AR/AP Risk Information

The outstanding debits of the AR/AP to the company are defined as company risk; it is a type of precaution taken for outstanding debits of the AR/AP. Risk control in the sales and purchasing departments of the company is a continuous transaction. Companies cannot decide on AR/AP relations only by looking at the AR/AP balances. In addition to the balance, totals of dispatches to be billed are also considered for any planning attempts.

The risk control method and risk factors of checks and P. Notes are determined in the Risk Info tab. This tab is used to track the risk limit of the AR/AP, the closed risk amount after payment transactions, and the NSF Check and The Protested P. Note totals of the AR/AP. In addition to these, it is determined whether the risks will be controlled based on a single AR/AP or a group company in Risk Info tab.

The fields on the risk info tab are:

Check / P. Note Risk Factors: Risk factors how when and in which amount risk fields will be updated in check/p.note operations. Check/P.Note risk factor defaults are determined in "Company Check / Customer Check / Endorsement Check / Company P. Note /Customer P. Note / Endorsement P. Note Factor" line in Finance Parameters. The specified values are transferred to the AR/AP records as defaults, and they can be changed if preferred. 

The method of risk total calculation and risk control is specified in the other field in this window.

Risk factors are specified separately for the followings:

• Company Check / P. Notes
• Customer Check / P. Notes
• Endorsement Check / P. Note

Risk Factor Examples:

When check risk factor is '0',

For example a company has taken order for a product.
Order Quantity: 10 Units
Unit Price: 250 TL
The customer's risk status is as follows:
Check Risk Factor:0
Risk Tracking: Local Currency
Risk Limit: 25.000 TL
Risk Control: Customer Checks / P. Notes

When a check received from the customer for this order that is amount to 2,500 TL, customer checks / p. notes field of the risk totals part will display 2,500 TL as invoice amount and total risk field will display 2,500 TL as risk (equivalent to invoice amount).

When check risk factor is '0', in any case customer risk will be calculated and even if a check is received from the customer, the risk will not be closed.

Only when the company encashes the check by bank, customer check risk will be closed and the encashed amount will be decreased from total risk.

When check risk factor is '1',

For example a company has taken order for a product.
Order Quantity: 10 Units
Unit Price: 250 TL
The customer's risk status is as follows:
Check Risk Factor:0
Risk Tracking: Local Currency
Risk Limit: 25.000 TL
Risk Control: Customer Checks / P. Notes

When a check received from the customer for this order that is amount to 2,500 TL, there will be no risk info in Customer Check Closed Risk and Risk Totals fields of the Risk Info tab.

When check risk factor is '1', even if a check received from the customer (amount to 2,500 TL), this invoice amount will not be displayed in Total Risk field. That is to say, '1' shows that there will be risk for the customer even if the company does not encashe the check by bank.

After the company encashes the check by bank, the program will again display the same risk info. There will be no change in customer risk status.

When check risk factor is '0,5',
When a check received from the sane customer amount to 2,500 TL, before it is encashed it works as '0' factor and Total Risk / Customer Check/P. Note Risk Totals fields list 1,250 TL amount.
Because the factor is '0,5', the debit of AR/AP (2,500 TL) is distributed as:
1,250 TL to Customer Check/P. Note part
1,250 TL to Total Risk part

When check risk factor is '0,5', until received check by the customer is encashed, it is displayed as half of the risk amount. The other part is displayed as AR/AP balance.
It is calculated as:

Check Amount*Check Risk Factor = Balance=Total Risk

This customer's risk totals will be closed only when the customer check is encashed in bank.

"0" - "0,5" – "1" Factors Total Risk Statuses

Risk Tracking

Local Currency / Reporting Currency

This field is used to specify the currency type to be used for risk tracking. This field contains the following options:

• Local Currency
• Reporting Currency

When risk tracking is performed in reporting currency, all AR/AP transactions are added to the risk total calculated in reporting currency using the daily exchange rate. Therefore, slips and invoices used to record AR/AP transactions are not recorded without the reporting currency exchange rate.

