number series, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.

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3. On the Application Setup page, click Financial Management >
Finance > Sales & Receivables Setup.
4. Expand the Numbering FastTab.
5. In the Reminder Nos. field, enter the number series to use to assign
numbers to reminders when they are created.
6. In the Issued Reminder Nos. field, enter the number series to use to
assign numbers to reminders when they are issued.

FIGURE 7.14: SALES & RECEIVABLES SETUP WINDOW – NUMBERING

FASTTAB
7. Click OK to close the Sales & Receivables Setup page.

Create and Issue Finance Charge Memos

In Microsoft Dynamics NAV 2013, a finance charge memo resembles an invoice.
To create a finance charge memo, the finance charge memo header and one or
more finance charge memo lines must be filled in. This process resembles the how
to create reminders process.

You can create finance charge memos by using either of the following methods.

• Automatically create reminders by using the Create Finance Charge

Memos batch job. Typically this method is used when you generate
finance charge memos for all customers.
• Manually fill in a header and use the Suggest Fin. Charge Memo
Lines batch job to fill in the lines. Typically this method is used when
only one finance charge memo is needed for a single customer.

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Finance Charge Memo Process

FIGURE 7.15: FINANCE CHARGE MEMOS PROCESS

Create Finance Charge Memos Batch Job

The Create Finance Charge Memos batch job creates finance charge memos for
customers who have overdue amounts. This includes the following.

• Open entries where payment is overdue.

• Closed entries where payment is late. (The date in the Closed at Date
field is later then the date in the Due Date of the closed customer
ledger entry.)

Information that is related to the batch job includes the following.

• Uses information from the customer card to determine the relevant

terms for the finance charge memo.
• Calculates finance charges according to the following conditions
defined on the customer's finance charge terms.
• Checks customer ledger entries to determine whether any payments
are overdue (or for closed entries, if they are overdue when they are
paid by the customer).
• Inserts the overdue customer ledger entries into the Finance Charge
Memo lines and calculates finance charges on each line.

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Note: Make sure that all open credit memos are applied to existing open
invoices before you calculate finance charges. Because credit memos have negative
balances, the finance charge function generates an error when you try to calculate
on that open record.

To access the Create Finance Charge Memos batch job, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. On the Actions tab, click Create Finance Charge Memos.

FIGURE 7.16: CREATE FINANCE CHARGE MEMOS WINDOW

Options FastTab

The Options FastTab contains the fields shown in the following table.

Field Description
Posting Date Date that is listed as the posting date on the header of the
finance charge memo.

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Field Description
Document • Date that is listed as the document date on the header of
Date the finance charge memo.
• This date is used:
• To determine the finance charge memo’s due date.
• For any interest calculations on the overdue customer
ledger entry, when you use the Average Daily Balance
method.

Customer FastTab and Cust. Ledger Entry FastTab

Use these filter options to filter the information that will create the finance charge
memos.

Without filters, the following will occur.

• Finance charge memos only will be created for customers who have
outstanding balances.
• Finance charge memos are created for each currency for which the
customer has overdue customer ledger entries. Finance charge memo
lines are only created for the customer ledger entries that are in the
currency represented by the currency code on the finance charge
memo header.
Finance charge memo lines are created for all overdue open and
closed customer ledger entries, regardless of the document type of
the entry. This means finance charge memo lines are created for
invoices, but also for payments, credit memos, refunds, finance
charge memos and reminders.

Note: The batch job only inserts customer ledger entries that are in the
currency represented by the currency code on the finance charge memo header.
The batch job creates one finance charge memo for each currency that there are
entries that interest is calculated for.

Demonstration: Create Finance Charge Memos

Automatically

Scenario: Beginning from 2014, Arnie is required to create finance charge memos
for all open customer entries. It is February 1, 2014 and he must run the reminders
for open entries as of January 31, 2014.

After Arnie runs the Create Finance Charge Memos batch job, he reviews the
memo for customer 20000.

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To create a finance charge memo that uses the Create Finance Charge Memos
batch job, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. On the Actions tab, click Create Finance Charge Memos.
4. Expand the Options FastTab.
5. In the Posting Date field, enter 01/31/14.
6. In the Document Date field, enter 01/31/14.
7. Click OK.

To review a finance charge memo, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. Double-click the finance charge memo for customer 20000.
4. Notice that all invoices are past due as of January 31, 2010.
5. Expand the Posting FastTab.
6. The Finance Charge Terms Code contains the value 11 LATE.
7. Select the Finance Charge Terms Code field, the finance charge
term 11 LATE is automatically selected, and then click Advanced to
view the setup of the 11 LATE finance charge term.
8. Notice that there is:
o 11 percent interest calculated with an interest period of 360 days.
o No additional fee.
o A line text referencing the interest rate and the amount due.
o Only an ending text that is set up that references the total
amount of overdue invoices, interest, and additional fees.
9. Click OK to close the Finance Charge Terms page.
10. On the Finance Charge Memo page, notice the following lines based
on the Finance Charge Terms:
o Line text of 11% finance charge of (overdue invoice amount*(days
overdue/interest period)).
o No additional fee line.
o Ending text of Please pay the total of (total amount).
11. Close the Finance Charge Memo page.

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Create Finance Charge Memos Manually

You can manually create finance charge memos directly on the Finance Charge
Memo page. After you create the header, you can add invoice lines by using the
Suggest Fin. Charge Memo Lines batch job.

The Suggest Fin. Charge Memo Lines batch job creates finance charge memo
lines by using options similar to those in the Create Finance Charge Memos
batch job.

Note: The batch job first deletes any existing lines in the finance charge
memo before it inserts the new lines that are created when you run the batch job.

To create finance charge memos manually, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. Click New to create a new finance charge memo.
4. In the Customer No. field, enter the relevant customer.
5. Press Tab or Enter to populate the header.
6. In the Posting Date field, enter the date this finance charge memo is
to be issued.
7. In the Document Date field, enter the date the finance charge memo
is created. Remember that this date is used to:
o Calculate interest, when the Average Daily Balance method is
used.
o Calculate the due date of the finance charge memo.
8. On the Actions tab, click Suggest Finance Charge Memos Lines.
9. Expand the Cust. Ledger Entry FastTab.
10. Filter as needed on the document types to include in the memo lines.
11. Click OK to generate the finance charge memo lines.
12. Close the Finance Charge Memo page.

Update Finance Charge Text Batch Job

Change the beginning and ending text on reminders by using the Update
Reminder Text batch job. This batch job changes the text that is associated with
the current reminder level of the reminder term, to the text that is associated with
a different level of the same reminder term. The user can also choose to update
the associated additional fee.

If the existing beginning or ending text is changed incorrectly on a finance charge

memo, use the Update Finance Charge Text batch job to revert the text to the
original text set up on the finance charge term.

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To change finance charge memo text, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. Select a finance charge memo and then click Edit.
4. On the Actions tab, click Update Finance Charge Text.
5. Click OK.
6. The finance charge memo lines are updated with the new text.
7. Click OK to close the Finance Charge Memo page.

Note: If text is changed on the finance charge term, it is recommended to run

the Suggest Fin. Charge Memo Lines batch job to update the lines.

Issue Finance Charge Memos

After the finance charge memo header and associated finance charge memo lines
are created, the finance charge memo must be issued. This is the process for how
to post the finance charge memos. Actual posting to the customer and G/L
account will only occur when the Post Additional Fee and, or Post Interest
check boxes are selected on the finance charge term of the finance charge memo
header.

Before issuing finance charge memos, a test report can be run to review the pre-
printed document.

To issue one finance charge memo and run the test report, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. Select a finance charge memo and then click Edit.
4. On the Actions tab, click Test Report.
5. Click Preview to view the document on the screen or click Print to
print the document for review.
6. Close the Print Preview page.
7. On the Actions tab, click Issue.
8. Expand the Options FastTab.
9. Select the Print check box to print the issued reminder.

Note: You can always (re)print the document from the Issued Finance
Charge Memos List page.

10. Select the Replace Posting Date check box to change the existing
posting date on the finance charge memo header.

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11. If you want to replace the posting date, enter the new posting date in
the Posting Date field.
12. Expand the Finance Charge Memo FastTab.
13. The No. filter contains the finance charge memo number of the
selected reminder. By changing this filter, you can group finance
charge memos and issue them together.
14. Click OK.

To issue multiple finance charge memos from the Finance Charge Memo List
page, follow these steps.

1. On the Navigation Pane, click Home.

2. Click Finance Charge Memos.
3. On the Finance Charge Memos List page, select all relevant finance
charge memos.
4. On the Actions tab, click Issue.
5. Click the Options FastTab and complete as needed.
6. Click OK.

When you issue a finance charge memo, the following results will occur within the
database.

• An Issued Finance Charge Memo document is created and it can be

located on the navigation pane, by clicking Posted Documents and
then by clicking Issued Finance Charge Memos. The issued finance
charge memo header contains the due date that must be used when
the next finance charge memo can be created.
• Reminder/Fin.Charge Entries are created for each reminder line that
represents an overdue customer ledger entry.
• New open customer ledger entries are created when the additional
fee and interest are set up to be posted.
• G/L entries are created when the additional fee and interest are set up
to be posted.

Interest Calculation Rules in Finance Charge Memos

The entries suggested in finance charge memos, and the amount of interest
calculated in finance charge memos, depends on the selections made in the
Interest Calculation and Interest Calculation Method fields in the Finance
Charge Terms window.

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The interest calculation rules for finance charge terms are summarized in the
following table.

Interest Interest Customer Ledger Entries Base Used to

Calculation Calculation Suggested in Finance Calculate Interest
Method Charge Memo
Balance Due Open Entries Open entries at Remaining Amount
Document Date of of each finance
Finance Charge Memo. charge memo line.

Balance Due Closed No Finance Charge No Finance Charge

Entries Memo created. Memo created.

Balance Due All Entries Open entries at Remaining Amount

Document Date of of each finance
Finance Charge Memo. charge memo line.

Average Open Entries Open entries at Remaining Amount

Daily Document Date of of each finance
Balance Finance Charge Memo. charge memo line.

Average Closed Closed entries at Remaining Amount

Daily Entries Document Date of at the Due Date of
Balance Finance Charge Memo each closed entry
Open at their Due Date. suggested.

Average All Entries The combined entries for Same base as the
Daily the Open and Closed Open and Closed
Balance Entries options. Entries options.

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Lab 7.4: Create and Issue Finance Charge Memos

Scenario

It is the beginning of March 2014 and finance charge memos must be created and
issued for past due customer entries as of February 28, 2014.

Issue a finance charge memo for customer 42147258 only, without printing or
changing the posting date.

Exercise 1: Create and Issue Finance Charge Memos

Task 1: Create and Issue Finance Charge Memos

High Level Steps

1. Run the Create Finance Charge Memos batch job as specified in the
scenario.
2. Issue the finance charge memo as is specified in the scenario.

Detailed Steps
1. Run the Create Finance Charge Memos batch job as specified in the
scenario.
a. On the Navigation Pane, click Home.
b. Click Finance Charge Memos.
c. On the Actions tab, click Create Finance Charge Memos.
d. Expand the Options FastTab.
e. In the Posting Date field, enter 02/28/14.
f. In the Document Date field, enter 02/28/14.
g. Click OK.

2. Issue the finance charge memo as is specified in the scenario.

a. On the Navigation Pane, click Home.
b. Click Finance Charge Memos.
c. Select the finance charge memo for customer 42147258 and then
click Edit.
d. On the Actions tab, click Issue.
e. Click OK.

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Module 7: Receivables Management: Reminders and Finance Charge Memos

Calculate Interest on Reminders

Besides calculating interests in finance charge memos, you can also calculate
interests on reminders. This means that you can combine the function of
reminding customers to overdue invoices, using different levels, with calculating
and charging interests in one document.

Set Up Overview

When you combine the interest charges with the reminders, make sure that you
complete the following setup.

• Reminder Terms:
o Select or clear the Post Interest field - If this check box is
selected, any interest listed on the reminder will be posted to the
G/L and customer accounts when the reminder is issued.
o Select or clear the Calculate Interest field on the Reminder
Levels - If this check box is selected, interest is calculated on the
reminder lines and displayed on the reminder. Interest is
calculated based on the Finance Charge Terms Code selected on
the customer card.
o Assign the Reminder Term Code to the customer card.
• Finance Charge Terms:
o Make sure that you assign the Fin. Charge Term Code to the
customer card. Otherwise, interest cannot be charged on the
reminder, even when the reminder term and levels are set up for
interest calculation.

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Reminder Process with Interest Calculation

FIGURE 7.17: REMINDERS PROCESS WITH INTEREST CALCULATION

Create and Issue Reminders with Interest Calculation

The steps that you must perform when you create and issue reminders with
interest calculation are identical to the steps that you must perform to create and
issue reminders without interest calculation.

The Use Header Level check box on the reminder header or on the Create
Reminders batch job, only has an effect when the reminder includes interest
calculation, because it will determine whether to calculate interest on the
reminder lines.

The reminder terms setup resembles the finance charge terms setup. The setup on
the reminder terms takes precedence for the following fields.

• Post Interest
• Post Additional Fee
• Grace Period
• Due Date Calculation
• Additional Fee Amount

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When you combine interest charges on reminders, only the interest-related fields
on the finance charge term are used to calculate the interest amount on the
reminder lines.

Use a Header Level Option Example

A customer has two overdue amounts.

• The first amount already appeared in a reminder and is now at Level 2

when the next reminder is created.
• The second amount has not appeared in a reminder before and is
therefore at Level 1 when the next reminder is created.

In this situation, the reminder header has a reminder Level of 2, because it uses
the highest level from the lines.

If reminder terms are set up with Level 2 having interest calculated while Level 1
does not and the Use Header Level check box is selected, the following will occur
when the batch job is run.

• The reminder level on the header is Level 2.

• The number of reminders for the first overdue amount is one and the
reminder level is 1.
• The number of reminders for the second overdue amount is two and
on the reminder level is 2.
• Interest is calculated for both lines in the reminder.

Interest Calculation Rules in Reminders

Unlike finance charge memos, customer ledger entries suggested in reminders are
only open entries at the Document Date of the reminder.

If the reminder is assigned a finance charge term with an Interest Calculation

Method of Balance Due, then:

• The Interest Calculation field has no effect.

• The amount of interest calculated for each reminder line suggested is
based on the Remaining Amount of the reminder line.

If the reminder is assigned a finance charge term with an Interest Calculation

Method of Average Daily Balance, the Interest Calculation field has the
following effect.

• If Open Entries or All Entries is selected in the Interest Calculation

field, then the amount of interest calculated for each reminder line
suggested is based on the Remaining Amount of the reminder line.

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Finance Essentials in Microsoft Dynamics® NAV 2013
• If Closed Entries is selected in the Interest Calculation field, then the
amount of interest calculated for each reminder line suggested is
based on the Remaining Amount of the related customer ledger
entry on its Due Date. Interest can be calculated on the full invoice
amount of the partially applied entries if they are overdue at the time
that the partial payment is applied.

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Module 7: Receivables Management: Reminders and Finance Charge Memos

Module Review
Module Review and Takeaways

Using Receivables Management in Microsoft Dynamics NAV 2013 helps you

manage your collections processes. Reminders and finance charge memos can
easily be created and combined.

Test Your Knowledge

Test your knowledge with the following questions.

1. Which of the following statements on reminders is true?

( ) A reminder term in Microsoft Dynamics NAV always has three levels.

( ) You can only create each reminder level once.

( ) You can charge interest to a customer by using reminders.

( ) Additional fees are always posted to the general ledger.

2. What is the result of the Update Reminder Text function?

( ) The beginning and ending text on the reminder is changed. If you use
text variables, they are recalculated.

( ) The beginning and ending text on the reminder is changed.

( ) If you use text variables, they are recalculated.

3. On which on the following entries can you calculate interest?

( ) Open entries, applied entries, all entries

( ) Open entries, applied entries, closed entries.

( ) Open entries, closed entries, all entries.

( ) Applied entries, closed entries, all entries.

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4. You can charge interest to customers either by using finance charge memos
or reminders. What are the advantages and disadvantages of both systems?

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Test Your Knowledge Solutions

Module Review and Takeaways

1. Which of the following statements on reminders is true?

(√) A reminder term in Microsoft Dynamics NAV always has three levels.

( ) You can only create each reminder level once.

( ) You can charge interest to a customer by using reminders.

( ) Additional fees are always posted to the general ledger.

2. What is the result of the Update Reminder Text function?

(√) The beginning and ending text on the reminder is changed. If you use
text variables, they are recalculated.

( ) The beginning and ending text on the reminder is changed.

( ) If you use text variables, they are recalculated.

3. On which on the following entries can you calculate interest?

(√) Open entries, applied entries, all entries

( ) Open entries, applied entries, closed entries.

( ) Open entries, closed entries, all entries.

( ) Applied entries, closed entries, all entries.

4. You can charge interest to customers either by using finance charge memos
or reminders. What are the advantages and disadvantages of both systems?

MODEL ANSWER:

<Add Answer here>

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Finance Essentials in Microsoft Dynamics® NAV 2013

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MODULE 8: VAT

Module Overview
Value-Added Tax (VAT) is a tax on consumption that is paid by the end consumer.

For the seller, it is a tax only on the value that is added to a product, material, or
service.

All companies are required to calculate and report VAT on sales and
purchases. Therefore, companies must become familiar with the setup process, in
addition to how to calculate, display, and adjust VAT amounts in sales and
purchase documents.

Additional functions that make the required VAT reporting more efficient include
the following:

• Import VAT
• VAT Corrections
• VAT Reporting
• VAT Settlement
• Unrealized VAT
• Payment Discount VAT Adjustments

Note: Although the general concepts of VAT are the same in all countries that
apply VAT, statements and VAT rates differ from country to country. This module
explains VAT based on the Microsoft Dynamics NAV 2013 worldwide (W1)
database. To be compliant with national VAT legislation, most country versions of
Microsoft Dynamics NAV 2013 include localizations on VAT.

Objectives

The objectives are:

• Explain the different VAT calculation types.

• Show how to reverse a VAT charge.
• Describe how to correct a posted VAT entry.
• Show how to record Import VAT.
• Explain the Prices Including VAT fields on sales and purchase
documents.
• Explain how to adjust calculated VAT amounts in sales and purchase
documents and journals.

