The Collateral Information option of the AR/AP card is used to record the currency to be used for risk tracking in AR/AP collateral transactions, amounts of which transactions will be tracked for risks and the control method to be used when risk limits are exceeded.
Collateral Total: The AR/AP collateral total.
Risk Tracking: Risk tracking for collaterals is performed in local and reporting currencies. The Risk Tracking field is used to specify the currency type to be used for tracking. When risk tracking is performed in Reporting Currency, all AR/AP transactions such as invoices, cash collection, payment and bank transaction are added to the risk total calculated in Reporting Currency using the Daily Exchange Rate.
Closed Risk: Indicates the closed collateral risk amount of the AR/AP. This amount entered by the user reduces the risk for each AR/AP. This field allows the user to intervene to the AR/AP collateral risk directly.
Risk Limit: The risk limit is displayed by multiplying the received/issued letters of guarantee with the risk factor (on the collateral card). This field cannot be entered directly.
Total Risk: The total of all AR/AP transactions selected as "affects collateral risk" constitute the total risk balance.
Risk Total: These fields are used to track collateral risk totals through the AR/AP card. The amount on the Balance field indicates the risk total of the AR/AP according to the current balance. The Balance total is affected by transactions selected as "affects collateral risk", invoices issued to the AR/AP, money orders received and issued, AR/AP transactions, and Checks/P. Notes received and issued slips. The dispatch risk indicates the unbilled dispatches for which the "affects collateral risk" field is checked. The net amount of AR/AP dispatches generates the AR/AP dispatch risk. When the dispatches/receipts are transferred into the invoice, the dispatch/receipt net amount is deducted from the Dispatch Risk total, and added to the Balance total. The amount of the Order (deliverable) field indicates the approved order total of the AR/AP. The amount of the Order (proposal) field indicates the approved order total of the AR/AP. As with dispatch transfer to invoices, the balances will be updated when proposal orders are approved and when orders are transferred to dispatches/invoices.
This field is not for direct data entry. This field is used for information purposes. The risk total tracking method and the transactions subject to collateral risk control are specified using the Finance Parameters option of the Administration section.
Risk Control: The field used to determine risk control options. Risk Control is performed using one of the following methods:
- Balance
- Balance + Dispatch
- Balance + Dispatch + Order
- Balance + Dispatch + Order (incl. proposal)
When Balance is selected, the Risk Control is performed according to the current balance of the AR/AP. The transactions that affect the AR/AP balance are:
- Invoices issued on the Purchasing and Sales sections (except for Proforma invoices),
- AR/AP slips recorded on the Finance section,
- Checks/P. Notes Received and Issued Slips recorded on the Finance section (except for transfer checks and P. Notes)
- Bank Money Order Slips recorded on the Finance section
- AR/AP Collection Slips, AR/AP Payment Slips and Invoices issued from the safe deposit.
When Balance + Dispatch is selected, totals of unbilled dispatches are processed in addition to the AR/AP balance. If the material slip is debiting the AR/AP, it will also increase the risk total. If the material slip is crediting the AR/AP, it will also decrease the risk total. If the material slip is billed, it will no longer affect the dispatch risk field. The same amount will now affect the balance risk field. Transactions to be monitored and the control method are specified on When Collateral Risk Limit Exceeded field. Transactions are controlled according to the risk limit amount specified on the card. A risk excess warning message is displayed when the transaction exceeds the risk limit.
When Balance + dispatch + order is selected, the current balance of the AR/AP, total amount of unbilled dispatches and the total amounts of approved and deliverable orders of the AR/AP are processed.
When Balance + dispatch + order (incl. proposals) is selected, the current balance of the AR/AP, total amount of unbilled dispatches and the total amounts of all orders of the AR/AP are processed.
Risk Limit Excess Control Default: When Collateral Risk Limit Exceeded field is used to record the control method to be used when the risk limit is exceeded in recorded order slips, dispatches and other AR/AP transactions. The risk total calculation method, transactions to be monitored and the control method defaults are recorded using the Finance Parameters of the Administration section. The control and method specified on the Finance Parameters option are transferred into the card as default. However, the transactions to be tracked and the control method can be different for any given AR/AP. In this case, the related options on the risk control and method fields are checked.
The risk limit control can be performed separately for Orders, Receipts/Dispatches and Other Transactions; and the control method contains two 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 confirms.
- When Block is selected, the transaction is not recorded if the risk limit is exceeded.