Chapter 10

Using Account Receivable (Customers)

Lesson Outcomes
At the end of this Chapter, you should be able to;
1. Explain the flow of Accounts Receivables tasks in Sage;
2. Describe how to enter and convert Quotes into sales orders or invoices;
3. Describe how to enter and fill Sales Orders;
4. Explain how to create Sales Invoices;
5. Describe how to record for returned goods from the customer; and
6. Explain how to apply finance charges.

10.1 Introduction
Accounts Receivable transactions can be entered in a variety of ways as follows.
 Quotes can be entered for customers and can be converted to Sales Orders or Sales Invoices
when the customer commits to the sale.
 Sales Orders can be entered when customer orders are received.
 Sales/Invoicing allows you to fill orders or enter invoices unrelated to orders.
 Sales invoices can be paid using the Receipts task.
 Finance charges can be applied to outstanding customer balances using the Apply Finance
Charges task.

Each transaction updates the journals, which in turn update General Ledger. However, Quotes
and Sales Orders do not update General Ledger. The flow of Accounts Receivable tasks is
illustrated in Figure 10.1.

Figure 10.1: Flow of Accounts Receivable Tasks in Sage

Quotes

Sales Orders Sales Order

Journal

General Ledger

Sales/Invoicing
Credit Memos Sales Journal

Apply Finance
Charges
Cash Receipts
Receipts
Journal

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 Sales Cycle
10.2 Entering Quotes
Customers or prospects often request pricing information about goods or services that a company
sells. Since they are not receiving any products or services, they are provided with a quote.
However, Quotes do not affect General Ledger. To access the Quotes window, the following
steps can be used.

Steps:
Click Tasks in the Menu Bar - Select Quotes/Sales Orders/Proposals – Click Quotes
Or

Click Customers & Sales Navigation Bar – Click Quotes & Proposals– Select New
Quotes

Then, you will see the Quotes Window which is shown in Figure 10.2. The Quotes window is
used to enter and print quotes for customers.

Figure 10.2: Quotes Window

In the Quotes Window,

Select Customer ID from the list – Then the Sage automatically takes Ship To information
from early set defaults - Select the Quote Date from the calendar – Select Expected date of
shipment from Goods Thru field – Enter the Quote No. (If you plan to print Quotes, then
leave this box blank) - Enter Customer PO No. – Select Ship Via (Shipping Method) –
Select Accounts Receivable GL Account– Select Product Items from Item List – Enter
Quantities – Select GL Sales Account - Select Sales Tax ID - Enter Freight Amount -
Click Print – Select Print Preview – Click Save

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Activity 10.1 (ILO 1 & 2)
Record following quotations of AFMA 2021 (Pvt) Ltd.

Customer ID GGF001 HIF001 TC001

Date 01.04.2021 10.04.2021 17.04.2021
Expected Date 15.04.2021 10.05.2021 30.05.2021
Quote No. Q001 Q002 Q003
Customer PO No. 1341 4441 -
Shipping Method Cust. Pickup Courier N/A
A/R GL Account 1100-CL 1100-CL 1160-TR
Items BL001 SR001 CTL001 KID001 TRA001
Quantity 50 20 100 100 40 Hours
Price Level Normal Normal Normal Normal Normal
Sales GL Account 4000-CL 4000-CL 4050-TR
VAT 8% 8% Exempt
Freight - Rs. 2,000 -

10.2.1 Converting Quotes into Sales Orders or Sales Invoices

Once the sale quote is accepted by the customer, you can convert it to either a sales order or
invoice. For this, the following steps can be used.

Steps:
Open the Quote

Click List in the Menu Bar - Select Customers & Sales – Click Quotes – Select
the required Date Range - Double Click Quote or Select Quote and Click Open

Or

Click Customers & Sales Navigation Bar – Click Quotes – Select View and
Edit Quotes –

Then, in the Quotes window,

Click Convert Button – Tick either Sales Invoice or Sales Order options – Enter
Sales Invoice No. (If you have selected Sales Invoice option) or Sales Order No.
(If you have selected Sales Order option) – Click OK

Activity 10.2 (ILO 1 & 2)

Convert following quotations of AFMA 2021 (Pvt) Ltd.

i. Convert Q001 to Sales Order (SO001). Order Date (02.04.2021)

ii. Convert Q003 to Sales Invoice (SITR001). Invoice Date (31.05.2021)

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10.3 Entering Sales Orders

Sales orders are used when a customer agrees to purchase items or services that are not shipped
immediately. However, sales orders do not update General Ledger. To Create Sales Orders, the
following steps can be used.

Steps:
Click Tasks in the Menu Bar - Select Quotes/Sales Orders/Proposals – Click Sales
Orders
Or

Click Customers & Sales Navigation Bar – Click Sales Orders – Select New Sales
Order

Then, you will see the Sales Order Window which is shown in Figure 10.3.