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• Describe unrealized VAT.
• Explain, create, and print a VAT Statement.
• Explain and run the Calc. and Post VAT Settlement batch job.

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 Module 8: VAT

VAT Calculation Type

In Microsoft Dynamics NAV 2013, VAT is calculated based on the VAT Business
Posting Group and the VAT Product Posting group.

The VAT posting setup resembles the general posting setup and is covered in the
course Application Setup in Microsoft Dynamics NAV 2013.

FIGURE 8.1: VAT POSTING SETUP WINDOW

The VAT posting setup also includes the VAT Calculation Type field. With the
VAT calculation type field, the method of calculating VAT is defined.

VAT Calculation Type Overview

Microsoft Dynamics NAV 2013 has four methods of calculating VAT. The following
table provides a description for these four methods.

Option Description
Normal VAT Use this option to calculate VAT for items sold or
purchased with this particular combination of
business posting group and product posting group
code.
With this option, the seller of the item calculates and
withholds the VAT.

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Option Description
Reverse Charge VAT Use this option when you are trading with other
countries, and, or regions within the European Union
(EU), where the purchaser must calculate and settle
VAT accounts that have the tax authorities.
If this option is used, the Reverse Chrg. VAT Acc.
field must be filled in.
When you are selling goods with reverse charge VAT,
VAT is neither calculated nor withheld.
When you are purchasing goods, the program
calculates the VAT amount, debits the Purchase VAT
Account, and credits the Reverse Chg. VAT Account.

Full VAT Use this option when the amount to post, with this
particular combination of the VAT business posting
group and the VAT product posting group, consists
completely of VAT.
This option is useful, for example, when you record
import VAT, or make an entry to correct a VAT
calculation error. If the correct entry is made by using
Full VAT, the original VAT entries are not referenced.
This can make the preparation of the VAT Statement
more difficult.

Sales Tax Use this option only if United States (U.S.) sales tax is
recorded instead of VAT.

Demonstration: EU Purchases with Reverse Charge VAT

Scenario: On January 23 2014, April, the accounts payable coordinator at

CRONUS International Ltd., receives a purchase invoice from the German vendor
JB-Spedition for 1,200.00 euros for delivery expenses.

April uses G/L account 8450 to post the delivery expenses.

Because JB-Spedition is a European Union (EU) vendor and it does not invoice
VAT, April must make sure that she uses the reverse charge VAT when she is
posting the purchase invoice.

Demonstration Steps

1. Create the purchase invoice for vendor 49989898 – JB-Spedition and

analyze the results.
a. On the Navigation Pane, click Departments > Financial
Management > Payables > Purchase Invoices.
b. In the ribbon, click New to create a new purchase invoice.

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 Module 8: VAT
c. In the Buy-from Vendor No. field, click the drop-down list.
d. Locate and select vendor 49989898.
e. In the Posting Date field, enter 01/23/14.
f. In the Vendor Invoice No. field, enter RC001.
g. In the lines, in the Type field, click the drop-down list and select
G/L Account.
h. In the No. field enter 8450.
i. In the Quantity field, enter 1.
j. In the Direct Unit Cost Excl. VAT field, enter 1200.
k. In the ribbon, click Post.
l. Click Yes to post the invoice.
m. Close the Purchase Invoice window.

To review the posted result, follow these steps.

n. In the Search box, enter Posted Purchase Invoices, and then

click the related link.
o. Locate and select the line for vendor 49989898.
p. In the ribbon, click Navigate.

The navigate function shows all the records, linked to this posted purchase
invoice.

To review the G/L entries, follow these steps.

q. Select the G/L entry line.

r. In the ribbon, click Show.

FIGURE 8.2: GENERAL LEDGER ENTRIES WINDOW

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Notice that there are four G/L entries. Because of the reverse charge VAT, there
are two entries with VAT amounts. These entries use the G/L accounts set up in
the VAT posting setup.

To review the VAT entry for this invoice, follow these steps.

a. With the General Ledger Entries window open, click ESC to

return to the Navigate window.
b. Select the VAT entry line.
c. In the ribbon, click Show.

FIGURE 8.3: VAT ENTRIES WINDOW

Based on the VAT posting setup, the combination of the VAT business posting
group “EU” and the VAT product posting group “VAT25” results in the Reverse
Charge VAT calculation type.

Demonstration: Set Up and Post Import VAT

Scenario: April, the accounts payable coordinator at CRONUS International Ltd.

posts a purchase invoice of 100,000.00 local currency (LCY) for imported goods,
that is received from a U.S. vendor on January 30, 2014.

When the VAT invoice from the transport company (vendor 62000 –
WalkerHolland) arrives, it shows a calculated import VAT amount of 25 percent of
the invoice amount (25,000.00 LCY). Therefore, the posting of this VAT invoice
should result in a VAT base of zero (0) and a VAT amount of 25,000.00 LCY.

The first step is to set up a general ledger account and the VAT posting setup to
accommodate the Import VAT. In this demonstration, the import VAT is posted by
using a purchase invoice.

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 Module 8: VAT
Demonstration Steps

1. Set up the Import VAT.

a. Set up the following to record Import VAT by using a general
journal:
 VAT Product Posting Group
 G/L Account
 VAT Posting Setup combination for Import VAT
b. To set up the VAT product posting group for Import VAT, follow
these steps.
i. On the Navigation Pane, click Departments
> Administration > Application Setup > Financial
Management > VAT Posting Group > VAT Product
Posting Groups.
ii. Click New.
iii. In the Code field, enter IMPVAT.
iv. In the Description field, enter Import VAT.
v. Close the VAT Product Posting Group window.
c. To set up the G/L account for Import VAT, follow these steps.
i. On the Navigation Pane, click Financial Management
> General Ledger > Chart of Accounts.
ii. Click New.
iii. In the No. field, enter 5650.
iv. In the Name field, enter Import VAT 25%.
v. In the Income/Balance field, click the drop-down list
and select Balance Sheet.
vi. On the Posting FastTab, in the General Posting Type
field, click the drop-down list and select Purchase.
vii. In the Gen. Bus. Posting Group field, click the drop-
down list and select NATIONAL.
viii. In the VAT Bus. Posting Group field, click the drop-
down list and select NATIONAL.
ix. In the Gen. Prod. Posting Group field, click the drop-
down list and select MISC.
x. In the VAT Prod. Posting Group field, overwrite the
default value with IMPVAT.
xi. Click OK.
xii. Click Indent Chart of Accounts.
xiii. Click Yes to continue with the indent function.

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d. To set up the VAT posting setup for Import VAT, follow these
steps.
i. On the Navigation Pane, click the Departments >
Administration > Application Setup > Financial
Management > VAT Posting Group > VAT Posting
Setup.
ii. Click New.
iii. In the VAT Bus. Posting Group field, click the drop-
down list and select NATIONAL.
iv. In the VAT Prod. Posting Group field, click the drop-
down list and select IMPVAT.
v. Leave the VAT % field set to zero (0).
vi. In the VAT Calculation Type field, click the drop-down
list and select Full VAT.
vii. In the Purchase VAT Account field, enter 5650.
e. No other fields have to be populated in this card.

2. Post a purchase invoice to record Import VAT.

a. On the Navigation Pane, click Departments > Financial
Management > Payables and then select Purchase Invoices.
b. Click New.
c. In the Buy-from Vendor No. field, click the drop-down list.
d. Locate and select vendor 62000 - WalkerHolland.
e. In the Posting Date field, enter 01/30/14.
f. In the Vendor Invoice No. field, enter WH001.
g. In the lines, in the Type field, click the drop-down list and select
G/L Account.
h. In the No. field, enter 5650.
i. In the Quantity field, enter 1.
j. In the Direct Unit Cost Excl. VAT field, enter 25000.

Note: You can view the result of the VAT calculation type FULL VAT before
you post the invoice by going to the Purchase Invoice Statistics page (F7).

k. Click Post.
l. Click Yes to post the invoice.
m. Close the Purchase Invoice window.

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To review the posted entries, follow these steps.

a. In the Search box, enter Posted Purchase Invoices, and then

click the related link.
b. Locate and select the line for vendor 62000.
c. In the ribbon, click Navigate.

The navigate function shows all the records that are linked to this posted purchase
invoice.

To review the G/L entries, follow these steps.

a. Select the G/L entry line.

b. In the ribbon, click Show.

FIGURE 8.4: GENERAL LEDGER ENTRIES WINDOW

There are two G/L entries with the same G/L account. The first entry is for the VAT
base amount and it is zero. The second entry is for the VAT amount.

To review the VAT entry for this invoice, follow these steps.

a. With the General Ledger Entries window open, click ESC to

return to the Navigate window.
b. Select the VAT entry line.
c. In the ribbon, click Show.

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FIGURE 8.5: VAT ENTRIES WINDOW

In the VAT Entries window, the Base field is 0.00 and the Amount field is
25,000.00 local currency (LCY).

Demonstration: Set Up and Post a VAT Correction

Scenario: April, the accounts payable coordinator at CRONUS International Ltd.,

receives an invoice from the vendor Electronics Ltd. (No 61000). The invoice is for
1,250.00 LCY and includes a 25 percent VAT. With the VAT25 posting
combination, the following entries are made:

• 1,250.00 LCY credit to both the relevant vendor account and the
payables account.
• 250.00 LCY debit to the purchase VAT account.

April later receives the vendor invoice that states the amount including VAT is
1240.00 LCY. Therefore, a 10.00 correction must be posted. April contacts Cassie,
the accountant, to make the correction.

Because this is the first VAT correction that is made at CRONUS International Ltd.,
Cassie sets up the following to prepare for the correction:

• Purchase VAT 25% account is set up for Direct Posting.

• The correction VAT Product Posting Group is created.
• The VAT Posting Setup combination for National (domestic) vendors
and the Correction VAT Product Posting Group is created, for Full
VAT, with a zero VAT %.

As soon as the setup is complete, she posts the correction by using a general
journal and then reviews the posting. As soon as the posting and review are
complete, she removes the Direct Posting features on the G/L accounts.

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 Module 8: VAT
Demonstration Steps

1. Set up the G/L account and VAT posting groups.

a. On the Navigation Pane, click Departments > Financial
Management > General Ledger > Chart of Accounts.
b. Locate G/L account 5630.
c. In the ribbon, click Edit.
d. Click the Direct Posting check box to insert a check mark.
e. Click OK to close the G/L account card.
f. In the navigation pane, click Administration > Application
Setup > Financial Management, click VAT Posting Group >
VAT Product Posting Groups.
g. Click New.
h. In the Code field, enter Correct.
i. In the Description field, enter VAT corrections.
j. With the new line selected, click Setup.
k. In the ribbon, click New.
l. In the VAT Bus. Posting Group field, click the drop-down list
and then select NATIONAL.
m. In the VAT Calculation Type field, click the drop-down list and
then select Full VAT.
n. In the Purchase VAT Account field, enter 5630.
o. Click OK.
p. Click Close
q. Click OK.

2. Post a VAT correction by using the general journal.

a. On the navigation pane, click Financial Management >
General Ledger > General Journals.
b. In the Batch Name field, click the drop-down list and select
Default.
c. Click OK.
d. Delete any existing journal lines.
e. Open the Choose Column feature and add VAT Bus. Posting
Group and VAT Prod. Posting Group.
f. In the Posting Date field, enter 01/01/14.
g. In the Account No. field, enter 5630.
h. In the Amount field, enter -10.00.
i. In the General Posting Type field, click the drop-down list and
then select Purchase.

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j. In the VAT Bus. Posting Group field, click the drop-down list
and then select National.
k. In the VAT Prod. Posting Group field, click the drop-down list
and then select Correct.
l. In the Bal. Account Type field, click the drop-down list and then
select Vendor.
m. In the Bal. Account No. field, enter 61000.
n. Click Post.
o. Click Yes to post the journal.
p. Click OK.
q. Close the General Journals window.

To view the VAT correction entries, follow these steps.

a. In the Search box, enter G/L Registers, and then select the
related link.
b. Press CTRL+END to move to the last entry.
c. In the ribbon, click General Ledger.
d. Open the Choose Column feature and add the VAT Amount
field.
e. Click OK and reopen the general ledger entries.

FIGURE 8.6: GENERAL LEDGER ENTRIES WINDOW

When the general journal is posted, the following entries are created:

o 10.00 LCY credit to the VAT Amount (VAT Entry credit)

o 10.00 LCY credit to the Purchase VAT Account
o 10.00 LCY debit to the Payables Account

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To review the VAT entry credit, follow these steps.

a. With any line in the General Ledger Entries window, click

Navigate.
b. Click the VAT Entry line and then click Show. The 10.00 LCY VAT
entry credit appears.
c. Close the VAT Entries, Navigate and General Ledger Entries
windows.

To remove the direct posting features on the G/L accounts, follow these steps.

a. On the Navigation Pane, click the Departments button, click

Financial Management, click General Ledger, and then select
Chart of Accounts.
b. Locate G/L account 5630.
c. In the ribbon, click Edit.
d. Click the Direct Posting check box to remove the check mark.
e. Click OK to close the G/L Account Card window.

Display VAT Amounts in Sales and Purchase

Documents
Companies can display and calculate VAT amounts in sales and purchase
documents differently, depending on the Prices Including VAT settings on the
customer or vendor card.

Note: Except for retail sales, the Prices Including VAT check box typically is
not selected.

Display VAT Amounts in Sales and Purchase Documents

The selection made in the Prices Including VAT check box determines whether
unit prices on sales documents and direct unit costs on purchase documents
include VAT. Set up the Prices Including VAT check box in the following areas:

• Customer Card
• Vendor Card
• Item Card
• Sales document header
• Purchase document header

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The following table shows the description of the behavior of the Prices Including
VAT check box, when you select it and when you do not select it on the customer
and vendor cards.

Prices Includes VAT check box Description

Not selected Sales and purchase documents are
automatically set up to exclude VAT from unit
prices and direct unit costs. Therefore, the
price and cost fields on the respective
document dynamically display Unit Price Excl.
VAT and Direct Unit Cost Excl. VAT.

Selected Sales and purchase documents are

automatically set up to include VAT in unit
prices and direct unit costs. Therefore, the
price and cost fields on the respective
document dynamically display Unit Price Incl.
VAT and Direct Unit Cost Incl. VAT.

On the item card, if the Prices Including VAT check box is not selected, VAT is
not included in the unit price, and the unit price is copied directly from the item
card to the Unit Price field on the sales line. If the Prices Including VAT check
box is selected, VAT is subtracted from the price on the item card before it is
entered on the sales line, and the VAT Bus. Posting Gr. (Price) field must be
filled in.

Note: To include VAT in the unit price on items, you must display the Prices
Including VAT and VAT Bus. Posting Gr. (Price) fields on the Item Card window
by using the Object Designer.

The following table provides an overview of how unit price amounts are
calculated for a sales document when prices are not set up in the Sales Prices
window.

Price Includes Prices Including Action Performed

VAT field on VAT field in Sales
Item Card Header
No check mark No check mark The Unit Price on the Item Card is
copied to the Unit Price Excl. VAT
field on the sales lines.

No check mark Check mark The VAT amount for each unit is
calculated and added to the Unit Price
on the Item Card. This total Unit Price
is then entered in the Unit Price Incl.
VAT field on the sales lines.

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Price Includes Prices Including Action Performed
VAT field on VAT field in Sales
Item Card Header
Check mark No check mark The VAT amount included in the Unit
Price on the Item Card is calculated by
using the VAT% related to the VAT
Bus. Posting Gr. (Price) and the VAT
Prod. Posting Group combination. The
Unit Price on the Item Card that is
reduced by the VAT amount is then
entered in the Unit Price Excl. VAT
field in the sales lines.

Check mark Check mark The Unit Price on the Item Card is
copied to Unit Price Incl. VAT field
on the sales lines.

If the Prices Including VAT function is set up on customers and vendors, you do
not have to change the settings on the sales or purchase document headers.
However, if amounts on individual documents have to include or exclude VAT, the
Prices Including VAT check box in the header can be changed.

If you change the Prices Including VAT setting in a sales or purchase document
header, you receive a message that asks you to update the unit price or direct unit
cost on the lines. If you change the Prices Including VAT setting, any manual
changes that you make to the unit prices or direct unit costs are overwritten.

Adjust VAT Amounts in Sales and Purchase Documents

and Journals
When VAT amounts that are calculated by Microsoft Dynamics NAV 2013 differ
slightly from VAT amounts that are calculated by the customer or vendor, the
amount can be manually adjusted on the sales or purchase documents, and on
general, sales, or purchase journals.

Setup

Users can manually enter or adjust VAT amounts, if the calculated amount differs
slightly from the amount calculated by the customer or vendor, for example, a
difference that is caused by rounding.

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The following must be set up before you enter or adjust VAT in documents and
journals:

• General Ledger Setup: Specify a maximum VAT correction amount

that can be allowed.
• Sales & Receivables Setup: Allow the VAT difference for sales.
• Purchases & Payables Setup: Allow the VAT difference for
purchases.
• Journal Templates: Allow the VAT difference for the relevant journal.

To set up the maximum VAT correction amount, follow these steps.

1. On the Navigation Pane, click the Departments > Administration

> Application Setup > Financial Management > Finance >
General Ledger Setup.
2. In the Max. VAT Difference Allowed field, enter the maximum VAT
correction amount for the local currency. For example, if five is
entered, then the VAT amounts can be corrected by an increase of
5.00 LCY.
3. Close the General Ledger Setup window.

FIGURE 8.7: GENERAL LEDGER SETUP WINDOW

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To allow a VAT correction for sales and purchases, follow these steps.

1. On the Navigation Pane, click the Departments > Administration

> Application Setup > Financial Management > Finance > Sales
& Receivables Setup.
2. Select the Allow Vat Difference check box to allow the manual
adjustment of VAT amounts in sales documents.
3. Close the Sales & Receivables Setup window.
4. Select Purchases & Payables Setup.
5. Select the Allow Vat Difference check box to allow the manual
adjustment of VAT amounts in purchase documents.
6. Close the Purchases & Payables Setup window.

To set up the VAT difference allowance in the relevant journal, follow these steps.

1. On the Navigation Pane, click the Departments > Administration

> Application Setup > Financial Management > General >
Journal Templates.
2. To edit the General Journal Templates, double-click the journal
name.
3. To use each journal to adjust VAT amounts, select the Allow VAT
Difference check box.
4. You will receive a message to update all related batches. If only
certain batches are used to adjust VAT amounts, click No to set up
individual batches. Otherwise, click Yes.

