Paid Cheque Cycle: Concepts and Workflow
A payable cheque is a cheque that your business issues from your bank account to a supplier or any other party. The Cheque Cycle lets you track every cheque from the moment it is issued until the bank collects or rejects it, with journal entries created automatically at each stage.
This guide explains the concept of payable cheques, the stages of the cheque cycle, the journal entries at each stage, how to enable the app, where to find the screens, and the permissions.
Article Contents
Enable the Cheque Cycle
- Open Apps Manager.
- Enable the Cheque Cycle app.
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Note: The app requires the Accounting app to be enabled, because cheques create journal entries.
Components of Payable Cheques
| Component | Function |
|---|---|
| Chequebook | A book linked to a bank account that contains the range of cheque numbers (from the first serial number to the last). |
| Payable Cheque | A cheque from the chequebook, with an amount, an issue date, and a due date, made out to a recipient account. |
| Notes Payable | An intermediate account where the cheque is recorded after it is handed over, until the bank collects it. |
| Recipient Account | The account of the beneficiary in the Chart of Accounts, such as the supplier’s account. |
Stages of the Payable Cheque Cycle
| Status | Meaning | Available Actions |
|---|---|---|
| Issued | The check has been written but not yet handed to the beneficiary. | Deliver, Cancel, Edit, Delete |
| Delivered | The check has been handed to the beneficiary and is waiting to be cashed. | Collect, Reject, Undo Delivery |
| Collected | The bank has cashed the check and the amount has been deducted from the account. | Undo Collection |
| Rejected | The bank has refused to cash the check (it bounced). | Undo Rejection |
| Canceled | The check was canceled before it was delivered. | Undo Cancellation |
Example
Journal Entries at Each Stage
| Stage | Debit | Credit | Entry Date |
|---|---|---|---|
| Issue | — | — | No entry is created. |
| Deliver | The receiving account (such as the supplier) | Notes Payable | The check issue date. |
| Collect | Notes Payable | The bank account | The collection date. |
| Reject | Notes Payable | The receiving account | The rejection date. |
| Cancel | — | — | No entry is created. |
When you undo any stage, the entry for that stage is deleted.
Accounts Used
- Notes Payable: An account that the system creates automatically under Current Liabilities and uses with automatic routing. You can set a different account for each cheque from Cheque Account Routing.
- Receiving Account: You select it when you issue the cheque.
- Bank Account: The bank Treasury account linked to the cheque book.
Screen Locations
| Screen | Location |
|---|---|
| Payable Cheques | Payable Cheques |
| Manage Cheque Books | A button on the Payable Cheques page, or Cheque Books |
| Cheque Account Routing | Cheque Account Routing |
| Cheque Cycle Settings (print templates) | Cheque Cycle Settings |
| Payable Cheques Report | Payable Cheques Report |
Permissions
| Permission | What It Allows |
|---|---|
| View Cheque Book | View cheques, cheque books, and Settings. |
| Add Cheque Book | Add cheque books, issue cheques, and make all status changes (deliver, collect, reject, cancel, revert). |
| Edit and Delete Cheque Book | Edit and delete cheque books and cheques, and deactivate and activate cheque books. |
Important Notes
- A payable cheque is not linked to a Purchase Invoice, so issuing it does not change the invoice’s payment status.
- You cannot collect a cheque before its due date.
- You can delete a cheque only while it is Issued.
Frequently Asked Questions
What is the difference between payable and receivable cheques?
Payable cheques are cheques you issue to others, and receivable cheques are cheques you receive from Clients or others.
When is the bank balance affected?
Only when the cheque is collected.
When is the Supplier balance affected?
When the cheque is delivered, if the receiving account is the Supplier account.
Why doesn’t Cheque Cycle appear in the menu?
Because the app is not enabled, or you don’t have permission to view the checkbook.