10.3.1 Sales Order Window

The Sales Orders window is used to enter and print sales orders for products and services
ordered by customers. The Sales Orders window also allows partial orders to be shipped and
backorders to be tracked. Using this window, items can be shipped from inventory as they
become available.

Figure 10.3: Sales Order Window

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 In the Sales Order Window,

Select Customer ID from the list – Then the Sage automatically takes Ship To information
from early set defaults - Select the Sales Order Date from the calendar – Select Expected
date of shipment from Ship by field – Enter the Sales Order No. - Enter Customer PO No.
– Select Ship Via (Shipping Method) - Select Accounts Receivable GL Account – Select
Product Items from Item List – Enter the Quantities – Select GL Sales Account - Select
Sales Tax ID - Enter Freight Amount - Click Print – Select Print Preview – Click Save

Activity 10.3 (ILO 1 & 3)

Record following sales orders of AFMA 2021 (Pvt) Ltd.
Customer ID AVC001 WAS001
Date 05.04.2021 11.04.2021
Expected Date 01.05.2021 11.05.2021
Order No. SO002 SO003
Customer PO No. A201 500
Shipping Method Cust. Pickup Cust. Pickup
A/R GL Account 1100-CL 1100-CL
Items CTG001 CTL001 OFS001-15- OFS001-15.5-
BL BL
Quantity 100 40 20 20
Price Level Normal Normal Special Special
Sales GL Account 4000-CL 4000-CL
VAT 8% 8%
Freight - Rs. 1,000

10.4 Entering Sales Invoices

Sales Invoices are used to bill customers. Sales Invoicing is also used to invoice customers for
items that have been entered on sales orders. Unlike quotes and sales orders, invoices update
General Ledger. To Enter Sales Invoices, the following steps can be used.

Steps:
Click Tasks in the Menu Bar - Sales/Invoicing
Or

Click Customers & Sales Navigation Bar – Click Sales Invoices – Select New Sales
Invoice

Then, you will see the Sales Invoice window which is shown in Figure 10.4.

10.4.1 Sales/ Invoicing Window

The Sales/Invoicing window is used to enter sales to customers. The header area is used to enter
customer-specific information. The Apply to Sales Order tab is used to ship inventory items

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from sales orders. The Apply to Sales tab is used to record customer invoices without a sales
order on file.

10.4.2 Figure 10.4: Sales/ Invoicing Window

a) Entering Sales Invoices against Sales Orders (Filling Sales Orders)

As mentioned above, sales invoicing is used to invoice customers for items that have
been entered on sales orders. It is noted that the Apply to Sales Order tab in the Sales
Invoicing Window is used to ship inventory items from sales orders. To fill a sales order,
the following steps can be used.

Steps:

Open the Sales Invoicing Window (See the 10.4 section)

Then, in the Sales Invoicing Window,

Select Customer ID – Select the Sales Invoice Date –Enter the Sales Invoice No.
- Select Apply to Sales Order tab - Select the Sales Order No. from the list –
Enter Shipped Quantity - Click Save

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 b) Entering Sales Invoices without Sales Orders

Sales invoices can also be created without sales orders. In this situation, Apply to Sales
tab in the Sales Invoicing Window is used to ship inventory items without sales orders.
To create a sales invoice without sales orders, the following steps can be used.

Steps:

Open the Sales Invoicing Window (See the 10.4 section)

Then, in the Sales Invoicing Window,

Select Customer ID –Select the Sales Invoice Date –Enter the Sales Invoice No.
- Select Apply to Sales Order tab – Enter Customer PO No. – Select Ship Via
(Shipping Method) – Select Ship Date (Expecting date of the shipment) - Select
Accounts Receivable GL Account– Select Product Items from Item List – Enter
the Quantities – Select GL Sales Account - Select Sales Tax ID- Enter Freight
Amount - Click Save.

Activity 10.4 (ILO 1, 3 & 4)

Record following sales invoices of AFMA 2021 (Pvt) Ltd.

Customer ID AVC001 WAS001 AMN001

Invoice Date 30.04.2021 11.05.2021 03.04.2021
Invoice No. SI006 SI007 SI001
Order No. SO002 SO003 N/A
Shipping Method Cust. Pickup Cust. Pickup Cust. Pickup
A/R GL Account 1100-CL 1100-CL 1100-CL
Items CTG001 CTL00 OFS001-15-BL OFS001-15.5- BL001 TSH001
1 BL
Shipped Quantity 100 40 20 20 100 50
Price Level Normal Normal Special Special Normal Normal
Sales GL 4000-CL 4000-CL 4000-CL
Account
VAT 8% 8% 8%
Freight - Rs. 1,000 -
Paid Amount Rs.94,300
Deposit Ticket
ID
Reference Cheque 645789 -BOC

Customer ID GGF001 HIF001 AMN001 AVC001

Invoice Date 10.04.2021 20.04.2021 23.04.2021 26.04.2021

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 Invoice No. SI002 SI003 SI004 SI005
Order No. N/A N/A N/A N/A
Shipping Cust. Pickup Courier Cust. Pickup Cust. Pickup
Method
A/R GL 1100-CL 1100-CL 1100-CL 1100-CL
Account
Items TIE001 CTL001 OFS001- BL001 BL001 CTG001
15-BL
Shipped 50 50 10 120 120 300
Quantity
Price Level Normal Normal Special Normal Normal Special
Sales GL 4000-CL 4000-CL 4000-CL 4000-CL
Account
VAT 8% 8% 8% 8%
Freight Rs. 1,500 - - -

10.5 Entering Customer Credit Notes

Customer Credit Memos are used to record goods returns by customers. To enter customer credit
memos, the following steps can be used.