If you answer No to the message that asks you to update all related batches, then
you must set up individual batches. To set up individual batches, follow these
steps.

1. In the General Journal Templates window, click the Navigate tab of

the ribbon, and then click Batches.
2. For each batch, add a check mark in the Allow VAT Difference check
box.
3. Close the General Journal Batches.
4. Close the General Journal Templates.

Adjust VAT Amounts in Journals

After setup is complete, VAT adjustments can be made in the Sales Order
Statistics or Purchase Order Statistics windows.

To open both windows, follow these steps.

1. From the sales or purchase order, click Statistics.

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2. Click the Invoicing FastTab. Adjustments can only be made while on
this FastTab.
3. Drill-down on the No. of VAT Lines field.

FIGURE 8.8: PURCHASE ORDER STATISTICS WINDOW

In both windows, the total VAT amount for the invoice, grouped by VAT identifier,
is displayed in the lines. To make an adjustment, change the amount in the VAT
Amount field on the lines for each VAT identifier.

Note: If the sales or purchase document has a currency code assigned, the
VAT amounts in the Statistics page are displayed in the same currency.

When the VAT Amount field is changed, Microsoft Dynamics NAV 2013 verifies
that the VAT amount has not changed by more than the amount that is specified
as the maximum difference allowed. If this is the case, then, one of the following
actions occurs:

• If the amount is outside the range of the Max. VAT Difference

Allowed, the system displays a warning stating that the maximum
allowed difference and the adjustment is prevented. Click OK and
enter another VAT Amount that is within the allowed range.
• If the VAT difference is equal to or less than the maximum allowed,
the VAT is divided proportionally among the document lines that
have the same VAT identifier.

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Confirm the original VAT amount and the adjusted difference on the Sales Order
Statistics or Purchase Order Statistics windows by using the Show Column
function to display the Calculated VAT Amount and VAT Difference fields.

Demonstration: Adjust a VAT Amount in a Purchase

Document

Scenario: April, the accounts payable coordinator at CRONUS International Ltd.,

receives an invoice from vendor 10000, for purchase order 106009. The VAT
amount on the invoice is 226.00 LCY, and it is not calculated as 225.90 LCY.

April discusses the difference with Phyllis, the accounting manager, who tells her
to set up a 0.10 LCY maximum VAT correction amount and to allow corrections
for purchases.

April accidentally enters 0.01 LCY as the maximum and then tries to adjust the
VAT amount on the purchase invoice. Because the change is not within the
allowed range, she is prevented from making the change. She checks her setup,
and after correcting the maximum VAT correction amount, she adjusts the VAT
amount accordingly.

The Calculated VAT Amount and VAT Difference fields are also added to the
Purchase Order Statistics window to review the original VAT amount and the
difference between the amounts.

Demonstration Steps

1. Set up Microsoft Dynamics NAV 2013 so that you can make VAT
corrections.
a. On the Navigation Pane, click Departments > Administration
> Application Setup > Financial Management > Finance >
General Ledger Setup.
b. In the Max. VAT Difference Allowed field, enter 0.01.
c. Click OK to close the General Ledger Setup window.
d. Click Purchases & Payables Setup.
e. Add a check mark in the Allow Vat Difference check box.
f. Click OK to close the Purchases & Payables Setup window.

2. Make the adjustment on the purchase order.

a. On the navigation pane, click Purchase > Order Processing >
Purchase Orders.
b. Locate and select order 106009.
c. In the ribbon, click Statistics.
d. Click the Invoicing FastTab.

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e. To open the VAT Amount Lines, click the number 1 field No. of
VAT Lines.
f. In the VAT Amount field in the lines, enter 226.00.
g. Press Tab or Enter.

You will receive an error message stating that the VAT difference must not exceed
Max. VAT Difference Allowed = 0.01.

h. Click OK, and then click Yes to delete the changes.

i. Click OK to close the Purchase Order Statistics window.

3. Correct the maximum VAT difference allowed and complete the VAT
amount adjustment on the purchase order.
a. On the Navigation Pane, click Departments > Administration
> Application Setup > Financial Management > Finance >
General Ledger Setup.
b. Update the Max. VAT Difference Allowed field to 0.10.
c. Click OK to close the General Ledger Setup window.
d. On the Navigation Pane, click Purchase > Order Processing >
Purchase Orders.
e. Locate and select order 106009.
f. On purchase order 106009, click Statistics.
g. Click the Invoicing FastTab.
h. Click the No. of VAT Lines field.
i. In the VAT Amount field in the lines, enter 226.00.
j. Click OK.

Notice that a message does not appear in the header, and the 25% VAT field in
the General FastTab still contains the original amount of 225.90 LCY.

k. Open the VAT Amount Lines window. Notice that the 25% VAT
field now contains the adjusted amount of 226.00 LCY.
l. In the Choose Column feature, add the Calculated VAT
Amount and VAT Difference.
m. Review the amounts and then close the VAT Amount Lines,
Purchase Order Statistics, and Purchase Order windows.

Adjust VAT Amounts in Journals

Calculated VAT amounts can be adjusted in general, sales, and purchase journals.
This might be necessary when an invoice received from a vendor is entered in the
general journal and the VAT amount on the invoice differs from the calculated
VAT amount.

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After setup is complete, adjustments to VAT amounts to equal invoiced VAT
amounts can be made in the VAT Amount field in the general journal and the
Bal. VAT Amount field in the sales or purchase journal.

Similar to changing VAT amounts in sales and purchase documents, Microsoft

Dynamics NAV 2013 verifies that the difference is not greater than the specified
maximum. One of the following actions then occurs:

• If the difference is greater than the maximum allowed, the system

displays a warning stating that the maximum allowed difference and
the adjustment is prevented. Click OK and enter another amount that
is within the allowed range.
• If the VAT difference is equal to or less than the maximum allowed,
the difference is displayed in the VAT Difference field.

Demonstration: Adjust a VAT Amount in a General

Journal

Scenario: Phyllis, the accounting manager at CRONUS International Ltd., enters

expenses in the general journal, and she notices that there are some minor VAT
differences.

For the journal to accept changes to the VAT amounts, Phyllis sets a 2.00 LCY
maximum VAT difference and allows for a VAT difference in the general journal
and all related batches.

One of the expenses, the 800.00 LCY for Electricity and Heating, calculates VAT at
160.00 LCY. However, the VAT amount she is posting is 162.00 LCY. She
accidentally enters 163.00 LCY and receives an error. After Phyllis enters the
correct VAT amount, she reviews the amount in the VAT Difference field.

Demonstration Steps

1. Adjust a VAT Amount in a General Journal.

a. On the Navigation Pane, click the Departments, click
Administration, click Application Setup, click Financial
Management, click Finance, and then select General Ledger
Setup.
b. In the Max. VAT Difference Allowed field, enter 2.
c. Close the General Ledger Setup window.
d. On the navigation pane, click General, and then select Journal
Template.
e. Locate and select the GENERAL template.
f. Add a check mark in the Allow VAT Difference check box.
g. Click Yes to update all related general journal batches.
h. Close the General Journal Templates window.

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To enter a line in the general journal and adjust the VAT amount, follow these
steps.

a. On the Navigation Pane, click General Ledger and then select

General Journals.
b. In the Batch Name field, click the drop-down list and select
Default.
c. Click OK.
d. Delete existing lines, if any exist.
e. Open the Choose Column feature and add the VAT Amount
and VAT Difference fields.
f. In the Posting Date field, enter 01/25/14.
g. Make sure that the Account Type is set to G/L Account.
h. In the Account No. field, enter 8120.
i. In the Amount field, enter 800.
j. Notice that the VAT Amount field contains 160.00 LCY. Change
this amount to 163.
k. Press Tab or Enter. You will receive a message that states that the
VAT Difference must not be more than two.
l. In the VAT Amount field, enter 162.
m. Press Tab or Enter.
n. Review the amount in the VAT Difference field and close the
General Journal window.

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 Module 8: VAT

Lab 8.1: Adjust a VAT Amount in a Sales Document

Scenario

A purchase order is received from customer 20000, Selangorian Ltd., for sales
order 101017. The customer has agreed to pay the full amount of the sales order.
However, the customer’s calculated VAT is slightly larger than the calculation that
appears on the sales order. The calculated VAT amount is 277.27 LCY. The
customer has calculated the VAT amount as 280.21 LCY.

To increase the sales order process, you set up a maximum VAT correction
amount of 3.00 LCY and enable the VAT differences on sales documents. After the
setup is complete, you change the VAT amount on the sales order.

Exercise 1: Adjust a VAT Amount in a Sales Document

Task 1: Setup Microsoft Dynamics NAV 2013 to Adjust VAT Amounts

for Sales Documents

High Level Steps

1. Open the General Ledger Setup window.
2. Set the maximum VAT difference as it is specified in the scenario.
3. Open the Sales & Receivables Setup window.
4. Allow the VAT difference for sales documents.

Detailed Steps
1. Open the General Ledger Setup window.
a. On the Navigation Pane, click Departments > Administration
> Application Setup > Financial Management > Finance
> General Ledger Setup.
2. Set the maximum VAT difference as it is specified in the scenario.
a. In the Max. VAT Difference Allowed field, enter 3.
b. Close the General Ledger Setup window.
3. Open the Sales & Receivables Setup window.
a. Click Sales & Receivables Setup.
4. Allow the VAT difference for sales documents.
a. Put a check mark in the Allow Vat Difference check box.
b. Close the Sales & Receivables Setup window.

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Task 2: Adjust the VAT Amount on Sales Order 101017

High Level Steps

1. Open the Sales Order window and locate order 101017.
2. Open the Sales Order Statistics window.
3. Click the Invoicing FastTab and enter the adjusted VAT amount as it
is specified in the scenario.

Detailed Steps
1. Open the Sales Order window and locate order 101017.
a. On the Navigation Pane, click Sales & Marketing > Order
Processing > Sales Orders.
2. Open the Sales Order Statistics window.
a. Locate and select order 101017.
b. Click Statistics.
3. Click the Invoicing FastTab and enter the adjusted VAT amount as it
is specified in the scenario.
a. Click the Invoicing FastTab.
b. Click the No. of VAT Lines 1 field.
c. In the VAT Amount field in the lines, enter 280.21.
d. Click OK.
e. Close the Sales Order Statistics window.

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 Module 8: VAT

Lab 8.2: Adjust a VAT Amount in a Purchase Journal

Scenario

An expense for vehicle maintenance is received. As the accounts payable

coordinator at CRONUS International Ltd., you typically post these expenses by
using the Purchase Journal instead of creating an invoice.

In the past, these invoices have contained large differences in VAT calculations.
Therefore, before you enter the expense, you set a 10.00 LCY maximum VAT
difference allowance and then verify that both the purchase journal and Purchase
area are set up to adjust VAT amounts.

The journal line includes the following information:

• Batch: Default
• Posting Date: January 28 2014
• G/L account: 8530
• Amount: 210.17
• Adjusted VAT amount: 51.49

You do not have to enter a balancing account or post the journal.

Exercise 1: Adjust a VAT Amount in a Purchase Journal

Task 1: Setup Microsoft Dynamics NAV 2013 to Adjust VAT Amounts

for Purchase Journals

High Level Steps

1. Open the General Ledger Setup window.
2. Set the maximum VAT difference as it is specified in the scenario.
3. Open the Journal Templates window.
4. Allow VAT differences for the purchases journal template.
5. Open the Purchases & Payables Setup window.
6. Allow VAT differences for purchases.

Detailed Steps
1. Open the General Ledger Setup window.
a. On the Navigation Pane, click Departments > Administration
> Application Setup > Financial Management > Finance >
General Ledger Setup.
2. Set the maximum VAT difference as it is specified in the scenario.
a. In the Max. VAT Difference Allowed field, enter 10.
b. Close the General Ledger Setup window.

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3. Open the Journal Templates window.
a. On the navigation pane, click General and then select Journal
Templates.
4. Allow VAT differences for the purchases journal template.
a. Select the Purchases journal template and add a check mark in
the Allow VAT Difference check box.
b. Click Yes to update all related general journal batches.
c. Close the Journal Templates window.
5. Open the Purchases & Payables Setup window.
a. On the navigation pane, click Finance, and then select
Purchases & Payables Setup.
6. Allow VAT differences for purchases.
a. Add a check mark in the Allow Vat Difference check box.
b. Close the Purchases & Payables Setup window.

Task 2: Create the Expense and Adjust the VAT Amount

High Level Steps

1. Open the Purchase Journal window.
2. Show the VAT Amount and VAT Difference fields, if this is
necessary.
3. Enter the expense line as it is specified in the scenario.

Detailed Steps
1. Open the Purchase Journal window.
a. On the Navigation Pane, click Purchase > Order Processing >
Purchase Journals.
b. Make sure that the Default batch is selected.
2. Show the VAT Amount and VAT Difference fields, if this is
necessary.
a. Open the Choose Column feature and add the VAT Amount
and VAT Difference fields.
3. Enter the expense line as it is specified in the scenario.
a. In the Posting Date field, enter 01/28/14.
b. Make sure that the Account Type is set to G/L Account.
c. In the Account No. field, enter 8530.
d. In the Amount field, enter 210.17.
e. In the VAT Amount field, enter 51.49.
f. Press Tab or Enter.
g. Review the amount in the VAT Difference field.

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 Module 8: VAT

Unrealized VAT
Microsoft Dynamics NAV provides the options to process unrealized VAT.

VAT is typically calculated when the invoice is created but is not due or realized
until the invoice is paid.

Note: Using unrealized VAT depends on national VAT legislation, and is

therefore not used in all countries.

Unrealized VAT Setup

To process unrealized VAT, the Unrealized VAT check box must be selected in
the General Ledger Setup page.

You must define how and when VAT is realized in the Unrealized VAT Type field
in the VAT Posting Setup page. If the default value is blank, this indicates that
unrealized VAT is not calculated for the combination of the VAT business and the
VAT product posting groups.

If you must calculate unrealized VAT, the five options that are available are shown
in the following table.

Option Description
Percentage Each payment covers both VAT and the invoice
amount in proportion to the payment's percentage of
the remaining invoice amount. The paid VAT amount is
transferred from the unrealized VAT account to the
VAT account.

First Payments cover VAT first and then invoice amounts.

The amount transferred from the unrealized VAT
account to the VAT account equals the payment
amount until the total VAT is paid.

Last Payments cover the invoice amount first and then the
VAT. No amount is transferred from the unrealized
VAT account to the VAT account, until the total
amount of the invoice, excluding VAT, is paid.

First (Fully Paid) Payments cover VAT first (as in the First option), but no
amount is transferred to the VAT account until the full
VAT amount is paid.

Last (Fully Paid) Payments cover the invoice amount first (as in the Last
option), but no amount is transferred to the VAT
account until the full VAT amount is paid.

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As soon as the Unrealized VAT Type is selected, enter the accounts that unrealized
VAT posts to in the following fields:

• Sales VAT Unreal. Account

• Purch. VAT Unreal. Account
• Reverse Chrg. VAT Unreal. Acc.

VAT Statements
Most companies are required to periodically submit a VAT declaration. The VAT
statement is used to specify the basis for calculating the VAT that is payable to the
tax authorities. The VAT statement is defined based on the following:

• Accounts in the Chart of Accounts window.

• Entries in the VAT Entries window.

The advantage of using the VAT entries is that you can close these entries by
posting the VAT settlement. When you work with VAT entries, you can locate VAT
correction entries in previous accounting periods, where the VAT statement is
created.

In Microsoft Dynamics NAV 2013, the VAT statement is typically only defined
during the initial company setup, and it is set up with the format that is required
by the tax authorities. Additionally, it can be previewed and printed after it is
defined.

VAT Statement Templates and Names

Before you can create a VAT statement, you must create a VAT statement
template.

To create a VAT Statement Template, follow these steps.

1. On the Navigation Pane, click Departments > Administration >

Application Setup > Financial Management > General > VAT
Statement Templates.
2. Click New.
3. In the Name field, enter a unique name for the template.
4. In the Description field, enter a short description for the template.

To assign statements to a template, follow these steps.

1. On the VAT Statement Templates window, select the relevant

template.
2. On the Navigate tab of the ribbon, click Statement Names.
3. In the Name field, enter a unique name for the statement.

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4. In the Description field, enter a short description for the statement.
5. Close the VAT Statement Names and VAT Statement Templates
windows.

The VAT Statement is now defined in the VAT Statement window.

Sometimes you could have different VAT reporting requirements, such as when
you are reporting to different government authorities or to different
governments. When this is required, you must create different VAT statements.

If different VAT Statements are created based on the same template, different
names are created in the VAT Statement Names window.

VAT Statement

When the VAT business posting group and the VAT product posting group
transaction posts, the system processes the VAT amounts on the G/L accounts
according to how they are defined in the VAT Posting setup. Then the VAT entries
are created.

You can use the VAT Statement window to calculate the VAT settlement amount
for a specific period. By defining the VAT Statement window, you determine how
the statement is calculated and how it appears when it is printed.

Each line in the VAT statement represents a filter on the G/L Entry table or the
VAT Entry table.

FIGURE 8.9: VAT STATEMENT WINDOW

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The following list describes the fields that appear on the VAT Statement:

• Name – Accesses the VAT Statement Names window. New

statement names can be set up or existing statements can be
selected.
• Description – Description of the VAT statement line. It is
recommended that you use the description from the customs and tax
authorities VAT statement form.
• Type – Determines what the VAT statement line includes. The
following options are available:
o Account Totaling: Used when VAT is totaled by using G/L
Account entries. If this is selected, the Account Totaling field
must be filled in with the G/L account range to total.
o VAT Entry Totaling: Used when VAT is totaled by using VAT
entries. If this is selected, you must fill in the following fields:
- Gen. Posting Type
- VAT Bus. Posting Group
- VAT Prod. Posting Group
- Amount Type
o Row Totaling: Used to define the totaling of other rows in the
VAT statement. If this is selected, the Row Totaling field must be
filled in with the row range to total.
o Description: Used when the row is to contain only text or
symbols, for example, a dotted line.
• Account Totaling – If Account Totaling is selected in the Type field,
specify the G/L account interval or a series of G/L account numbers to
be included in the row total.
• General Posting Type, VAT Bus. Posting Group, and VAT Prod.
Posting Group – If VAT Entry Totaling is selected in the Type field,
the appropriate value for the row must be specified in each field.
These fields determine the VAT entries that are totaled from the VAT
Entry table.
• Amount Type – If VAT Entry Totaling is selected in the Type field,
specify whether the totaling of VAT entries will consist of VAT
amounts or the amounts on which the VAT is based. The options are
as follows:
o Blank: No amount is totaled.
o Amount: The VAT Amount in the selected VAT entries is totaled
in the row.
o Base: The Base Amount used to calculate the VAT in the selected
VAT entries is totaled in the row.
o Unrealized Amount: The Unrealized VAT Amount in the
selected VAT entries is totaled in the row.