If risk tracking is performed in reporting currency and risk control is "Charge Account", the current balance calculated using the reporting currency specified in slips of transactions that affect the AR/AP balance (except check/p. notes) is transferred into the Balance field located in the Risk Total section.

If risk tracking is performed in reporting currency and "Dispatch/Receipt" is selected as risk control, the calculated current balance using the reporting currency specified in unbilled dispatches (belonging to AR/AP) is transferred into the balance field located in the risk total section.
NSF checks In The Bank or Portfolio and Protested P. Notes in the bank or portfolio are transferred into the NSF Checks or Protested P. Notes fields respectively in Reporting Currency.

Risk Control will be done Based on Totals / Risk Control Will be done Based on Transactions

The field used to determine risk-tracking method. Risk control can be done based on totals or transaction risk limit.

When "Risk Control will be done Based on Totals" is selected, the risk control is performed according to the AR/AP risk totals. For example, when a dispatch is entered, it is controlled whether the risk total has exceeded the risk limit totals or not.

When "Risk Control will be done Based on Transactions" is selected, the risk control is performed basis on transaction limits. Risk limits are controlled for each transaction separately.

In both conditions, when a transaction exceeds the risk limits, the user is warned or the risk limit is not checked or the transaction is not recorded if the risk limit is exceeded, according to limit exceeding selection determined in the AR/AP card or specified using the finance parameters option located in the definitions menu of the administration section.

Customer Check / P. Note and Endorsement Check P. Note Risks In Charge Account Risk Tracking

In Charge Account risk tracking, Customer Check / P. Note risks and Endorsement Check / P. Note risks are tracked separately. For this, the following options are used which activated when Risk Control Will Be Done On Basis of Transactions option is selected:

• Deduct Customer Check / P. Notes From Charge Account
• Deduct Endorsement Check / P. Notes From Charge Account

Deduct Customer Check / P. Note Amounts From Charge Account: This option is activated when "Risk Control Will Be Done Based on Transactions" option is selected at risk tracking part of the risk info page. When risk tracking is done based on transactions, it is used to provide including the received customer check and p. notes to charge account risk total. The total amount of the received check and p. note from customer is decreased from the charge account's risk total. Customer check / p. note risk is created by uncollected check/p. notes.

The check / p. note risk is decreased from total risk amount only when the amount is collected. Besides, "company check / p. note" risk is decreased when they are collected at customer side.

Deduct Endorsement Check / P. Notes From Charge Account: This option is activated when "Risk Control Will Be Done Based on Transactions" option is selected at risk tracking part of the risk info page. When risk tracking is done based on transactions, it is used to provide including the endorsed customer check and p. notes to charge account risk total. The total amount of the received endorsement check and p. note is decreased from the charge account's risk total. Endorsement check / p. note risk is created by uncollected check/p. notes. The check / p. note risk is decreased from total risk amount only when the amount is collected.

Group Company Risk Transactions

Used to determine how risk control and tracking transactions will be performed for Group Companies. This field is located only in AR/AP records of Group Company type.

Risk control defaults for Group Companies are specified by using "Group Company Risk Transactions" parameter line of Finance Parameters. The selection is transferred to AR/AP cards as default; can be changed if necessary.
Group Company Risk Transactions field contains the following options.

• Will Be Done Based On AR/AP
• Will Be Done Based On Group
• Will Be Done Based On Group + AR/AP

If "Will Be Done Based on AR/AP" option is selected, the risk controls and tracking are done based on AR/AR.

When "Will Be Done Based on Group" is selected, the group company related accounts' risks are tracked based on group company.

The determined risk control and warning methods for the group company are assigned to related group related accounts as risk criteria automatically and cannot be changed through AR/AP cards.

User can determine risk limits based on AR/AP and can enter closed risk amounts. During the control, the transaction amount is compared to AR/AP risk limit and if the transaction exceeds the risk limit the user is warned according to limit exceeding options.

