Writing Cheques to Make Payments

When you write a cheque to pay your supplier, this cheque is a liability for you. However, until your supplier cashes this cheque , you still have the money in your bank account. To handle this situation SMARTEDGE uses cheque books. A cheque book is associated with a specific bank account, where one bank account can have many associated cheque books . For example, if you have a single bank account, and both you and your purchase manager each have a cheque book on this bank account, you need to add two separate cheque books to this bank account. When either of you pay by check, the relevant cheque book is used as the payment method.

The cheque book is not necessarily referring to a physical cheque book. When your physical cheque book is out of checks, you get a new cheque book from your bank. However, this does not mean that you have to enter a new cheque book in the system.

Before Writing a Cheque

Before you can use a cheque to pay for expenses, you have to add the cheque book to the system. You do that in Account List. Click the New button to enter a new account, and select Cheque Books as the account type.

Processing the Cheques You Write

When you make a payment with a cheque, you should select the cheque book used as the payment method. When the payment is entered, the cheque used to pay the expense will be classified as written, but not yet cashed/cleared. If the payment is for a supplier invoice, the invoice itself, will be classified as paid. Until the cheque is cashed, it is considered a current (short-term) liability. When the cheque has been cashed (i.e. you are notified by your bank) you have to record this. Use the following procedure to do this:

go to Clear Written Cheques.
select the cheque book the cheque book was written from (you can select all cheque books to see all written uncleared checks)
All the written but not yet cashed cheques on the selected cheque book will be displayed.
mark the cheque that has been cashed
click the Save button to cash this cheque.

The amount on this cheque will now be withdrawn from your bank account and your cheque will be classified as cashed.

What If the Cheque Bounces?

If you make a purchase using a cheque and the cheque bounces, you have to void the purchase. This is done as follows:

open the supplier you made the purchase from, and select the Tab Statement.
select Status All. This is important, because the purchase will not show if you only display unpaid invoices.
click Retrieve. All the transactions for the supplier will be displayed.
select View Transaction for the purchase you need to void.
the details of the purchase transaction will display.
click Void to void the purchase. You are prompted to select a reason for voiding the purchase.
Select the reason for voiding the purchase, and click void again.

The purchase is voided. To record the purchase again, you will need to re-enter the purchase with the new payment method.

Alternative Process for Writing Cheques

You can bypass cheque books completely by selecting the bank account itself as payment method, when you have written a cheque. Using this method can lead to problems, when reconciling your bank account. The reason for this potential problem is that you can't control when the supplier actually cashes the cheque. Thus, if you enter the payment in one month and the supplier cashes the cheque the next month or even later, there will be discrepancies between your bank account in the system and the bank statement.

If you hardly ever use cheques this would not be a big problem. However, if you do use a lot of cheques it becomes messy and difficult when reconciling your bank accounts.

Because of this, we strongly recommend that you use cheque books when writing cheques.