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 Module 8: VAT
o Unrealized Base: The Unrealized Base Amount used to
calculate the Unrealized VAT in the selected VAT entries is totaled
in the row.
• Row Totaling – If Row Totaling is selected in the Type field, the row-
number interval or the series of row numbers that should be included
in the row total must be specified.
• Calculate With – Determines whether Microsoft Dynamics NAV 2013
reverses the sign of VAT entries when it performs calculations. The
options are as follows:
o Sign: Uses the sign of the VAT entry.
o Opposite Sign: Uses the opposite sign of the VAT entry.
• Print – If this is selected, the row is printed on the VAT Statement.
• Print With – Determines whether amounts on the VAT statement are
printed with their original sign or with the sign reversed. The options
are the same as in the Calculate With field.
• New Page – If this is selected, a new page begins immediately after
this row when the VAT statement is printed.

Demonstration: Define, Preview, and Print a VAT

Statement

Scenario: Phyllis, the accounting manager at CRONUS International Ltd., has to

set up a new VAT statement for European tax authorities. Based on the tax
authorities requirement, this statement includes the following:

• One description row heading

• One blank row
• Three statement rows:
o Two for calculating VAT entries on 10 percent and 25 percent
VAT
o One for totaling the VAT entry rows

After Phyllis sets up the VAT statement, she runs a preview to confirm the setup
and then prints the statement.

Demonstration Steps

1. Create a VAT statement by using VAT entries.

a. On the Navigation Pane, click Departments > Financial
Management > Periodic Activities > VAT > VAT Statements.
b. In the Name field, click the drop-down list to create a VAT
statement.
c. Click New.

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Finance Essentials in Microsoft Dynamics® NAV 2013
d. In the Name field, enter VAT Europe.
e. In the Description field, enter VAT Statement for Europe.
f. Click OK.
g. On the first line, in the Description field, enter Monthly VAT
statement.
h. In the Type field, click the drop-down list and then select
Description.
i. Skip the next line to create a blank line.
j. In the third line, in the Row No. field, enter REV1.
k. In the Description field, enter VAT Revenue Domestic 25%.
l. In the Type field, click the drop-down list and then select VAT
Entry Totaling.
m. In the General Posting Type field, click the drop-down list and
then select Sale.
n. In the VAT Bus. Posting Group field, click the drop-down list
and then select National.
o. In the VAT Prod. Posting Group field, click the drop-down list
and then select VAT25.
p. In the Amount Type field, click the drop-down list and select
Amount.
q. Do not change the default settings in the remaining fields.

To enter the fourth and fifth lines, follow these steps.

a. Click the next line.

b. In the Row No. field, enter REV2.
c. In the Description field, enter VAT Revenue Domestic 10%.
d. In the Type field, click the drop-down list and then select VAT
Entry Totaling.
e. In the General Posting Type field, click the drop-down list and
then select Sale.
f. In the VAT Bus. Posting Group field, click the drop-down list
and then select National.
g. In the VAT Prod. Posting Group field, click the drop-down list
and then select VAT10.
h. In the Amount Type field, click the drop-down list and then
select Amount.
i. Do not change the default settings in the remaining fields.
j. Click the next line.
k. In the Row No. field, enter REV3.
l. In the Description field, enter VAT Revenue Domestic.

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m. In the Type field, click the drop-down list and then select Row
Totaling.
n. In the Row Totaling field, enter REV1..REV2.
o. Do not change the default settings in the remaining fields.

Reporting and Printing a VAT Statement

To view a calculated VAT Statement before you print it, in the VAT Statement
window, click Preview in the ribbon.

FIGURE 8.10: VAT STATEMENT PREVIEW WINDOW

On the General FastTab of the VAT Statement Preview window, specify the
following:

• The date filter

• The VAT statement that you must preview
• The VAT entries that you must include in the calculations

These selections determine the lines that are contained in the actual statement
and the lines that appear in the preview.

On lines where the Type field contains VAT Entry Totaling, you can access the
individual entries that make up the sum in the Column Amount field by clicking
the drop-down list.

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Periodically, a printed statement detailing the VAT transactions must be provided
to the tax authorities. To print the VAT Statement, follow these steps.

1. In the VAT Statement window, with the relevant batch to print

selected, in the ribbon, click Print.
2. Click the Options FastTab:
o Specify the statement period in the Starting Date and Ending
Date fields.
o Filter by VAT Entry type to print the following:
 Totals based on any combination of Open and, or Closed
VAT Entries.
 Entries inside or outside the period.
o Round the report to whole numbers.
o Print in additional currency.
3. Click the VAT Statement Line FastTab.
4. Filter the printed row numbers as is needed.
5. Click Preview to review the statement, or Print to print the
statement.
6. Close the open windows.

Note: In addition to the VAT Statement report, most country specific

versions of Microsoft Dynamics NAV contain additional VAT reports, based on local
VAT legislation.

VAT Settlement
Periodically, the net VAT must be remitted to the tax authorities. To calculate this
amount, run the Calc. and Post VAT Settlement batch job. The following list
describes some specifics that are related to this batch job:

• Calculates VAT settlement of open VAT entries in previous accounting

periods.
• Finds all the VAT entries in the VAT Entry window—for every VAT
Posting Group combination that is included in the filters in the batch
job.
• Use it to start the posting process or to print a test report.
• Run it as frequently as it is needed.

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Running the Calc. and Post VAT Settlement Batch Job

To run the Calc. and Post VAT Settlement batch job, follow these steps.

1. On the Navigation Pane, click Departments > Financial

Management > Periodic Activities > VAT > Calc. and Post VAT
Settlement.
2. In the Starting Date and Ending Date fields, define the date range
for the VAT entries to be settled.
3. In the Posting Date field, define the posting date for the settlement.
4. In the Document No. field, enter a unique number. This field is
required to run the batch job.
5. In the Settlement Account field, click the drop-down list and then
select the G/L account that the net of the Purchase and Sales VAT
entries are transferred to.
6. In the Show VAT Entries check box:
o Click to insert a check mark to display all VAT entries that are
used to calculate each VAT Posting Group settlement amount.
o Leave it unchecked to display only the total settlement for each
VAT Posting Group.
7. In the Post check box, when you print or preview the batch job, do
the following:
o Click to insert a check mark to post the transfer to the VAT
settlement account automatically.
o Leave it unchecked to print a test report.
8. Click to insert a check mark in the Show Amounts in Add.
Reporting Currency check box for report amounts to be shown in
the additional reporting currency.
9. On the VAT Posting Setup FastTab, filter on the VAT business or
product posting groups to be included in the batch job, when it is
needed.

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FIGURE 8.11: CALC. AND POST VAT SETTLEMENT WINDOW

To preview or print the report, follow these steps.

1. Click Preview to review the report, or click Print to print the VAT
Settlement.
2. If the Post check box is checked, you will receive a message that asks
whether the VAT Settlement has to be calculated and posted.
o Click Yes to continue posting.
o Click No to prevent posting.
3. Close the Print Preview window.

VAT Settlement Posting Results

When you post the Calc. and Post VAT Settlement batch job, it closes open VAT
entries and transfers purchase and sales VAT amounts to the VAT settlement
account.

When VAT entries are closed, the Closed field on the VAT Entry is selected. The
entry number of the settlement entry that closed the VAT entry is automatically

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 Module 8: VAT
inserted in the Closed by Entry No. field. This occurs only when the amount must
be transferred between G/L accounts.

When a VAT amount is transferred to a VAT settlement account, the account for
purchase VAT is credited and the account for sales VAT is debited with the
amount from the VAT statement period. The account for VAT settlement is
credited with the net amount (or, if the purchase VAT amount is larger, it is
debited).

Note: After VAT entries are posted and their status is closed, they cannot be
reopened. However, VAT reports can be created from these closed entries.

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Module Review
Module Review and Takeaways

When doing business with EU countries, VAT must be reported. The system can
automatically calculate VAT amounts for sales, purchases and import.

Microsoft Dynamics NAV 2013 can run all the necessary reports related to VAT. To
accurately report VAT to the appropriate authorities, you must understand the
reporting capabilities that are available in Microsoft Dynamics NAV 2013.

Test Your Knowledge

Test your knowledge with the following questions.

1. Where can you not set up prices including VAT?

( ) G/L accounts

( ) Customer and vendor cards

( ) Sales and purchase documents

( ) Item cards

2. What happens when the Calc. and Post VAT Settlement batch job is posted?

( ) VAT entries are closed and removed.

( ) Purchase VAT entries are applied with sales VAT entries.

( ) Purchase and Sales VAT amounts are transferred to the VAT

settlement account.

( ) A payment line is suggested in the payment journal.

3. Which of the following is not an option in the VAT Calculation Type field of
the VAT posting setup?

( ) Normal VAT

( ) Full VAT

( ) Sales Tax

( ) EU VAT

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4. What is true about the VAT calculation type Full VAT?

( ) Using Full VAT, the amount is posted as a VAT base.

( ) Using Full VAT, the amount is posted as a VAT amount.

( ) Full VAT can only be used in purchase and sales documents.

( ) Full VAT cannot be used in purchase and sales documents.

5. Which of the following is not required to adjust VAT amounts in sales and
purchase documents?

( ) The VAT difference must be allowed for sales and purchases.

( ) A maximum VAT correction amount allowed must be specified.

( ) The Invoicing FastTab must be selected on the Sales Order Statistics or

Purchase Order Statistics window.

( ) A minimum VAT correction amount allowed must be specified.

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Test Your Knowledge Solutions

Module Review and Takeaways

1. Where can you not set up prices including VAT?

(√) G/L accounts

( ) Customer and vendor cards

( ) Sales and purchase documents

( ) Item cards

2. What happens when the Calc. and Post VAT Settlement batch job is posted?

( ) VAT entries are closed and removed.

( ) Purchase VAT entries are applied with sales VAT entries.

(√) Purchase and Sales VAT amounts are transferred to the VAT
settlement account.

( ) A payment line is suggested in the payment journal.

3. Which of the following is not an option in the VAT Calculation Type field of
the VAT posting setup?

( ) Normal VAT

( ) Full VAT

( ) Sales Tax

(√) EU VAT

4. What is true about the VAT calculation type Full VAT?

( ) Using Full VAT, the amount is posted as a VAT base.

(√) Using Full VAT, the amount is posted as a VAT amount.

( ) Full VAT can only be used in purchase and sales documents.

( ) Full VAT cannot be used in purchase and sales documents.

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5. Which of the following is not required to adjust VAT amounts in sales and
purchase documents?

( ) The VAT difference must be allowed for sales and purchases.

( ) A maximum VAT correction amount allowed must be specified.

( ) The Invoicing FastTab must be selected on the Sales Order Statistics or

Purchase Order Statistics window.

(√) A minimum VAT correction amount allowed must be specified.

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MODULE 9: PREPAYMENTS

Module Overview
Prepayments are the payments before the final invoicing of a sales or purchase
order. A sales or purchase prepayment invoice should be created for each advance
payment that is requested so that these prepayments can be posted and applied
to the prepayment invoices. By doing this, you will improve the follow-up on the
sales and purchase orders and the tracking of prepayments.

In Microsoft Dynamics 2013, prepayments are available for both sales and
purchases.

• On the sales side, prepayments are used to require customers to pay

a part of the total amount of their order-specified as an amount or a
percentage-in advance of the final invoice.
• On the purchases side, prepayments are used to document and
process prepayments that vendors require.

Note: The prepayment functionality is not integrated to Service Management.

Microsoft Dynamics NAV 2013 can be set up to require:

• Selected customers to prepay a specific percentage of the total sales

order amount.
• Specified prepayment percentages for particular combinations of
customers or customer price groups and items.
• All customers to prepay a specific percentage for selected items.
• Selected vendors to prepay a specific percentage of the total
purchase order amount.
• Specified prepayment percentages for particular combinations of
vendors and items.
• Verification that the prepayment is made before shipping or receiving
items.

Note: Do not use the prepayments functionality to process customer deposits

and retainers.

To use prepayments, you must set up the following.

• Assign general ledger accounts on general posting groups for

prepayments

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• Number series for prepayment documents
• Prepayment percentages for selected vendors and customers
• Prepayment percentages for combinations of:
o Customers, customer price groups, or all customers and items
o Vendors and items
• Check boxes to require before the posting of sales shipments or
purchase receipts:
o The receipt of prepayment amounts that are from customers for
sales
o The issue of prepayment amounts that are from vendors for
purchases

After the required setup is complete, a user can generate prepayment invoices
from the sales and purchase orders for the calculated prepayment amount, and
the correct prepayment invoices as they are needed.

Note: For more information about how to set up prepayments and any
known limitations of the prepayments feature, refer to the Prepayments white
paper (May, 2011). (http://go.microsoft.com/fwlink/?LinkId=267545)

Objectives

The objectives are:

• Explain the requirements for setting up prepayments.

• Set up and assign prepayment General Ledger accounts.
• Set up prepayment numbering for sales and purchases.
• Set up default prepayment percentages on customers and vendors.
• Set up default prepayment percentages for Customer-Item and
Vendor-Item combinations.
• Set up prepayment posting verification for sales and purchases.
• Explain the prepayment processing flows for sales and purchase
orders.
• Describe the prepayment-specific fields on sales and purchase orders.
• Create sales and purchase orders with prepayment percentages and
amounts.
• Create prepayment invoices that are from sales and purchase orders.
• Explain the processes available to correct posted prepayment
invoices.

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Set Up General Posting Groups

Because the prepayment amount belongs to the buyer until he or she has
received the goods or services, companies must set up general ledger accounts to
post the prepayment amounts until the final invoice is posted. To recognize
ownership, companies must set up Microsoft Dynamics NAV 2013 to record:

• Customer prepayments in a liability account until the items are

shipped.
• Vendor prepayments in an asset account until the items are received.

Note: How to set up general ledger accounts is described in the Chart of

Accounts module for this course.

Note: Value-added tax (VAT) for the prepayment amounts. This means the
prepayment invoice is handled through a combination of the VAT product posting
group set up on the general ledger account for the prepayment and the VAT
business posting group that is set up on the customer or vendor in the sales or
purchase order header. Therefore, a separate general ledger account is required for
each VAT product posting group.

VAT for the prepayment amounts is not handled through the VAT product posting
group on the sales order line.

These general ledger accounts must be assigned to the relevant general posting
setup combinations on the General Posting Setup page. To complete this setup,
follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Posting Groups > General Posting Setup.
4. In the Choose Column feature, add Sales Prepayments Account
and Purch. Prepayments Account.
5. Click OK to close the Choose Column page.
6. For every line that contains a combination of general business posting
group and general product posting group that requires sales or
purchase prepayments, enter the following:
o In the Sales Prepayments Account field, enter the number of
the general ledger account to use for posting sales prepayment
amounts.
o In the Purch. Prepayments Account field, enter the number of
the General Ledger account to use for posting purchase

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prepayment amounts.
7. Click Close to close the General Posting Setup window.

FIGURE 9.1: GENERAL POSTING SETUP WINDOW

Set Up Unrealized VAT for Prepayments

VAT for the prepayment amount. This means the prepayment invoice is handled
through a combination of the VAT product posting group that is set up on the
general ledger account for prepayment, and the VAT business posting group that
is set up on the customer or vendor in the sales or purchase order header.

Note: How to set up unrealized VAT is discussed in the “VAT” module in this
course.

When VAT is used with the Prepayment Unrealized VAT check box in the
General Ledger Setup window (this is how it is used in many countries), VAT that
is from the prepayment invoice will be realized as soon as the payment is applied
to it.

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 Module 9: Prepayments
Another opportunity to realize VAT that is from a prepayment invoice is when
goods or services on order are delivered. In this case, the posting of the sales
order (final invoice posting) realizes the unrealized VAT posted in the prepayment
invoice if that invoice is open. If this is not the behavior you want, select the
Check Prepmt. When Posting check box in the Sales & Receivables Setup
window. This setting makes sure that a prepayment invoice is applied before the
final invoice can be posted. Both realized and unrealized transactions are handled
through the Prepayments Account set up in the General Posting Setup window.

Set Up General Ledger Setup

The setup in the General Ledger Setup page makes sure that the unrealized VAT
feature is opened and the VAT that is from the prepayment invoice will be
realized as soon as the payment is applied to it.

To access the General Ledger Setup page, follow these steps.

1. In the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > General Ledger Setup.
4. Expand the General FastTab.
5. Select the Unrealized VAT check box.

The Prepayment Unrealized VAT check box is automatically selected.

6. Click OK to close the General Ledger Setup page.

Note: When the Unrealized VAT check box is selected, the Prepayment
Unrealized VAT check box must also be selected.

You can select the Prepayment Unrealized VAT check box, without having to
select the Unrealized VAT check box.

When the prepayment invoice is not yet applied, when the final invoice is created it
will automatically realize the unrealized VAT posted in the prepayment invoice.

Set Up VAT Posting Groups

When you use unrealized VAT, you must have different general ledger accounts to
post realized and unrealized VAT. To do this, set up these general ledger accounts
on the VAT Posting Setup page.

These realized and unrealized VAT accounts will be used when the prepayment
invoice is posted, based on the VAT posting groups assigned to the used
prepayments general ledger account.

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Set Up Number Series for Prepayment Documents

Companies must set up a number series for every type of prepayment document
that is used. The prepayment documents are as follows:

• Sales prepayment invoices

• Sales prepayment credit memos
• Purchase prepayment invoice
• Purchase prepayment credit memos

The same number series can be used for:

• Prepayment invoices and credit memos.

• Regular invoices and credit memos.

Alternatively, you can use a different number series. When you use a different
number series, each number series must be unique so that you can browse
effectively on posted transactions.