If the transaction does not exceed the limit, the related group company risk limit is controlled and if this limit is exceeded, the user is warned according to limit exceeding options.
In the event of relating a group company with another one, the risk info of the topmost group company is applied to all related accounts(R/P).

When the user breaks off the connection between the group company and related account, the initial risk values determined at Finance Parameters are assigned to the AR/AP automatically.

When determining a group company through an AR/AP, if the new AR/AP risk totals exceed risk limits of the group company, according to the limit exceeding options determined for the group company, the user is warned or the transaction is stopped.
Risk totals fields of group related accounts (receivable/payable) list risk totals of the relevant AR/AP records only.

Risk Criteria

This part is used to specify the transactions for which risk control will be performed.

The risk limit control can be performed separately for,

• Charge Accounts
• Company Check / P. Notes
• Customer Check / P. Notes
• Endorsement Check / P. Notes
• Dispatch / Receipts
• Dispatch / Receipts (Proposal)
• Orders (Deliverable)
• Orders (Proposal)

The transactions are specified and controls are done based on defined risk limits.

Risk Limits

It indicates maximum AR/AP deficit amount.

The limit given on this field is processed depending on the selection made on the Risk Control field and "When limit exceeded" fields and the risk warning control is performed.

Charge Account: The risk limit of the charge account. Charge account risk consist of all the AR/AP transaction risk totals except order, dispatch, customer/company check / p. note transactions.

Transactions included to Charge Account risk:

-AR/AP Slips (Cash Collection, Cash Payment, Debit Note, Credit Note, Remittance Slip, Exch. Rate Diff. Slip, Opening Slip, Sales Due Date Diff. Invoice, Purchase Due Date Diff. Invoice, Tradesman Invoice (Received), Tradesman Invoice (Issued), Credit Card Slip, Credit Card Return Slip)
-Bank Slips (Money Order Received/EFT, Money Order Issued/EFT)
-Safe Deposit Transactions (AR/AP Collection, AR/AP Payment)
-Purchase Invoices
-Sales Invoices
-Check / P. Note Slips

Company Check / P. Notes: The risk limit for the check / p. notes issued to AR/AP.

Transactions included to Company Check/P. Notes:

• Check Issued (to AR/AP)
• P. Note Issued (to AR/AP)
• Group Processing Slip (Company Check)
• Group Processing Slip (Company P. Note)
  Customer Check / P. Notes: The risk limit for the check/p. notes received by the AR/AP.
  Transactions included to Customer Check/P. Notes:
• Check Received
• P. Note Received
• Group Processing Slip (Customer Check)
• Group Processing Slip (Customer P. Note)
  Endorsement Check / P. Notes: The risk limit for the endorsement check /p. notes received by AR/AP.
  Transactions included to Endorsement Check / P. Notes:
• Check Received
• P. Note Received
• Group Processing Slip (Customer Check)

Group Processing Slip (Customer P. Note)
Dispatch / Receipt: In this field the user enters risk limit for Disp./Receipts.
Dispatch / Receipt (Proposal): In this field the user enters risk limit for Disp./Receipts in "Proposal" status.
Order (Deliverable): This field is used to enter risk limit for orders in "Deliverable" status.
Order (Proposal): Used to enter risk limit for orders in "Proposal" status.
Note:
Balance= Unpaid Lines in Debit Tracking Window – Closed Risk
Total Risk = Balance Risk (Charge Account (AR/AP Slips / Bank Slips / Safe Deposit Transactions / Purchase Invoices / Sales Invoices) / Check / P. Note Slips (Company Check/P. Notes / Customer Check/P. Notes + Disp./Receipt Risk + Order (Deliverable) Risk + Order (Proposal) Risk
Closed Risks: Indicates the closed risk amounts of the selected transactions. This amount entered by the user reduces the risk. This field allows the user to directly intervene to the AR/AP risk.


Check – P.Note Totals Tracking Fields

Totals of checks and P. Notes that affect the AR/AP risk are located on the middle pane of the risk info tab. These amounts are automatically transferred by the application after transactions; these fields are not for data entry. 

