IAccounts Payable Issue with encashed checks

[Former Member]

Hello All,

Can someone help me. We have an issue where the wrong vendor ( Vendor B) was paid and he encashed the check. Although he is sending us the money back. but the problem is

we wantto pay the right vendor (Vendor A , PO is under his name) . So in order to do that we have to reverse the check and document and re-enter invoice.

My question is, I am using transaction 'FCHG' to clear encashment date' in the sytem . Then I will reverse the check and payment subsequently. IS that the correct way to do that.

Also, vendor B is sending us a seperate check, how can we take care of that in the system (balances)

You help is appreciated.

roma

[Former Member]

Hi

Dont reverse the encashed cheque as it will affect your bank reconciliation.

Option 1 - On receipt of payment from Vendor B pass an entry, debiting bank and crediting Vendor B account. After that pass a transfer entry between Vendor B and Vendor A account by debiting Vendor B and Crediting Vendor A account. Then issue a fresh cheque in the name of Vendor A account. The effect of this will be as follows -

If you are maintaining seperate Bank sub-GL accounts for payments and deposits, then the receipt of cheque from Vendor B will be in Deposit account which will get cleared on getting the amount credited to your bank account. The amount shown as paid to Vendor B will get cleared when you upload bank statement against the cheque issued to him. The amount paid to Vendor A will get cleared when you upload bank statement against the fresh cheque issued to him.

The risk in this transaction is, you will not be able to track the transactions from the PO perspective. Because there will be no PO for the amount paid to Vendor A as his account is credited only as a transfer entry from Vendor B

Option 2 - On receipt of payment from Vendor B pass an entry, debiting bank and crediting Vendor B account. Make a reversal journal entry debiting Vendor B and crediting the Expense account which was earlier debited when you did GR. Then create a PO in the name of Vendor A and proceed with GR and IV against the PO. This will have all the transactions recorded in the appropriate manner.

Hope it is clear. Please award points if found useful.

Regards,

K Lakshmanan

[Former Member]

Thanks for your answer. How do I create a transfer entry between Vendor A and vendor B . As the Gl account, whic is a recon account is ame for both and cant eb directly posted to.

What transaction code or document type , can I use because I can't do an invoice or a credit memo.

Thanks

Roma

[Former Member]

Hi

Please use transaction code F-02 using posting keys "34" and "24"

Regards,

K Lakshmanan

[Former Member]

Krishan Lal,

I have assigned points to you. Thanks for your answer.

I tried your first option but here is what happened when we put credit to the vendor A . he got paid again. so in the system it is showing taht eh got paid twice.

because as in any invoice the credit goes to the vendor, it's like a second invoice. It did not work .

Any other option.

Roma,.