Note: How to set up a number series is covered in the course Application

Setup in Microsoft Dynamics NAV 2013.

Set Up Prepayment Numbering for Sales

To set up a prepayment number series for sales, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Sales & Receivables Setup.
4. Expand the Numbering FastTab.
5. In the Posted Prepmt. Inv. Nos. field, enter the number series to use
to assign numbers to sales prepayment invoices when they are
posted.
6. In the Posted Prepmt. Cr. Memo Nos. field, enter the number series
to use to assign numbers to sales prepayment credit memos when
they are posted.
7. Click OK to close the Sales & Receivables Setup page.

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FIGURE 9.2: SALES & RECEIVABLES SETUP WINDOW – NUMBERING

FASTTAB

Set Up Prepayment Numbering for Purchases

To set up a prepayment number series for purchases, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Purchases & Payables Setup.
4. Expand the Numbering FastTab.
5. In the Posted Prepmt. Inv. Nos. field, enter the number series to use
to assign numbers to purchase prepayment invoices when they are
posted.
6. In the Posted Prepmt. Cr. Memo Nos. field, enter the number series
to use to assign numbers to sales prepayment credit memos when
they are posted.
7. Click OK to close the Purchases & Payables Setup page.

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FIGURE 9.3: PURCHASES & PAYABLES SETUP WINDOW – NUMBERING

FASTTAB

Set Up Prepayment Percentages for Customers and

Vendors
Companies can specify a default percentage for prepayments to use for all sales
for customers and for all purchases that are from vendors. As soon as the
percentage is specified, it is automatically populated on the Prepayment FastTab
of the sales or purchase order header, and will be copied to all sales or purchase
order lines. Then the prepayment percentage is calculated on the total sales or
purchase amount of the order.

Note: Prepayment percentages specified on customers and vendors apply to

all lines entered on sales and purchase orders, not only items.

Set Up Prepayment Percentages for Customers

To set up a default prepayment percentage for a customer, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Financial Management > Receivables > Customers.
3. Select the customer who requires a default prepayment percentage
and then click Edit.
4. Expand the Invoicing FastTab.
5. In the Prepayment % field, enter the default percentage.
6. Click OK to close the Customer Card page.

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Demonstration: Set Up Prepayment Percentages for
Vendors

Scenario: The vendor London Postmaster always charges CRONUS International

Ltd. with a prepayment of 10 percent on all orders. As the accounts payable
coordinator, you are responsible for setting up prepayments for vendors.

To set up a default prepayment percentage for a vendor, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Financial Management > Payables > Vendors.
3. Select vendor 10000 and then click Edit.
4. Expand the Invoicing FastTab.
5. In the Prepayment % field, enter 10.
6. Click OK to close the Vendor Card page.

Set Up Prepayment Percentages for Customer-Item

and Vendor-Item Combinations
Companies can set up a default prepayment percentage for an item that is being
sold to all customers, a specific customer, or a customer price group. This default
prepayment percentage for a specific combination will take precedence over the
default prepayment percentage that is set up for the customer. The default
prepayment percentage for a customer-item combination will take precedence
over the default prepayment percentage for a customer price-group combination
and take precedence over the default prepayment percentage for an item that is
sold to all customers.

Various combinations of items and customers can be set up from the Customer
Card or the Item Card. The same Sales Prepayment Percentages page is used
from both locations. However, the preset filters differ, depending on whether the
page is opened from the Customer Card or the Item Card.

Note: The Sales Prepayment Percentages page cannot be accessed from

the Customer Price Groups page.

Companies can also set up a default prepayment percentage for an item that is
being purchased for a specific vendor. This prepayment percentage will take
precedence over the default prepayment percentage set up for the customer.

The various combinations of items and vendors can be set up from the Vendor
Card or from the Item Card. The same Purchase Prepmt. Percentages page is
used from both locations. However, the preset filters differ, depending on whether
the window is opened from the Vendor Card or from the Item Card.

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Set Up Prepayment Defaults for a Customer-Item
Combination

To set up prepayment defaults for a combination of an item and customer,

starting from the Item Card, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Warehouse > Planning & Execution > Items.
3. Select the item that requires a default prepayment percentage for a
specific combination of item and customer.
4. In the Sales section of the Navigate tab, click Prepayment
Percentages.

FIGURE 9.4: SALES PREPAYMENTS PERCENTAGES WINDOW – ITEM

The Item No. Filter field is automatically populated with the item the Sales
Prepayments Percentages page is opened from.

5. In the Sales Type field, click the drop-down list and select either
Customer, Customer Price Group, or All Customers.
6. In the Sales Code field, click the drop-down list and select the
particular Customer or Customer Price Group for whom this
prepayment percentage applies or leave it blank when the Sales type
field contains the value All Customers.
7. In the Item No. field, click the drop-down list and select the item the
prepayment percentage applies to.

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8. In the Starting Date field, enter the date to start charging the
prepayment percentage.
o Set the Starting Date to the current date by leaving the field
blank.
o If a future date is entered, the rule starts automatically on that
date.
9. In the Ending Date field, enter the date to stop charging the
prepayment percentage.
o If the Ending Date field is left blank, the rule does not expire
until it is edited or removed.
o If a future date is entered, the rule expires automatically on that
date.
10. In the Prepayment % field, enter the percentage of the item cost to
charge as a prepayment. For example, if a prepayment of 10 percent
is charged on this item, enter 10 in this field.
11. Click OK to close the Sales Prepayment Percentages page.

To set up prepayment defaults for a combination of an item and customer,

starting from the Customer Card, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Financial Management > Receivables > Customers
3. Select the customer who requires a default prepayment percentage
for a specific combination of item and customer.
4. On the Navigate tab, click Prepayment Percentages.

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FIGURE 9.5: SALES PREPAYMENTS PERCENTAGES WINDOW –

CUSTOMER
5. The Sales Type Filter field and Sales Code Filter field are
automatically populated with the customer the Sales Prepayments
Percentages page is opened from. Remove or change these filters, if
you want to set up default prepayment percentages for combinations
of items with customer price groups or all customers.

The following steps are identical to steps 6 through 11 when the Sales
Prepayments Percentages page is opened from the Item Card.

6. Click OK to close the Sales Prepayments Percentages page.

Demonstration: Set Up Prepayment Defaults for a Vendor-

Item Combination

Scenario: Because of the delicate material of the item 8924-W server – enterprise
package, the vendor London Postmaster charges CRONUS International Ltd. with
a prepayment of 20 percent for this item, instead of the regular 10 percent for
other items. As the accounts payable coordinator, you are responsible for setting
up prepayments for vendors.

To set up the prepayment default for the vendor-item combination, starting from
the Item Card, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Warehouse > Planning & Execution > Items.

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3. Select item 8924-W.
4. In the Purchases section of the Navigate tab, click Prepayment
Percentages.

The Item No. Filter field is automatically populated with item 8924-
W.
5. In the Vendor No. field, click the drop-down list and select vendor
10000.

The Item No. field is automatically populated with item 8924-W.

6. Leave the Starting Date and Ending Date field blank.
7. In the Prepayment % field, enter 20.
8. Click OK to close the Purchase Prepmt. Percentages page.

FIGURE 9.6: PURCHASES PREPMT. PERCENTAGES WINDOW– ITEM 8924-W

To set up prepayment defaults for a combination of an item and vendor, starting

from the Vendor Card, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Financial Management > Payables > Vendors.
3. Select the vendor that requires a default prepayment percentage for
a specific combination of item and vendor.

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4. On the Navigate tab, click Prepayment Percentages.

FIGURE 9.7: PURCHASE PREPMT. PERCENTAGES - VENDOR

The Vendor No. Filter field is automatically populated with the vendor the
Purchases Prepmt. Percentages page is opened from.

The following steps are identical to steps 6 through 11 when the Purchase
Prepmt. Percentages page is opened from the Item Card.

5. Click OK to close the Purchase Prepmt. Percentages page.

Set Up Prepayments Verification

When users post a prepayment invoice to a customer or vendor, they can set up
Microsoft Dynamics NAV 2013 to verify that prepayments that are due from a
customer are received and prepayments that are due from a vendor are issued.

This feature makes sure that inventory is not shipped to a customer or received
from a vendor before the prepayment invoice is applied.

Note: Starting the prepayments verification, eliminates having to realize the

unrealized VAT posted in the prepayment invoice, by creating the final invoice
without applying the prepayment invoice.

Now, to realize prepayment VAT, you must apply the prepayment invoice.

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Set Up Prepayments Verification for Sales

To set up the prepayments verification when you post sales, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Sales & Receivables Setup.
4. Expand the General FastTab.
5. Select the Check Prepmt. When Posting check box to prevent the
posting of invoices before the receipt of the prepayment amount.
6. Click OK to close the Sales & Receivables Setup page.

FIGURE 9.8: SALES & RECEIVABLES SETUP WINDOW – GENERAL FASTTAB

Set Up Prepayments Verification for Purchases

To set up the prepayments verification when you post purchases, follow these
steps.

1. On the Navigation Pane, click Departments.

2. Click Administration, and then click Application Setup.
3. On the Application Setup page, click Financial Management >
Finance > Purchases & Payables Setup.
4. Expand the General FastTab.

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5. Select the Check Prepmt. When Posting check box to prevent
posting before paying the prepayment amount.
6. Click OK to close the Purchases & Payables Setup page.

FIGURE 9.9: PURCHASES & PAYABLES SETUP WINDOW – GENERAL

FASTTAB

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Lab 9.1: Set Up Prepayments for Sales

Scenario

As the accounts receivable administrator for CRONUS International Ltd., you are
responsible for setting up prepayments for particular items and customers. You
must charge a prepayment of 10 percent on all orders for Item 1896-S. You must
also charge customer 10000 a prepayment of 20 percent on all orders.

Note: To successfully perform the following detailed steps, the profile and
corresponding role center for the Accounts Receivables Administrator must be
assigned to your user ID.

Exercise 1: Set Up Prepayments for Sales

Task 1: Set Up Prepayments for Sales

High Level Steps

1. Enter the prepayment requirement for the item as it is specified in the
scenario.
2. Enter the prepayment requirement for the customer as it is specified
in the scenario.

Detailed Steps
1. Enter the prepayment requirement for the item as it is specified in the
scenario.
a. On the Navigation Pane, click Home.
b. Click Items.
c. Select item 1896-S.
d. In the Sales section of the Navigate tab, click Prepayment
Percentages.
e. In the Sales Type field, enter All Customers.
f. Leave the Sales Code field blank.

The Item No. field is automatically filled in with the item 1896-S.

g. Leave the Starting Date and Ending date fields blank.

h. In the Prepayment % field, enter 10.
i. Click OK to close the Sales Prepayment Percentages page.

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2. Enter the prepayment requirement for the customer as it is specified
in the scenario.
a. On the Navigation Pane, click Home.
b. Click Customers.
c. Select customer 10000 and then click Edit.
d. Expand the Invoicing FastTab.
e. In the Prepayment % field, enter 20.
f. Click OK to close the Customer Card page.

Prepayments Processing Flows

Users can create prepayment invoices that are from a sales or purchase order with
the prepayment invoice option.

The prepayment amount on the order is calculated based on the prepayment

percentage specified on items, customers, or vendors. Users can edit this
prepayment percentage or amount on the individual sales or purchase order.

Prepayment Sales Order Process

The following steps list the typical process flow for prepayment sales orders.

1. Create a sales order with a prepayment requirement.

2. Send a prepayment invoice for the prepayment amount to the
customer.

The customer pays the prepayment amount.

3. Apply the prepayment amount to the sales order.

4. Ship the order to the customer.
5. Create a sales invoice for the total amount of the sales order minus
the prepayment amount.
6. Receive payment from the customer and post the payment to the
sales order.

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FIGURE 9.10: PREPAYMENT SALES ORDER PROCESS

Prepayment Purchase Order Process

The following steps list the typical process flow for prepayment purchase orders.

1. Create a purchase order with a prepayment requirement.

2. Post a prepayment invoice for the prepayment amount.
3. Send the prepayment amount to the vendor.
4. Apply the prepayment amount to the purchase order.
5. After the vendor ships the order, create a purchase invoice for the
total amount of the purchase order minus the prepayment amount.
6. Send the payment to the vendor and post the payment to the
purchase order.

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FIGURE 9.11: PREPAYMENT PURCHASE ORDER PROCESS

Prepayment Sales and Purchase Orders Overview

The sales and purchase orders contain a specific Prepayment FastTab, and the
order lines also contain some prepayment-specific fields. This lesson will define
these fields and explain the prepayment percentage priority.

Sales and Purchase Order Header – Prepayment FastTab

The sales and purchase order header contains the following fields on the
Prepayment FastTab that are related to prepayments.

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FIGURE 9.12: PURCHASE ORDER – PREPAYMENT FASTTAB

• Prepayment % – The percentage to be applied to all lines on the
order. If there is a default prepayment percentage specified on the
customer or vendor, this field is automatically populated with that
amount.
However, the prepayment percentage specified on the customer or
vendor only applies to lines that do not have a default prepayment
percentage set up for the customer-item or vendor-item
combination.
• Compress Prepayment –
o If this field is cleared, a prepayment sales or purchase invoice line
is created for each sales or purchase order line.
o If this field is selected, the prepayment amount of the sales or
purchase order lines are combined as one prepayment sales or
purchase invoice line when the following is applicable:
 The order lines have the same general ledger account for
prepayments (as is defined in the General Posting Setup
page).
 The order lines have the same dimensions.
• Prepmt. Payment Terms Code – The payment terms for prepayment
invoices. As a default, this code is retrieved from the Payment Terms
Code field on the Invoicing FastTab of the order.
The prepayment payment terms are used to calculate the due date,
payment discount date, and payment discount percentages for
prepayment amounts.
• Prepayment Due Date – The date the prepayment invoice for the
order is due. The date is calculated with the date formula in the Due
Date Calculation field that is related to the prepayment payment
term and the Document Date on the order.

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• Prepmt. Payment Discount % – The payment discount percentage
that is given on the prepayment if the order is paid on or before the
date entered in the Prepmt. Pmt. Discount Date field.
• Prepmt. Payment Discount Date – The last date the prepayment
invoice can be paid and still receive a payment discount on the
prepayment amount. The date is calculated with the date formula in
the Discount Date Calculation field that is related to the
prepayment payment term and the Document Date on the order.

Prepayment Status

The Status field on the General FastTab of the order contains an option of
Pending Prepayment. This status is used when the order has one or more lines
with a prepayment amount, and the prepayment invoice is posted, but not yet
paid.

The Status field is set to open when the order is created. However this field can
also be set to the following options.

• Pending Approval, when the document is waiting to be approved.

• Pending Prepayment, when the order is approved, if document
approvals are used, and when the prepayment invoice is created and
is waiting to be paid.
• Released, when the order is approved, if the document approvals are
used. When the prepayment invoice is paid, if prepayments are used,
and when the order is released to the next stage of processing. (On
the Actions tab, click Release.)

FIGURE 9.13: PURCHASE ORDER – GENERAL FASTTAB

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Sales and Purchase Order Lines

The sales and purchase order lines contain the following fields that are related to
prepayments. Notice that you must show these fields that have the Choose
Column function.

FIGURE 9.14: PURCHASE ORDER LINES

• Prepayment % – The content of this field is determined as follows:

o If a default prepayment percentage is set up for the item on the
line, it is automatically copied into the Prepayment % field.
o If no default prepayment percentage is set up for the item, the
prepayment percentage that is from the customer or vendor card
is copied from the order header.
o The Prepayment % field can be entered or changed manually on
a line-by-line basis.
• Prepmt. Line Amount Excl. VAT – The prepayment amount of the
order line that is determined as follows:
o It is calculated automatically based on the Prepayment % and
the Line Amount Excl. VAT fields of the order line. This means
that the prepayment is calculated on the amount excluding the
discount.
o The Prepmt. Line Amount Excl. VAT field can be entered or
changed manually on a line-by-line basis.

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• Prepmt. Amt. Inv. Excl. VAT – The prepayment amount that is
already invoiced for this order line. The contents of this field cannot
be changed. To void the prepayment, you must post a repayment
credit memo for the order line.
• Prepmt. Amt to Deduct Excl. VAT – The prepayment amount that
will be deducted from the next ordinary invoice for this line.

Note: The Prepmt. Amt to Deduct Excl. VAT is calculated proportionally to

the amount for the order that will be invoiced (based on the Qty. to Invoice field).

If the Qty. to Invoice field contains a number that is less than the total quantity
ordered, you can change the amount to deduct you post the invoice.

• Prepmt Amt Deducted Excl. VAT – The prepayment amount that is

already deducted from the ordinary invoices posted for this order
line. The contents of this field cannot be changed.

Prepayment Percentage Priority for Order Lines

A sales or purchase order can have a prepayment percentage on the header and a
different percentage for the items on the lines. For each sales or purchase order
line, Microsoft Dynamics NAV 2013 searches for the prepayment percentage and
applies the first default that it finds in the following order.

1. The prepayment percentage for the item on the line and the
customer or vendor on the order header.
2. The prepayment percentage for the item on the line and the
customer price group for the customer.
3. The prepayment percentage for the item on the line for all customers.
4. The prepayment percentage on the sales or purchase header.
5. The prepayment percentage for the customer or vendor on the order
header.

Note: The priority order followed by Microsoft Dynamics NAV 2013 means
that the prepayment percentage that is specified on the customer or vendor only
applies if there is no prepayment percentage set up for the selected item.

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Process Prepayment Sales and Purchase Orders

When an order is created for an item, customer, or vendor that has a prepayment
rule defined, Microsoft Dynamics NAV 2013 retrieves the prepayment
requirement that is from the item, customer, or vendor card and enters it into the
order.

Create Prepayment Orders by Using Percentages

Creating prepayment orders resembles creating other sales and purchase orders.

To create a prepayment sales order, follow these steps.