Steps:
Click Task from Menu Bar – Select Credit Memos

Or

Click Customers & Sales Navigation Bar – Select Credits and Returns Navigation
Button – Select New Credit Memo

Then, you will see the Customer Credit Memo Window which is shown in Figure 10. 5.

10.5.1 Customer Credit Memo Window

The customer Credit Memo window is used to enter credit memos for returns by Customers. You
can apply a credit memo to an existing invoice or enter it as an open credit.

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Figure 10.5: Customer Credit Memo Window

a) Create Credit Memos against existing Sales Invoices

As mentioned above, you can apply a credit memo to an existing invoice. In this case, the
Apply to Invoice No. Tab in the Customer Credit Memo Window is used. The steps are
as follows;

Steps:

Open the Customer Credit Memo Window (See the 10.5 section)

In the Customer Credit Memo Window,

Select Customer ID – Select Date – Enter Credit No. – Select Relevant Invoice
No. from Apply to Invoice No. Tab – Enter Returned Quantity – Click Save

b) Create Credit Memos as an Open Credit

You can also enter a credit memo as an open credit. In this case, the Apply to
Sales Tab in the Customer Credit Memo Window is used. The steps are as follows;

Steps:

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 Open the Customer Credit Memo Window (See the 10.5 section)

In the Customer Credit Memo Window,

Select Customer ID – Select Date – Enter Credit No. – Select Apply to

Purchases Tab – Select Items – Enter Returned Quantity of each item –Select
Sales Tax ID (If VAT applies to the returned goods) – Click Save

Activity 10.5 (ILO 1 & 5)

Record following customer credit memos of AFMA 2021 (Pvt) Ltd.

Customer ID AMN001 GGF001

Credit Date 25.04.2021 30.04.2021
Credit No. CN001 CN002
Relevant Invoice No. SI004 N/A
Items BL001 TIE001 CTL001
Retuned Quantity 10 5 7
Price Level Normal Normal Normal
Sales GL Account 4000-CL 4000-CL
VAT 8% 8%
Freight - -

10.6 Finance Charges

Finance Charges are calculated on the overdue amounts for all customers who have the Apply
Finance Charges Option selected in the Maintain Customers/Prospects window (Early set
defaults) and meet the filtering criteria selected in the Calculate Finance Charge window. To
calculate and apply finance charges, the following steps are as follows;

Steps:
Click Task in the Menu Bar– Select Finance Charge

Or

Click Customers & Sales Navigation Bar– Click Finance Charge

Then, you will see the Calculate Finance Charges window which is shown in Figure 10.6.

10.6.1 Calculate Finance Charge Window

This window is used to select the customers or range of customers for whom you want to
calculate finance charges.

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Figure 10.6: Calculate Finance Charge Window

 Starting Customer: Select the customer with whom you want to start charging Finance
Charge. If you want finance charges for just this one customer, select the Starting
Customer Only button at the bottom of the window.

 Ending Customer: Select the customer with whom you want to end of charging Finance
Charge.

 Type Mask: Select the Customer Type by which you need to sort customers.

Note 01: Remember that Sage 50 is case sensitive; entering NORTH won't include customers
with customer types of "North" or "north."

Note 02: If you do not select Starting Customer and Ending Customer, the Finance Charge
will be calculated for all customers.

10.6.2 Steps to Calculate Finance Charge

Select Starting Customers ID – Select Ending Customer ID (If you want to calculate
finance charges for all customers, do not select starting and ending customer IDs)- Enter
Date (This is the date on which you want to calculate the finance charges) – Click OK

Then you will see the Apply Finance Charges Window which is shown in Figure 10.7.

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 Figure 10.7: Apply Finance Charges Window

In the Apply Finance Charges Window,

Tick Yes check box in the Apply Finance Charge field – Tick Screen check box in the
Report destination field – Tick No check box in the Print calculation field - Click OK

Then, you will see the Finance Charge Report Selection Window which is shown in
Figure 10.8.

Figure 10.8: Finance Charge Report Selection Window

In the Finance Charge Report Selection Window,

Tick Summary or Detail check box in the Report Style field – Tick By Id or By name
in the Report Order field - Click OK

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Activity 10.6 (ILO 1 & 6)
The management of AFMA 2021 (Pvt) Ltd decided to charge finance charges on all customers of
the clothing division as of 30.04.2021. Record finance charges based on this information.

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