Here is what Rita had sent to me - hope it helps!!
PS Thanks again, Rita, for all your help and detailed instructions.
Subject: Setting up the Cash Clearing System in Receivables
Hi there: Well, it is rather long winded to walk you through the set up but it isn't difficult to do. If you try it and then have questions before actually going ahead with starting to use the system, just let me know. I will try and set it out in point form:
1. Open an account called "Cash Clearing" in the Current Assets section of your Chart of Accounts. Give it a number under "Bank" but before "Accounts Receivable". The type should be G (Group a/c). In "Class Options" go to the "Account Class" box and select "Bank". In the "Instituion" box and the "Account Type" box, select "Other".
2. Go up to "Setup", "Settings", "Receivables", "Linked Accounts" and in the "Principal Bank Account" box add your new "Cash Clearing" account as another option for an account to use.
3. Open "Receipts" and in the "Deposit To" box select you new "Cash Clearing" account as the one to use when recording receipts in your Accounts Receivable Module.
Now the system should be set up to use "Cash Clearing" when entering all your receipts that are for receivables accounts. What this does is credit the payments you receive off the customer's account and debits the "Cash Clearing" account.
When you do the bank deposit for those receipts, make the entry in the "General" module to the bank from your bank deposit slip as a debit to "Bank" and a credit to "Cash Clearing". (Just enter the total of your deposit, not each individual cheque). If any of the deposits are for something other than monies received on you receivables accounts, then break out that amount in your journal entry and post it to the account it pertains to and not to "Cash Clearing".
With each deposit, check the "Cash Clearing" account balance and it should be zero if the credits (receipts) to receivables and the debit to the bank for those receivables agree. If they don't, you can investigate why they differ and clear up the discrepancy right away. Just remember to only put monies deposited that pertain to receivables accounts in your "Cash Clearing" account.
There are many advantages to this system that really help to keep your accounts receivable in balance and to reconcile your bank account at month end with less problems. When only the total of your bank deposit is appearing in your "Bank" account there is less chance of differences than when each and every receipt on your receivables also shows up in "Bank". When using this system all those individual receipts are in the "Cash Clearing" account instead and don't clutter up your "Bank" account for no good reason!!
I also find that if I go away on holidays for instance and someone else is doing the bank deposit in my absence I can go directly to the deposit book and quickly update my bank balance by doing the entries for the deposits right away and getting to the receipts in Accounts Receivable when I get caught up with the workload that is usually waiting for me after holidays.
One other thing that I find helpful when using this system is to either write up each receipt in a receipt book so I have a record to work from when entering the receipts or to make a copy of each cheque received and keep that as a record to post to the customer's account.
This is the way I have always done my receivables in Simply and have found it ever so much more efficient and mistake free than the way "Simply" has it set up to be done.
You can start using the system at any point just as long as you change the option in "Receipts" to Cash Clearing and any receipts from then on go there and you make sure that the bank deposit to cover that batch of receipts is also entered by you to the Bank and Cash Clearing accounts.
Let me know how you make out. Hope this works for you.
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