1. On the Navigation Pane, click Departments.

2. Click Sales & Marketing > Order Processing > Sales Orders.
3. Click New to create a new sales order.
4. In the Sell-to Customer No. field, click the drop-down list and select
the relevant customer.
5. Click the Prepayment FastTab. Review the settings and update the
fields as needed. Make sure that the Prepayment % field is filled in.
6. In the Lines FastTab, in the Type field, click the drop-down list.
7. Select the relevant line type to add to the order.
8. In the No. field, click the drop-down list and select the relevant
number of the type selected in the Type field.
9. In the Quantity field, enter the number of items to be sold.
10. Review the prepayment fields to verify the settings. Notice that the
Prepayment % field is automatically filled in.
o When the Type field has a value of Item, the Prepayment %
field is filled according to the prepayment percentage priorities,
discussed in the previous lesson.
o When the Type field has a value of G/L Account, Fixed Asset,
Resource, or Charge (Item), the Prepayment % field is filled in
with the default prepayment percentage of the order header.
o When the Type field has a blank value, the Prepayment % field
cannot be filled in.
o Update the Prepayment % field as needed.
11. Press the down arrow to insert another line and repeat steps 7
through 10 for the new line.

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The same steps are used to create a purchase order, except:

• The purchase order is accessed by clicking Departments > Purchase

> Order Processing > Purchase Orders.
• The Buy-from Vendor No. is selected from the Vendor List.
• The Type field does not contain a Resource option.

Assign One Prepayment Percentage to All Order Lines

Although there can be different prepayment percentages for each order line, a
single prepayment percentage can be applied to the whole order. Perform this
action after each order line is completed.

To enter a single prepayment percentage that applies to all the order lines, follow
these steps.

1. Complete the sales or purchase order header and lines.

2. Click the Prepayment FastTab.
3. In the Prepayment % field, enter the prepayment percentage to be
applied to all the lines of the order.
4. You will receive a message that asks you to update the lines. Click Yes
to this message. The Prepayment % will be updated on all the lines
to match the header.

FIGURE 9.15: MESSAGE BOX – CHANGE PREPAYMENT %

Note: As soon as a number is entered into the Prepayment % field on the

header and the lines are updated, you cannot revert to the individual prepayment
percentages that existed for each line.

To return to the individual prepayment percentages, either delete and re-enter the
lines, or manually enter the Prepayment % on each line.

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Create Prepayment Orders by Using Prepayment Amounts

Instead of using prepayment percentages, you can define a prepayment amount

for the whole sales or purchase order. Prepayment amounts are set in the Sales
Order Statistics and the Purchase Order Statistics pages.

To apply a total prepayment amount to the order, follow these steps.

1. Complete the sales or purchase order header and lines.

2. On the Navigate tab, click Statistics.
3. Expand the Prepayment FastTab.
4. In the Prepmt. Amount Excl. VAT field, enter the prepayment
amount to be charged for the whole order. The amount in the
Prepayment Amount Excl. VAT field is distributed proportionately
between all the lines in the order, except those that have zero in the
Prepayment % field.
5. Click OK to close the Sales Order Statistics or Purchase Order
Statistics page.

FIGURE 9.16: SALES ORDER STATISTICS WINDOW

Note: If the Prices Including VAT check box is clear, you can edit the
Prepayment Amount Excl. VAT field.

If the Prices Including VAT check box on the order header is selected, you can edit
the Prepayment Amount Incl. VAT field.

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Process Prepayment Sales and Purchase Invoices

After you enter a sales or purchase order, you can create a prepayment invoice.
The default percentages for each sales or purchase line can be used, or the
amounts can be adjusted as necessary.

Create Prepayment Invoices

To create a prepayment invoice, follow these steps.

1. Complete the sales or purchase order header and lines.

2. On the Actions tab, click Prepayment.
3. Click (Post and) Print Prepmt. Invoice and then click Yes to
complete the process.

The posting process will have the following results:

o The posted sales or purchase invoice and corresponding entries

are created.
o On the sales or purchase order lines, the following fields are
updated:
 Prepmt Amt Inv. Excl. VAT
 Prepmt Amt to Deduct Excl. VAT
o On the sales or purchase order header, the Status field is
updated to the Pending Prepayment option.

Note: Before you post the prepayment invoice, you can generate a test report,
by clicking Prepayment on the Action tab, and then by clicking Prepayment Test
Report.

Review Prepayment Invoices

To review the created prepayment invoice, follow these steps.

1. From the sales or purchase order on the Navigate tab, click

Prepayment Invoices.

The View - Posted Sales Invoices or View – Posted Purchase Invoices page is
opened, with an automatic filter on the sales or purchase order that the
prepayment invoice is created from.

2. On the Home Tab, click View to view the prepayment invoice.

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The prepayment invoice contains:

o One or more invoice lines, depending on whether the Compress

Prepayment check box on the sales or purchase order header is
selected.
o The general ledger account, according to the general posting
groups on the sales or purchase order (Sales Prepayment
Account or Purch. Prepayment Account).
o The quantity is defaulted to one. The quantities of the sales or
purchase order lines are never copied.
o The VAT amount is calculated based on the VAT posting groups
on the prepayment invoice, and it depends on the customer or
vendor on the header and the general ledger account on the line.
3. Click Close to close the Posted Sales Invoice or Posted Purchase
Invoice page.
4. Click Close to close the View – Posted Sales Invoices or View –
Posted Purchase Invoices page.

Create Additional Prepayment Invoices

To create additional prepayment invoices for an order, follow these steps.

1. On the Home tab, click Reopen to make changes to the sales or

purchase order.
2. Increase the prepayment amount on one or more lines.
3. Adjust the document date, if this is required.
4. On the Actions tab, click Prepayment.
5. Click (Post and) Print Prepmt. Invoice and then click Yes to
complete the process.

The posting process will have the following results:

o A new posted sales or purchase invoice and corresponding

entries are created for the difference between the invoiced
prepayment amount and the new prepayment amount.
o On the sales or purchase order lines, the following fields are
updated:
 Prepayment Amount Inv. Excl. VAT
 Prepayment Amount to Deduct Excl. VAT
o On the sales or purchase order header, the Status field remains
unchanged.

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Create Final Sales and Purchase Invoices

Whether the final invoice can be created without a customer or vendor

prepayment, depends on the Check Prepmt. When Posting check box on the
Sales & Receivables Setup or Purchases & Payables Setup page. If it is
necessary, first process the prepayment, then continue with the following steps.

Note: Processing a prepayment is identical to processing a regular payment.

Make sure that you apply the open customer ledger entry to the prepayment
invoice. (This process is identical to a regular sales invoice.)

Payment procedures are described in the “Receivables and Payables Management

and Cash Management” module in this course.

To create a final invoice, follow these steps.

1. On the order line, review and if it is necessary, adjust the Qty. to Ship
or Qty. to Receive and Qty. to Invoice fields.
2. On the Actions tab, click Post.
3. Select (Ship and) Invoice or (Receive and) Invoice.
4. The posting process will have the following results:
o A posted sales or purchase invoice and corresponding entries are
created.
o On the sales or purchase order lines, the following fields are
updated:
 Prepmt Amt to Deduct Excl. VAT
 Prepmt Amt Deducted Excl. VAT

Note: In Microsoft Dynamics NAV 2013, the sales or purchase order cannot
post when there are unposted prepayment amounts (the amount in the Prepmt.
Line Amount excl. VAT field is more than the amount in the Prepmt. Inv.
Amount Excl. VAT field on one or more lines).

Review Final Invoices

To review the created final invoice, follow these steps.

1. From the sales or purchase order on the Navigate tab, click Invoices.

The View - Posted Sales Invoices or View – Posted Purchase

Invoices page is opened, with an automatic filter on the sales order
that the final invoice is created from.
2. On the Home Tab, click View to view the final invoice.

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The invoice contains:
o Invoice lines, identical to the sales or purchase order lines.
o The negative prepayment general ledger account invoice line, to
deduct the prepayment amount, based on the Prepmt Amount
to Deduct Excl. VAT field on the sales or purchase order lines.
This will result in the reversal of the prepayment amounts
previously posted to the balance sheet as assets or liabilities.
3. Click Close to close the Posted Sales Invoice or Posted Purchase
Invoice page.
4. Click Close to close the View – Posted Sales Invoices or View –
Posted Purchase Invoices page.

Demonstration: Prepayment Purchase Order Process

Scenario: CRONUS International Ltd. establishes an order with vendor 10000
London Postmaster with the following information.

• Document date 01/24/14.

• 10 pieces of item 8924-W Server – Enterprise package at 1,500.00 LCY
for each piece.
• 10 pieces of item 8920-W Server – Teamwear package at 500.00 LCY
for each piece.
• The vendor charges a 100.00 LCY delivery expense (general ledger
account 8450).
• The vendor sents a prepayment invoice (no. 2014/00215) on
01/27/14, according to the default prepayment percentages. There is
no prepayment calculated for the delivery expense.
• The goods are delivered on 30/01/14 before CRONUS has paid the
prepayment invoice.
• The final invoice (no. 2014/00246) is received on 30/01/12.

Note: To successfully perform this demonstration, the previous

demonstrations “Set Up Prepayment Percentages for Vendors” and “Set Up
Prepayment Defaults for a Vendor-Item Combination” must be completed.

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Steps: Create the Prepayment Purchase Order

To create the prepayment purchase order according to the scenario, follow these
steps.

1. On the Navigation Pane, click Departments.

2. Click Purchases > Order Processing > Purchase Order.
3. Click New to create a new purchase order.
4. Expand the General FastTab.
5. In the Buy-from Vendor No. field, enter 10000 and move to the next
field. The purchase order header is automatically filled in with default
information that is from the vendor card.
6. In the Document Date field, enter 01/24/14.
7. Unfold the Prepayment FastTab.

The Prepayment % field is automatically filled in with the default 10 percent,

according to the setup.

8. Select the Compress Prepayment check box.

9. Expand the Lines FastTab.
10. In the Type field, enter Item.
11. In the No. field, enter 8924-W.
12. In the Quantity field, enter 10.
13. In the Direct Unit Cost Excl. VAT enter 1,500.00.

The Prepayment % field is automatically filled in with the default 20 percent,

according to the setup.

14. Create a new purchase order line.

15. In the Type field, enter Item.
16. In the No. field, enter 8920-W.
17. In the Quantity field, enter 10.
18. In the Direct Unit Cost Excl. VAT enter 500.00.

The Prepayment % field is automatically filled in with the default 10 percent that
is from the order header.

19. Create a new purchase order line.

20. In the Type field, enter G/L Account.
21. In the No. field, enter 8450.
22. In the Quantity field, enter 1.
23. In the Direct Unit Cost Excl. VAT enter 100.00.

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The Prepayment % field is automatically filled in with the default 10 percent that
is from the order header.

FIGURE 9.17: PREPAYMENT PURCHASE ORDER – VENDOR 10000

Steps: Process and Review the Prepayment Purchase

Invoice

To create the prepayment invoice, follow these steps.

1. Expand the General FastTab.

2. In the Document Date and Posting Date field, enter 01/27/14.
3. In the Vendor Invoice No. enter 2014/00215.
4. Expand the Lines FastTab.
5. Select the line that contains the delivery expense.
6. Remove the 10 percent that is from the Prepayment % field.
7. On the Actions tab, click Prepayment.
8. Click Post and Print Prepmt. Invoice and then click Yes to complete
the process.
9. Expand the General FastTab.

The Status field is set to Pending Prepayment.

10. Expand the Lines FastTab.

11. Select the line for item 8924-W.

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The Prepmt Amt Inv. Excl. VAT and the Prepmt Amt to Deduct Excl. VAT are
updated with 3,000.00 LCY.

12. Select the line for item 8920-W.

The Prepmt Amt Inv. Excl. VAT and the Prepmt Amt to Deduct Excl. VAT are
updated with 500.00 LCY.

The line for general ledger account 8450 remains unchanged.

FIGURE 9.18: PREPAYMENT PURCHASE ORDER – VENDOR 10000

To review the created prepayment invoice, follow these steps.

1. From the purchase order on the Navigate tab, click Prepayment

Invoices.
2. The View – Posted Purchase Invoices page is opened, with an
automatic filter on the purchase order that the prepayment invoice is
created from.
3. On the Home Tab, click View to view the prepayment invoice.

One invoice line is created for the total prepayment amount of both item lines on
the purchase order. The Compress Prepayment check box on the purchase order
is selected.

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FIGURE 9.19: PREPAYMENT PURCHASE INVOICE WINDOW

4. Click Close to close the Posted Purchase Invoice page.
5. Click Close to close the View – Posted Purchase Invoices page.

Steps: Process and Review the Final Invoice

To create the final invoice, follow these steps.

1. Expand the General FastTab.

2. In the Document Date and Posting Date field, enter 01/30/14.
3. In the Vendor Invoice No. enter 2014/00246.
4. On the Actions tab, click Post.
5. Select Receive and Invoice.

Because the purchase order is completely processed, it no longer exists.

To review the created final invoice, follow these steps.

1. On the Navigation Pane, click Departments,

2. Click Purchases > History > Posted Purchase Invoices.
3. Select the newly created purchase invoice for London Postmaster.
4. On the Home Tab, click View.

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5. Expand the Lines FastTab.
a. An invoice line is created for the full purchase amount for each
purchase order line.
b. A negative invoice line is created, to deduct the previously
charged prepayment amount. The same general ledger account is
used as on the prepayment purchase invoice.

FIGURE 9.20: PURCHASE INVOICE WINDOW

6. Click Close to close the Posted Purchase Invoice page.

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Lab 9.2: Prepayment Sales Order Process with

Payment Discount
Scenario

Customer 10000 establishes an order with CRONUS International Ltd., but

changes the order later.

Susan, the Order Processor at CRONUS International Ltd. will first create the sales
order and the corresponding prepayment invoice. Later she will adjust the sales
order and the corresponding prepayment invoice.

Arnie, the Accounts Receivables Administrator will process the customer

prepayments and create the final invoice.

Note: To successfully perform this lab, the previous lab “Set Up Prepayments
for Sales” must be completed.

Note: Make sure that the database is set up to handle the payment discount
excluding VAT. The payment discount is discussed in the “Receivables and Payables
Management - Payment Discount and Payment Tolerance” module in this course.

Exercise 1: Create the Prepayment Sales Order and Process

and Review the Prepayment Sales Invoice
Exercise Scenario

Customer 10000 The Cannon Group Ltd., establishes the following order with
CRONUS International Ltd.

• Order Date 01/24/14.

• 10 pieces of item 1896-S for 649.40 LCY for each piece.
• 10 pieces of item 1900-S for 125.10 LCY for each piece.
• A delivery cost of 50.00 LCY (general ledger account 6810) is charged
to the customer.
• All items must be delivered together.
• The prepayment invoice is created according to the default settings,
except for the delivery charge. This does not require a prepayment.
• The prepayment invoice is created on 01/24/14 and contains one
invoice line for the total prepayment amount.
• The prepayment invoice has a payment term of 1M(8D) that will grant
a payment discount of two percent, when the amount is paid by the
customer within eight days.

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Note: To successfully perform the following detailed steps, the profile and
corresponding role center for the order processor must be assigned to your user ID.

Task 1: Create the Prepayment Sales Order and Process and Review
the Prepayment Sales Invoice

High Level Steps

1. Create the prepayment sales order according to the scenario.
2. Create the prepayment sales invoice according to the scenario.
3. Review the prepayment sales invoice.

Detailed Steps
1. Create the prepayment sales order according to the scenario.
a. On the Navigation Pane, click Home.
b. Click Sales Orders.
c. Click New to create the prepayment sales order.
d. Unfold the General FastTab.
e. Press ENTER to automatically insert a sales order number in the
No. field.
f. In the Sell-to Customer No. field enter 10000 and move to the
next field. The sales order header is automatically filled in with the
default settings that are from the customer card.
g. In the Document Date field, enter 01/24/14.
h. Expand the Shipping FastTab.
i. In the Shipping Advice field, enter Complete.
j. Click Yes.
k. Expand the Prepayment FastTab.

The Prepayment % field is automatically filled in with the default 20 percent,

according to the setup.

l. Select the Compress Prepayment check box.

m. In the Prepmt. Payment Terms Code enter 1M(8D).

The Prepayment Due Date, Prepmt. Payment Discount % and Prepmt. Pmt.
Discount Date, are automatically filled in based on the Document Date and the
Prepmt. Payment Terms Code.

n. Expand the Lines FastTab.

o. In the Type field, enter Item.
p. In the No. field, enter 1896-S.

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q. In the Quantity field, enter 10.
r. In the Unit Price Excl. VAT field, enter 649.40.

The Prepayment % field is automatically filled in with the default 10 percent,

according to the setup.

s. Create a new sales order line.

t. In the Type field, enter Item.
u. In the No. field, enter 1900-S.
v. In the Quantity field, enter 10.
w. In the Unit Price Excl. VAT field, enter 125.10.

The Prepayment % field is automatically filled in with the default 20 percent that
is from the order header.

x. Create a new sales order line.

y. In the Type field, enter G/L Account.
z. In the No. field, enter 6810.
aa. In the Quantity field, enter 1.
bb. In the Unit Price Excl. VAT field, enter 50.00

The Prepayment % field is automatically filled in with the default 20 percent that
is from the order header.

2. Create the prepayment sales invoice according to the scenario.

a. Expand the Lines FastTab.
b. Select the line that with G/L account 6810 (that contains the
delivery cost.)
c. Remove the 20 percent that is from the Prepayment % field.
d. On the Actions tab, click Prepayment.
e. Click Post and Print Prepmt. Invoice and then click Yes to
complete the process.
f. Expand the General FastTab.

The Status field is set to Pending Prepayment.

g. Expand the Lines FastTab.

h. Select the line for item 1896-S.

The Prepmt Amt Inv. Excl. VAT and the Prepmt Amt to Deduct Excl. VAT are
updated with 649.40 LCY.

i. Select the line for item 1900-S.

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The Prepmt Amt Inv. Excl. VAT and the Prepmt Amt to Deduct Excl. VAT are
updated with 250.20 LCY.

The line for general ledger account 6810 remains unchanged.

Review the prepayment sales invoice.

a. From the sales order, on the Navigate tab, click Prepayment

Invoices.

The View - Posted Sales Invoices page is opened, with an automatic filter on the
sales order that the prepayment invoice is created from.

b. On the Home tab, click View to view the prepayment invoice.

c. Expand the Lines FastTab.

One invoice line is created for the total prepayment amount of both item lines on
the purchase order. The Compress Prepayment check box on the purchase order
is selected.

d. Expand the Invoicing FastTab.

A payment discount of two percent is granted to the customer, when the

prepayment invoice is paid before 02/01/14.

e. On the Actions tab, click Navigate.

f. Select the VAT Entry and then click Show.