NSF Check: The total amount of NSF Checks of the AR/AP.
Protested P. Note: The total amount of Protested Promissory Notes of the AR/AP.
When risk tracking is performed in reporting currency, NSF checks In The Bank or Portfolio and Protested P. Notes in the bank or portfolio are transferred into the NSF Checks or Protested P. Notes fields respectively in Reporting Currency.

Risk Totals:

These fields are used to track AR/AP risk totals. For all the selected transactions, the totals are calculated and displayed in related sections.
The amount in Charge Account field gives the risk total depending on the outstanding liability (in other words, the current balance) of the AR/AP.

Company Check / P. Notes / Customer Check / P. Notes: Displays the risk totals of the checks received by or sent to other companies.

Endorsement Check / P. Notes: Displays the risk totals of the endorsement checks received by other companies.

The amount on the Dispatch / Receipt Risk field is used to indicate the risk total of the unbilled dispatches/receipts. The net amount of AR/AP dispatches constitutes the AR/AP dispatch risk. When the dispatches/receipts are transferred into the invoice, the dispatch/receipt net amount is deducted from the dispatch/receipt risk total, and added to the balance total.

Dispatch / Receipt (Proposal) field indicates the risk total of the dispatch / receipt of the AR/AP in proposal status.

The amount on the Order (Deliverable) field is used to indicate the risk total of the deliverable orders of the AR/AP.

The Order (Proposal) field indicates the risk total of the AR/AP orders in proposal status.

Not: These fields are only informative, and not for data entry. The risk total tracking method, and the transactions for which risk control will be applied are specified using the finance parameters option located in the definitions menu of the administration section within the Logo application.

Totals

Risk Limits: Risk limit totals of the transactions selected by the user.

Closed Risks: Closed risk totals of the transactions selected by the user.

Risk Totals: Risk limit totals of the transactions selected by the user.

Note: For a group company, the amount listed on risk totals field, consist of group company transactions and transactions of the accounts (R/P) related to the group company.

Action When Risk Limit Exceeded:

The Action When Risk Limit Exceeded section is used to specify the control method when transactions exceed the risk limit of AR/AP.
The risk total calculation type, the transactions that the risk control will be done for and control method defaults are determined by the Finance Parameters option located in the Administration part of the program.

Specified control and method defaults in Finance Parameters are transferred into the records. When risk criteria are different for defined AR/AP, the necessary changes are performed on the record.

The risk limit control can be performed separately for charge accounts, customer check / p. notes, company check / p. notes, endorsement check / p. notes orders and dispatches and there are three control method options:

When Proceed is selected, the risk limit is not checked.

When Warn User is selected, the user is warned while the transaction is recorded. However, the transaction is recorded if the user prefers to continue.

When Block is selected, the transaction is not recorded if the risk limit is exceeded.

Examples:

Case 1:

When "risk control will be done based on totals" option is selected,
In "Criteria" part, the transactions are specified for which risk control will be performed.
Risk limits are entered for the selected transactions.
Closed risks are entered.
In "Action When Risk Limit Exceeded" part, user warning method is selected if the transactions exceed the risk limits.

Result: Risk controls are done based on totals.

Case 2:

When "risk control will be done based on transactions" option is selected,
In "Criteria" part, the transactions are specified for which risk control will be performed.
Risk limits are entered for the selected transactions.
Closed risks are entered.
In "Action When Risk Limit Exceeded" part, user warning method is selected if the transactions exceed the risk limits.

Result: Risk controls are done for each transaction separately according to the defined risk limits for these transactions.

Case 3:

Group Company Risks

If AR/AP is inclusive of a group company, it must be specified in the "Business Info" tab of the AR/AP record.
In "Risk Info" tab of AR/AP card, "Risk operations will be done based on group company" option has to be marked.
Risk limits and closed risks are specified for the AR/AP.
AR/AP transaction controls and "Action When Risk Limit Exceeded" part options are equal to group company's options.
Risk total amounts consist of only this account's totals.