Receivable Cheques Cycle: Concepts and Workflow
A receivable cheque is a cheque you receive from a client or any other party as payment to your business. The Cheque Cycle app lets you track the cheque from the moment you receive it until it’s collected or rejected, and creates the journal entries automatically at each stage.
You can collect a cheque in two ways: collect it directly, or deposit it in the bank first and collect it once it clears. This guide explains the concepts, statuses, journal entries, settings, and permissions.
Contents
Enable the Cheque Cycle
- Open Apps Manager.
- Enable the Cheque Cycle app.
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Note: This app requires the Accounting app to be enabled, because cheques create journal entries.
Receivable cheque statuses
| Status | Meaning | Available actions |
|---|---|---|
| Received | You received the cheque, and it hasn’t been collected or deposited yet. | Collect, Deposit, Reject, Edit, Delete |
| Deposited | You deposited the cheque in the bank and are waiting for it to clear. | Collect, Reject, Undo Deposition |
| Collected | The cheque has cleared and its amount has been added to your account. | Undo Collection |
| Rejected | The cheque was rejected (bounced cheque). | Undo Rejection |
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Note: On all screens, the rejected status appears as Rejected.
The two collection paths
| Path | Steps | When to use it |
|---|---|---|
| Direct collection | Received → Collected | The cheque is cashed immediately or collected in cash. |
| Deposit then collect | Received → Deposited → Collected | You deposit the cheque in the bank and wait for it to clear, recording deposit fees if any. |
Journal entries at each stage
| Stage | Debit | Credit | Entry date |
|---|---|---|---|
| Receive | Receivable Notes | Received Account (such as the client’s account) | Issue Date |
| Collect (direct) | Collect Account | Receivable Notes | Collect Date |
| Deposit | Outstanding Deposit | Receivable Notes | Deposit Date |
| Collect (after deposit) | Collect Account with the amount minus fees, and the Deposit Fees Account with the fees | Outstanding Deposit | Collect Date |
| Reject (direct) | Received Account | Receivable Notes | Rejection Date |
| Reject (after deposit) | Received Account | Outstanding Deposit (via Receivable Notes) | Rejection Date |
When you undo any stage, its journal entry is deleted and the cheque returns to its previous status.
Accounts used
- Receivable Notes: An account the system creates under Current Assets, used with automatic routing.
- Outstanding Deposit: An account the system creates for deposited cheques. You can choose a different one in Outstanding Deposit when depositing.
- Deposit Fees Amount: An expense account the system creates for bank fees. You can choose a different one when collecting.
- Received Account and Collect Account: You choose both when receiving the cheque.
Screen locations
| Screen | Location |
|---|---|
| Receivable Cheques | Receivable Cheques |
| Receive Cheque | Receive Cheque |
| Cheque accounts routing | Cheque accounts routing |
| Receivable Cheques Report | Receivable Cheques |
Important notes
- A receivable cheque isn’t linked directly to a sales invoice or to the client. It’s linked to the client only if you choose the client’s account in Received Account.
- There are no chequebooks for receivable cheques.
- You can only delete a cheque while its status is Received.
FAQs
What’s the difference between receivable and payable cheques?
Receivable cheques are cheques you receive from your clients or others, while payable cheques are cheques you issue yourself.
When does the client’s balance decrease?
When you receive the cheque, if you choose the client’s account as the Received Account.
When does the bank balance increase?
On collection.
Should I deposit the cheque or collect it directly?
Deposit it if you’re waiting for the bank to clear it and want to track it. Collect it directly if it cleared immediately.