Notice that the VAT amount is calculated on the lowered base amount.

g. Click Close to close the VAT Entries page.

h. Click Close to close the Navigate page.
i. Click Close to close the Posted Sales Invoice page.
j. Click Close to close the View – Posted Sales Invoices page.

Exercise 2: Adjust the Prepayment Sales Order and Process

the Prepayment Sales Invoice
Exercise Scenario

Customer 10000 The Cannon Group Ltd. changes the newly created order by
adding new items to the sale. Adjust the sales order with the following
information.

• Order date 01/27/14.

• Five pieces of item 1924-W for 136.40 LCY for each piece.

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• The delivery cost remains unchanged if the previously ordered items
are delivered together with this new item.
• An additional prepayment invoice is created on 01/27/14 according
to the default settings for the prepayment of the new item.
• The prepayment invoice has a payment term of 1M(8D) that will grant
a payment discount of two percent, when the amount is paid by the
customer within eight days.

Note: To successfully perform the following detailed steps, the profile and
corresponding role center for the Order Processor must remain assigned to your
user ID.

Task 1: Adjust the Prepayment Sales Order and Process the

Prepayment Sales Invoice

High Level Steps

1. Adjust the sales order according to the scenario.
2. Create the prepayment sales invoice according to the scenario.
3. Review the prepayment sales invoice.

Detailed Steps
1. Adjust the sales order according to the scenario.
a. On the Home tab, click Reopen.
b. Expand the General FastTab. The Status field is set to Open.
c. In the Document Date and Posting Date field, enter 01/27/14.
d. Expand the Lines FastTab.
e. Create a new sales order line.
f. In the Type field, enter Item.
g. In the No. field, enter 1924-W.
h. In the Quantity field, enter 5.
i. In the Unit Price Excl. VAT field, enter 136.40.

The Prepayment % field is automatically filled in with the default 20 percent that
is from the order header.

2. Create the prepayment sales invoice according to the scenario.

a. On the Actions tab, click Prepayment.
b. Click Post Prepmt. Invoice and then click Yes to complete the
process.
c. Expand the General FastTab.

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The Status field is set to Pending Prepayment.

d. Expand the Lines FastTab.

e. Select the line for item 1924-W.

The Prepmt Amt Inv. Excl. VAT and the Prepmt Amt to Deduct Excl. VAT are
updated with 136.40 LCY.

The other lines remain unchanged.

3. Review the prepayment sales invoice.

a. From the sales order, on the Navigate tab, click Prepayment
Invoices.

The View - Posted Sales Invoices page is opened, with an automatic filter on the
sales order that the prepayment invoice is created from.

b. Select the second prepayment sales invoice.

c. On the Home tab, click View to view the prepayment invoice.
d. Unfold the Invoicing FastTab.

A payment discount of two percent is granted to the customer, when the

prepayment invoice is paid before 02/04/14.

e. On the Actions tab, click Navigate.

f. Select the VAT Entry and then click Show.

Notice that the VAT amount is calculated on the lowered base amount.

g. Click Close to close the VAT Entries page.

h. Click Close to close the Navigate page.
i. Click Close to close the Posted Sales Invoice page.
j. Click Close to close the View – Posted Sales Invoices page.
k. Click OK to close the Sales Order page.

Exercise 3: Process Customer Prepayment

Exercise Scenario

The following customer prepayments must be processed.

• On 01/30/14, customer 10000 pays the first prepayment invoice for a

total of 1,102.01 LCY. The customer has deducted the payment
discount correctly.
• On 02/06/14, customer 10000 pays the second prepayment invoice
for a total of 169.82 LCY. The customer did not deduct the payment
discount.

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Note: To successfully perform the following detailed steps, the profile and the
corresponding role center for the accounts receivable administrator must remain
assigned to your user ID.

Task 1: Process Customer Prepayment

High Level Steps

1. Process the first prepayment according to the scenario.
2. Process the second prepayment according to the scenario.

Detailed Steps
1. Process the first prepayment according to the scenario.
a. On the Navigation Pane, click Home.
b. Click Cash Receipt Journals.
c. Select the BANK cash receipt journal and then click Edit Journal
on the Home tab.
d. In the Posting Date field, enter 01/30/14.
e. In the Document Type field, enter Payment.
f. In the Account Type field, enter Customer.
g. In the Account No. field, enter 10000.
h. On the Home tab, click Apply Entries.
i. Select the open customer ledger entry for the first prepayment
invoice.
j. On the Home tab, click Set Applies-to ID.
k. Click OK to close the Apply Customer Entries page.

The Amount field is automatically filled in with the prepayment

amount excluding the payment discount, -1,102.01 LCY.
2. Process the second prepayment according to the scenario.
a. Create a new line in the cash receipt journal.
b. In the Posting Date field, enter 02/06/14.
c. In the Document Type field, enter Payment.
d. In the Account Type field, enter Customer.
e. In the Account No. field, enter 10000.
f. On the Home tab, click Apply Entries.
g. Select the open customer ledger entry for the second
prepayment invoice.
h. On the Home tab, click Set Applies-to ID.
i. Click OK to close the Apply Customer Entries page.

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The Amount field is automatically filled in with the prepayment
amount excluding the payment discount, -170.50 LCY.
j. On the Home tab, click Post.
k. Click Yes to complete the posting process.
l. Click OK.
m. Click OK to close the Edit - Cash Receipt Journal page.

Exercise 4: Process and Review Final Invoice

Exercise Scenario

On 02/07/14 all the items are delivered to the customer and the final invoice is
created.

Note: To successfully perform the following detailed steps, the profile and
corresponding role center for the accounts receivable administrator must remain
assigned to your user ID.

Task 1: Process and Review Final Invoice

High Level Steps

1. Create the final invoice according to the scenario.
2. Review the final invoice.

Detailed Steps
1. Create the final invoice according to the scenario.
a. On the Navigation Pane, click Home.
b. Click Sales Orders.
c. Select the prepayment sales order for customer 10000 and then
click Edit.
d. Expand the General FastTab.
e. In the Document Date and Posting Date field, enter 02/07/14.
f. On the Home tab, click Post.
g. Select Ship and Invoice and then click OK.

Because the sales order is completely processed, it no longer exists.

2. Review the final invoice.

a. On the Navigation Pane, click Posted Documents.
b. Click Posted Sales Invoices.
c. Select the newly created sales invoice for customer 10000.
d. On the Home tab, click View.
e. Expand the Lines FastTab.

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An invoice line is created for the full sales amount for each sales order line.

One negative invoice line is created, to deduct the previously charged

prepayment amount. The same general ledger account for the prepayment sales
invoices is used.

Lab 9.3: Prepayment Sales Order Process with

Unrealized VAT
Scenario

Customer 10000 establishes an order with CRONUS International Ltd.

Susan, the Order Processor at CRONUS International Ltd. will first create the sales
order and the corresponding prepayment invoice that the unrealized VAT will be
calculated for.

Arnie, the Accounts Receivables Administrator will create the final invoice, before
the prepayment is received.

Note: Before you start with the actual prepayment process, the first exercise
asks you to review the setup for unrealized prepayments. Make sure that you
complete this first!

Exercise 1: Verify Unrealized VAT Setup

Task 1: Verify Unrealized VAT Setup

High Level Steps

1. Verify the General Ledger Setup.
2. Verify VAT Posting Groups.

Detailed Steps
1. Verify the General Ledger Setup.
a. In the Navigation Pane, click Departments.
b. Click Administration, and then click Application Setup.
c. On the Application Setup page, click Financial Management >
Finance > General Ledger Setup.
d. Expand the General FastTab.
e. Select the Unrealized VAT and Prepayment Unrealized VAT
check boxes.
f. Click OK to close the General Ledger Setup page.

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2. Verify VAT Posting Groups.
a. In the Navigation Pane, click Departments.
b. Click Administration, and then click Application Setup.
c. On the Application Setup page, click Financial Management >
VAT Posting Group > VAT Posting Setup.
d. Select the VAT posting group combination NATIONAL-VAT25
and then click Edit.
e. Expand the General FastTab.
f. In the Unrealized VAT Type field, enter Last.
g. Expand the Sales FastTab.
h. In the Sales VAT Unreal. Account field, enter 5780.

Detailed Steps: This is not the correct VAT account, and a separate
unrealized VAT account should be created. However, for the demonstration you will
use the 5780 account.

i. Click OK to close the VAT Posting Setup Card page.

j. Click Close to close the VAT Posting Setup page.

Exercise 2: Create the Prepayment Sales Order and Process

and Review the Prepayment Sales Invoice
Exercise Scenario

Customer 10000 The Cannon Group Ltd., establishes the following order with
CRONUS International Ltd.

• Order date 01/24/14.

• 10 pieces of item 1896-S – 649.40 LCY for each piece.
• The prepayment invoice is created on 01/24/14, according to the
default settings.
• The order and prepayment invoice have a payment term of CM.

Task 1: Create the Prepayment Sales Order and Process and Review
the Prepayment Sales Invoice

High Level Steps

1. Create the prepayment sales order according to the scenario.
2. Create the prepayment sales invoice.
3. Review the prepayment sales invoice.

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Detailed Steps
1. Create the prepayment sales order according to the scenario.
a. On the Navigation Pane, click Home.
b. Click Sales Orders.
c. Click New to create the prepayment sales order.
d. Expand the General FastTab.
e. Press ENTER to automatically insert a sales order number in the
No. field.
f. In the Sell-to Customer No. field, enter 10000 and move to the
next field. The sales order header is automatically filled in with the
default settings that are from the customer card.
g. In the Document Date field, enter 01/24/14.
h. Expand the Invoicing FastTab.
i. In the Payment Terms Code field, enter CM.
j. Expand the Prepayment FastTab.

The Prepayment % field is automatically filled in with the default 20 percent,

according to the setup.

k. In the Prepmt. Payment Terms Code, enter CM.

l. Expand the Lines FastTab.
m. In the Type field, enter Item.
n. In the No. field, enter 1896-S.
o In the Quantity field, enter 10.
o. In the Unit Price Excl. VAT field, enter 649.40.

The Prepayment % field is automatically filled in with the default 10 percent,

according to the setup.

2. Create the prepayment sales invoice.

a. On the Actions tab, click Prepayment.
b. Click Print Prepmt. Invoice and then click Yes to complete the
process.
c. Expand the General FastTab.

The Status field is set to Pending Prepayment.

d. Expand the Lines FastTab.

e. Select the line for item 1896-S.

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The Prepmt Amt Inv. Excl. VAT and the Prepmt Amt to Deduct Excl. VAT are
updated with 649.40 LCY.

3. Review the prepayment sales invoice.

a. From the sales order, on the Navigate tab, click Prepayment
Invoices.

The View - Posted Sales Invoices page is opened, with an automatic filter on the
sales order that the prepayment invoice is created from.

b. Select the prepayment sales invoice.

c. On the Home Tab, click View to view the prepayment invoice.
d. On the Actions tab, click Navigate.
e. Select the G/L entries and then click Show.

Notice that the unrealized VAT account is used.

f. Click Close to close the General Ledger Entries page.

g. Click Close to close the Navigate page.
h. Click Close to close the Posted Sales Invoice page.
i. Click Close to close the View – Posted Sales Invoices page.

Exercise 3: Process and Review the Final Invoice

Exercise Scenario

On 01/30/14, the order is shipped and invoiced to the customer. The prepayment
is not yet received. Review the postings for the unrealized VAT amount.

Task 1: Process and Review the Final Invoice

High Level Steps

1. Create the final invoice according to the scenario.
2. Review the final invoice.

Detailed Steps
1. Create the final invoice according to the scenario.
a. On the Navigation Pane, click Home.
b. Click Sales Orders.
c. Select the prepayment sales order for customer 10000 and then
click Edit.
d. Expand the General FastTab.
e. In the Document Date and Posting Date field, enter 01/30/14.
f. On the Home tab, click Post.
g. Select Ship and Invoice and then click OK.

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Because the sales order is completely processed, it no longer exists.

2. Review the final invoice.

a. On the Navigation Pane, click Posted Documents.
b. Click Posted Sales Invoices.
c. Select the newly created sales invoice for customer 10000.
d. On the Home tab, click View.
e. Expand the Lines FastTab.

An invoice line is created for the full sales amount for each sales order line.

One negative invoice line is created, to deduct the previously charged

prepayment amount. The same general ledger account for the prepayment sales
invoices is used.

f. On the Actions tab, click Navigate.

g. Select the general ledger entries and then click Show.

Again the unrealized VAT account is used for the negative prepayment invoice
line.

The posting of the unrealized to the realized VAT account will be processed at the
time of payment.

Correct Prepayments
After you post a prepayment invoice, you can process corrections or updates by
adding new lines to the order and by posting another prepayment invoice. Lines
cannot be deleted from an order when a prepayment is invoiced for the line.

You can correct a prepayment by using any of following options.

• Refund all invoiced prepayments for an order

• Reduce the quantity on sales or purchase lines
• Add new lines to an order after issuing a prepayment
• Increase the prepayment amount

Credit all Invoiced Prepayments for an Order

To credit all invoiced prepayments for an order, follow these steps.

1. On the order, on the Actions tab, click Prepayment, and then click
Post Prepayment Credit Memo.
2. If it is required, re-create the correct entries.

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Note: When you create the prepayment credit memo, all prepayment invoices
will be credited. You cannot credit just one prepayment invoice.

Reduce the Quantity on Sales or Purchase Lines

To reduce the quantity on a sales or purchase line, follow these steps.

1. Increase the Prepayment % on the line so that the Prepmt. Line

Amount is not less than the amount in the Prepmt. Amt. Inv. field.
2. Reduce the amount in the Line Amount field.

Add New Lines to an Order after Issuing a Prepayment

To add new lines to an order after issuing a prepayment, follow these steps.

1. Add the additional lines to the order.

2. On the Actions tab, click Prepayment, and then click Post
Prepayment Invoice.

A prepayment invoice is created for the new line.

Increase the Prepayment Amount

To increase the prepayment amount, follow these steps.

1. Increase the Prepayment % on one or more lines.

2. On the Actions tab, click Prepayment, and then click Post
Prepayment Invoice.

A new invoice is created for the difference between the prepayment amount
invoiced to this point and the new prepayment amount.

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Module Review
Module Review and Takeaways

Prepayments are used in sales or purchases. You can use prepayments to charge
either a percentage of the total order or a specific amount before the items are
shipped to customers. Companies can also use prepayments to record
prepayments to vendors.

The Prepayments functionality in Microsoft Dynamics NAV 2013 assists in the

following:

• Invoicing and collecting prepayments that are required from

customers or remitting deposits to vendors.
• Posting and tracking prepayment amounts to specific accounts.
• Accurately creating invoices that reflect the total order amount minus
any prepayments.

You can create several prepayment invoices for one order. You can also post
prepayment credit memos, for example when an order is cancelled.

Test Your Knowledge

Test your knowledge with the following questions.

1. What status is used when an order has one or more lines with a prepayment
amount, and a prepayment invoice has not been posted?

( ) Open

( ) Pending Prepayment

( ) Prepayment Awaiting

( ) Pending Approval

2. Which of the following methods cannot be used to correct prepayment

invoices?

( ) Delete invoiced prepayment lines from the order.

( ) Increase the prepayment amount.

( ) Reduce the quantity on sales and purchase lines.

( ) Add new lines to an order after issuing a prepayment.

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3. Which of the following statements is incorrect?

To recognize prepayment ownership, Microsoft Dynamics NAV 2013 must be

set up to perform which of the following? (Select all that apply.)

( ) To recognize prepayment ownership, Microsoft Dynamics NAV 2013

must be set up to record purchase prepayments in an asset account
until the items are received.

( ) A default prepayment percentage can be set up for vendors, item-

vendor combinations and item-vendor price group combinations.

( ) To recognize prepayment ownership, Microsoft Dynamics NAV 2013

must be set up to record sales prepayments in a liability account until
the items are shipped.

( ) Default prepayment percentages can be set up for customers, item-

customer combinations, and item-customer price group
combinations.

4. Microsoft Dynamics NAV 2013 searches items, customers, vendors, and price
groups for default prepayment percentages when an order is created. Which
of the following statements is incorrect?

( ) First, Microsoft Dynamics NAV 2013 searches for a prepayment

percentage for the item on the line and then the customer or vendor
on the order header.

( ) Second, Microsoft Dynamics NAV 2103 searches for a prepayment

percentage for the item on the line and then the customer price
group for the customer.

( ) Third, Microsoft Dynamics NAV 2013 searches for a prepayment

percentage for the item on the line for all customers.

( ) Fourth, Microsoft Dynamics NAV 2013 searches for a prepayment

percentage for the customer or the vendor on the order header.

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 Module 9: Prepayments

Test Your Knowledge Solutions

Module Review and Takeaways

1. What status is used when an order has one or more lines with a prepayment
amount, and a prepayment invoice has not been posted?

(√) Open

( ) Pending Prepayment

( ) Prepayment Awaiting

( ) Pending Approval

2. Which of the following methods cannot be used to correct prepayment

invoices?

(√) Delete invoiced prepayment lines from the order.

( ) Increase the prepayment amount.

( ) Reduce the quantity on sales and purchase lines.

( ) Add new lines to an order after issuing a prepayment.

3. Which of the following statements is incorrect?

To recognize prepayment ownership, Microsoft Dynamics NAV 2013 must be

set up to perform which of the following? (Select all that apply.)

( ) To recognize prepayment ownership, Microsoft Dynamics NAV 2013

must be set up to record purchase prepayments in an asset account
until the items are received.

(√) A default prepayment percentage can be set up for vendors, item-

vendor combinations and item-vendor price group combinations.

( ) To recognize prepayment ownership, Microsoft Dynamics NAV 2013

must be set up to record sales prepayments in a liability account until
the items are shipped.

( ) Default prepayment percentages can be set up for customers, item-

customer combinations, and item-customer price group
combinations.

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Finance Essentials in Microsoft Dynamics® NAV 2013
4. Microsoft Dynamics NAV 2013 searches items, customers, vendors, and price
groups for default prepayment percentages when an order is created. Which
of the following statements is incorrect?

( ) First, Microsoft Dynamics NAV 2013 searches for a prepayment

percentage for the item on the line and then the customer or vendor
on the order header.

( ) Second, Microsoft Dynamics NAV 2103 searches for a prepayment

percentage for the item on the line and then the customer price
group for the customer.

( ) Third, Microsoft Dynamics NAV 2013 searches for a prepayment

percentage for the item on the line for all customers.

(√) Fourth, Microsoft Dynamics NAV 2013 searches for a prepayment

percentage for the customer or the vendor on the order header.

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MODULE 10: YEAR END CLOSING PROCESSES

Module Overview
Completing the year-end closing process in Microsoft Dynamics NAV
2013 involves three steps.

1. Closing the fiscal year by using the Close Year function on the
Accounting Periods page.
2. Generating a year-end closing entry by using the Close Income
Statement batch job.
3. Posting the year-end closing entry together with the offsetting equity
account entries.

Closing a year is not required by Microsoft Dynamics NAV 2013. However,

completing the closing process makes sure that balances are displayed only for
open year(s). For example, on the Chart of Accounts page.

Objectives

The objectives are:

• Close the accounting periods for the fiscal year.

• Explain and run the Close Income Statement batch job process.
• Complete the closing process by posting the general journal.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Closing a Fiscal Year

The first step in the year-end closing process is to close the fiscal year. This
process manages the periods and dates for fiscal years.

Note: A fiscal year cannot be closed before a new one is created.

Close the Fiscal Year

To close the accounting periods, follow these steps.

1. In the Search box, enter Accounting Periods, and click the related
link.
2. On the Home tab, click Close Year. You will receive a message about
the year to be closed. This year is suggested based on the earliest
open year, and the corresponding check marks in the New Fiscal
Year field.

FIGURE 10.1: ACCOUNTING PERIODS – CLOSE YEAR FUNCTION

3. Click Yes to close the year.

Note: To close a nonstandard year, add a check mark in the New Fiscal Year
check box of the last period to be included in the year to be closed.

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 Module 10: Year End Closing Processes
After you run the fiscal year closing process, the following will apply.

• The Closed and Date Locked fields for all periods in that fiscal year
are selected and they cannot be cleared any longer.
• The Date Locked field for the first period of the next fiscal year is
selected and it cannot be cleared any longer.
• The period lengths for the closed periods cannot be changed.

Note: To prevent users from posting entries in a closed fiscal year, set a date
range in the Allow Posting From and Allow Posting To fields on the General
Ledger Setup page.

Demonstration: Prior-Year Entry Confirmation

Scenario: After the 2013 fiscal year is closed, Phyllis, the Accounting Manager at
CRONUS International Ltd., realizes that she must post a December 2013 cleaning
expense for 80.00 local currency (LCY).

After Phyllis posts the expense, she reviews the entry to verify that the Prior-Year
Entry check box is selected to indicate that it is a prior-year entry.

Note: To complete this demonstration, make sure that the 2013 fiscal year is
closed. If a different year is closed, post into that year in step 6 of this
demonstration.

Demonstration Steps

1. Post the 2013 cleaning expense and review the posted entries.
a. In the Search box, enter General Journals, and click the related
link.
b. In the Batch Name field, click the drop-down list and then select
the DEFAULT journal batch.
c. Click OK.
d. Delete any existing journal lines in the batch.
e. In the Posting Date field, enter 12/31/13.
f. Make sure that the Account Type field is set to G/L Account.
g. In the Account No. field, enter 8110.
h. In the Amount field, enter 80.00.
i. Make sure that the Bal. Account Type field is set to G/L Account.
j. In the Bal. Account No. field, enter 2910.
k. On the Actions tab, click Post.
l. Click Yes to post the journal lines.

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Finance Essentials in Microsoft Dynamics® NAV 2013
m. Click OK.
n. Click OK to close the General Journal page.

To review the posted entries, follow these steps:

a. In the Search box, enter G/L Registers, and click the related link.
b. Press CTRL+END to move to the last entry and select this entry.
c. On the Navigate tab, click General Ledger to review the posted
entries.
d. Click the About This Page function.
e. Expand the Table Fields FastTab.
f. Locate the Prior-Year Entry field and verify that the value is set
to Yes. This means that this entry is considered a closing entry
and it will be included when the Close Income Statement batch
job is run.

FIGURE 10.2: GENERAL LEDGER ENTRIES - ABOUT THIS PAGE

g. Close the About This Page page.

h. Click Close to close the View – General Ledger Entries page.

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 Module 10: Year End Closing Processes

Transferring Income Statement Account Balances

The Close Income Statement batch job transfers the income statement account
balances to an account in the balance sheet and it closes the income statement
accounts. The Close Income Statement batch job also creates lines in a journal
that are posted manually.

You can use the Close Income Statement batch job multiple times to transfer the
income statement account balances. For example, you might have to do this when
the next entries are posted into a closed year.

Close Income Statement Batch Job

To open the Close Income Statement batch job, follow these steps.

1. In the Search box, enter Close Income Statement, and click the
related link.

FIGURE 10.3: CLOSE INCOME STATEMENT WINDOW

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Finance Essentials in Microsoft Dynamics® NAV 2013
The following fields appear on the batch job.

• Fiscal Year Ending Date – Automatically populated with the last date
in the latest closed fiscal year. This date is used to determine the
posting date for the journal.
• Gen. Journal Template – Identifies the name of the general journal
template that the entries are added in.
• Gen. Journal Batch – Identifies the name of the general journal
batch that the entries will be added in.
• Document No. – Automatically populated with the next available
number from the number series for the selected Gen. Journal Batch.
• Retained Earnings Acc. – Identifies the account that the retained
earnings entries are added in.
• Posting Description – Specifies the text to accompany the entries.
The default text is Close Income Statement.
• Close by – Provides the available accounting options in Microsoft
Dynamics NAV2013 to classify into multiple entries. The options are
as follows:
o Business Unit Code: If this field is selected, and the company is a
consolidated company, separate entries are created for each
business unit.
o Dimensions: For any dimensions selected, one entry is posted for
each dimension value combination used in a G/L account.
If neither option is used, a single entry is created for each
account.
• Inventory Period Close – Indicates that the inventory period(s) with
ending dates equal to or greater than the last date of the accounting
period is closed.

After you close a fiscal year, you can still post general ledger entries to the closed
year. When you post in a closed year, entries are marked as prior-year entries.

When the next entries are posted to a closed fiscal year, you must follow these
steps.

1. Run the Close Income Statement batch job to transfer the balances
to the retained earnings (equity) account.
2. Post the transferred entries.

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 Module 10: Year End Closing Processes
Demonstration: Run the Close Income Statement Batch
Job

Scenario: After the 2013 fiscal year is closed, Phyllis, the Account Manager, must
run the Close Income Statement batch job to transfer the income statement
accounts to account 3120, the retained earnings account, as part of the fiscal year
processing.

The default general journal is used and the posting description includes the fiscal
year number.

You must keep the Area, Business Group, and Customer Group dimension
information that is posted on the income account entries.

Demonstration Steps

1. Run the Close Income Statement batch job.

a. In the Search box, enter Close Income Statement, and click the
related link.
b. Make sure that the Fiscal Year Ending Date is 12/31/13.
c. In the Gen. Journal Template field, click the drop-down list and
select GENERAL.
d. In the Gen. Journal Batch field, click the drop-down list and
select DEFAULT.
e. Click OK.
f. In the Retained Earnings Acc. field, enter 3120.
g. In the Posting Description field, add 2013 to the end of the text.
h. In the Dimensions field, click the AssistEdit (…) button.
i. Select the Selected check box for the AREA, BUSINESS GROUP,
and CUSTOMER GROUP dimension codes.
j. Click OK to close the Dimension Selection page.
k. Click OK to run the Close Income Statement batch job.
l. Click OK to the message that the journal lines are now created.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Posting the Journal

The Close Income Statement batch job transfers the closing entries to the
specified journal batch. The batch job does not post the entries automatically.

If an account is not specified in the Retained Earnings Acc. field in the Close
Income Statement batch job, one or more lines must be inserted into the journal
with the retained earnings account, and the amount that will be posted to the
account.

When the journal is posted, one or more entries are posted to each income
statement account so that its balance becomes zero. Also, the retained earnings
account is updated for the gain or loss.

Note: When an additional reporting currency is set up in the General Ledger

Setup page, Microsoft Dynamics NAV2013 posts the journal automatically. This
guarantees the correct posting of rounding differences.

Demonstration: Review Entries and Post the General

Journal

In this demonstration, a general ledger account that has 2013 entries is reviewed
before and after the journal is posted, to obtain a comparison. The steps for
reviewing these entries are not part of the closing process.

Scenario: To complete the year-end closing process, Phyllis posts the entries
transferred to the DEFAULT general journal batch.

Because a retained earnings account is already specified in the Close Income

Statement batch job, a separate balancing line is not required.

Demonstration Steps

1. Review G/L account 9110 before posting.

a. In the Search box, enter Chart of Accounts, and click the related
link.
b. Select account 9110.
c. Notice the amount in the Net Change field.
d. On the Navigate tab, click Ledger Entries.
e. Review the posted entries.
f. Click Close to close the General Ledger Entries page.

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 Module 10: Year End Closing Processes
2. Post the general journal.
a. In the Search box, enter General Journals, and click the related
link.
b. Make sure that the DEFAULT batch is selected.
c. Do not change the Posting Date.
d. Scroll down to the last entry for account 3120, the Retained
Earnings account. Notice the amount.

Notice that the Total Balance field at the bottom of the window
contains a zero balance. Therefore, the journal can be posted.
e. On the Actions tab, click Post.
f. Click Yes to post the journal.
g. Click OK.
h. Click OK to close the General Journal page.

3. Review G/L account 9110 after posting.

As soon as the journal lines are posted, an entry is posted to each

income statement account so that its balance becomes zero and the
year's result is transferred to the Retained Earnings account in the
balance sheet.

To review the posted G/L accounts, follow these steps.

a. In the Search box, enter Chart of Accounts, and click the related
link
b. Select account 9110.

Notice that the Net Change field contains a zero balance.

c. On the Navigate tab, click Ledger Entries.

Notice that an offsetting line appears for the amount noted when you
reviewed the account before posting the journal.

d. Click Close to close the General Ledger Entries page.

e. Select account 3120.
f. On the Navigate tab, click Ledger Entries.

Notice that the amount for the Close Income Statement 2013 line
matches the amount for this account from the general journal.

g. Click Close to close the General Ledger Entries page.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Lab: Post an Entry into a Closed Fiscal Year

Scenario

In this lesson, the 2013 fiscal year is already closed and it uses the three step
process. It is now audit time and the auditors have found an additional vacation
compensation expense for 7,844.74 LCY that must be posted in 2009.

As the accounting manager, it is your responsibility to post the accrual. The debit
is to the Vacation Compensation expense (account 8740), and the credit is to the
Vacation Compensation Payable account (5840). Use 12/31/13 as the posting date
for the entry.

After the entry is made, transfer and post the expense to include it in the closing
process. Use the following criteria to complete the closing process.

• Use the DEFAULT general journal as the transfer to journal.

• Post to the retained earnings account, 3120.
• Add 2013 Audit to the end of the posting description.
• Do not close by dimensions because dimensions are not used to post
this expense.

You do not have to review any entries.

Exercise 1: Post an Entry into a Closed Fiscal Year

Task 1: Post an Entry into a Closed Fiscal Year

High Level Steps

1. Post the accrual according to the scenario.
2. Run the Close Income Statement batch job according to the scenario.
3. Post the general journal.

Detailed Steps
1. Post the accrual according to the scenario.
a. On the Navigation Pane, click Departments.
b. Click Financial Management > General Ledger > General
Journals.
c. In the Batch Name field, click the drop-down list and select the
DEFAULT journal batch.
d. Click OK.
e. Delete any existing journal lines in the batch.
f. In the Posting Date field, enter 12/31/13.
g. Make sure that the Account Type field is set to G/L Account.

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 Module 10: Year End Closing Processes
h. In the Account No. field, enter 8740.
i. In the Amount field, enter 7,844.74.
j. Make sure that the Bal. Account Type field is set to G/L Account.
k. In the Bal. Account No. field, enter 5740.
l. On the Home tab, click Post.
m. Click Yes to post the journal lines.
n. Click OK.
o. Click OK to close the General Journal page.

2. Run the Close Income Statement batch job according to the scenario.
a. On the Navigation Pane, click Departments.
b. Click Financial Management > Periodic Activities > Fiscal
Year > Close Income Statement.
c. Make sure that the Fiscal Year Ending Date is 12/31/13.
d. In the Gen. Journal Template field, click the drop-down list and
select GENERAL.
e. In the Gen. Journal Batch field, click the drop-down list and
select DEFAULT.
f. Click OK.
g. In the Retained Earnings Acc. field, enter 3120.
h. In the Posting Description field, add 2013 to the end of the text.
i. In the Dimensions field, click the AssistEdit (…) button.
j. Clear the Selected check box for the AREA, BUSINESS GROUP,
and CUSTOMER GROUP dimension codes.
k. Click OK to close the Dimension Selection page.
l. Click OK to run the Close Income Statement batch job.
m. Click OK to the message that the journal lines are now created.

3. Post the general journal.

a. On the Navigation Pane, click Departments.
b. Click Financial Management > General Ledger > General
Journals.
c. Make sure that the DEFAULT batch is selected.
d. On the Home tab, click Post.
e. Click Yes to post the journal.
f. Click OK.
g. Click OK to close the General Journal page.

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Finance Essentials in Microsoft Dynamics® NAV 2013

Module Review
Module Review and Takeaways

The year-end closing processes in Microsoft Dynamics NAV 2013 are the final step
in the fiscal year. A company must close all the income and expense accounts to
obtain a final statement and balance for the year.

The year-end closing processes close all entries in Microsoft Dynamics NAV 2013
and the Close Income Statement batch job transfers all general ledger accounts
to the balance so that the company is ready for the next period.

Completing the year-end closing processes will make data segregation and
analysis easier, and will also simplify the review of the posted entries in the Chart
of Accounts, because the balances only reflect the current year activity.

Test Your Knowledge

Test your knowledge with the following questions.

1. What does not occur after the Close Year process is run?

( ) The next entries posted in the closed year are marked as prior-year
entries.

( ) The Closed and Date Locked check boxes in the Accounting Periods
window are selected.

( ) A new fiscal year is created.

( ) Period lengths of closed periods cannot be changed.

2. What steps must be performed after an entry is posted into a closed fiscal
year?

( ) Move on to the postings in the next fiscal year.

( ) The Close Income Statement batch job must be run and then the
transferred entries must be posted.

( ) The next fiscal year must be created.

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 Module 10: Year End Closing Processes
3. Which of the following statements is false for the Close Income Statement
batch job?

( ) Reconciles all G/L entries.

( ) Transfers the income statement account balances to an account in the

balance sheet.

( ) Creates lines in a journal.

( ) Closes the income statement accounts.

4. What type of account are closing entries transferred to?

( ) Accrued Earnings

( ) Retained Earnings

( ) Accrual Entries

( ) Retained Accruals

5. What occurs when you post a journal that contains the closing entries?

( ) An entry is posted to each balance sheet account so that its balance

becomes zero.

( ) An entry is posted to each income statement account so that its

balance becomes zero.

( ) The income statement accounts are updated for the gain or loss.

( ) The retained earnings accounts are updated so that their balances

become zero.

6. In the closing process, what occurs when an additional reporting currency is

set up in the General Ledger Setup window?

( ) This setup does not affect the closing process.

( ) Additional currencies are added to the journal.

( ) Two journals are created when the Close Income Statement batch job
is run.

( ) The journal is automatically posted when the Close Income Statement

batch job is run.

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7. What is used to transfer the income statement account balances to a balance
sheet account?

( ) Transfer Fiscal Year Balance batch job

( ) Close Income Statement batch job

( ) Transfer Income Balance batch job

( ) Close Fiscal Year batch job

8. Which of the following is not a step in completing the year-end closing

process?

( ) Post the general journal.

( ) Open the new fiscal year.

( ) Transfer the Income Statement account balances.

( ) Close the fiscal year.

9. What must occur to prevent users from posting in a closed period?

( ) Open a new fiscal year.

( ) Run the Close Year process.

( ) Set a date range in the General Ledger Setup window.

( ) Close the Income Statement.

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 Module 10: Year End Closing Processes

Test Your Knowledge Solutions

Module Review and Takeaways

1. What does not occur after the Close Year process is run?

( ) The next entries posted in the closed year are marked as prior-year
entries.

( ) The Closed and Date Locked check boxes in the Accounting Periods
window are selected.

(√) A new fiscal year is created.

( ) Period lengths of closed periods cannot be changed.

2. What steps must be performed after an entry is posted into a closed fiscal
year?

( ) Move on to the postings in the next fiscal year.

(√) The Close Income Statement batch job must be run and then the
transferred entries must be posted.

( ) The next fiscal year must be created.

3. Which of the following statements is false for the Close Income Statement
batch job?

(√) Reconciles all G/L entries.

( ) Transfers the income statement account balances to an account in the

balance sheet.

( ) Creates lines in a journal.

( ) Closes the income statement accounts.

4. What type of account are closing entries transferred to?

( ) Accrued Earnings

(√) Retained Earnings

( ) Accrual Entries

( ) Retained Accruals

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5. What occurs when you post a journal that contains the closing entries?

( ) An entry is posted to each balance sheet account so that its balance

becomes zero.

(√) An entry is posted to each income statement account so that its

balance becomes zero.

( ) The income statement accounts are updated for the gain or loss.

( ) The retained earnings accounts are updated so that their balances

become zero.

6. In the closing process, what occurs when an additional reporting currency is

set up in the General Ledger Setup window?

( ) This setup does not affect the closing process.

( ) Additional currencies are added to the journal.

( ) Two journals are created when the Close Income Statement batch job
is run.

(√) The journal is automatically posted when the Close Income Statement
batch job is run.

7. What is used to transfer the income statement account balances to a balance

sheet account?

( ) Transfer Fiscal Year Balance batch job

(√) Close Income Statement batch job

( ) Transfer Income Balance batch job

( ) Close Fiscal Year batch job

8. Which of the following is not a step in completing the year-end closing

process?

( ) Post the general journal.

(√) Open the new fiscal year.

( ) Transfer the Income Statement account balances.

( ) Close the fiscal year.

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 Module 10: Year End Closing Processes
9. What must occur to prevent users from posting in a closed period?

( ) Open a new fiscal year.

( ) Run the Close Year process.

(√) Set a date range in the General Ledger Setup window.

( ) Close the Income Statement.

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