Cash Basis Processes

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Overview

With Cash Basis Accounting, when Billings and Payables are posted (finalized), no transactions are generated. However, you can still track Billings that are issued to customers and Payables to pay from the list view and run reports again them. This article includes examples of how the process works from the point of creating and posting a record when Cash is the Accounting Method.

Note: If you selected Accrual and Cash (Multi-book Accounting) as the Accounting Method, these examples are also applicable for transactions on your Cash Ledger. Your Accrual Ledger will continue to post all transactions, as expected.

For Cash Basis Ledgers, there is a setting in the Cash Basis section of the Enablements page that allows you to select how revenue or expense is recognized when there is more than one Billing or Payable Line, and the payment is a partial payment. The choices are “Proportional Distribution” or “Manual”.

Proportional Distribution – this is the default Cash Application Method and it proportionally recognizes revenue/expenses for that partial payment across all Billing/Payable Lines. This Cash Application Method applies to both Billings and Payables. Refer to Examples 1 and 2 below.

Manual – this Cash Application Method applies only to Billings, and it allows you to apply payments to individual Billing Lines, in which case revenue will be recognized based on the Revenue GL Account for each Billing Line where a payment has been applied. Refer to Example 3 below.

Example 1: Billing Paid in Full
Example 1: Payable Paid in Full
Example 2: Billing Partial Payment
Example 2: Payable Partial Payment
Example 3: Billing Partial Payment - Manual

Example 1: Billing Paid in Full

A Billing is issued on March 22, 2024, and posted in the Accounting Period of 2024-03.
The Billing Total Amount is $3,360.00.
All Billing Lines are taxable, and the tax rate is the same on all lines.

Billing Lines

Billing Lines	Qty	Unit Price	Sub-Total	Tax Rate	Tax Amount	Total	Revenue GL Account
Line 1	1	2,000.00	2,000.00	12%	240.00	2,240.00	4000-Product Revenue
Line 2	1	1,000.00	1,000.00	12%	120.00	1,120.00	4010-Services Revenue

Header Level Posting

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Line Level Posting

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Note: Remember that when Billings and Payables are posted (finalized), no transactions will be generated with Cash as the Accounting Method.

The business selected 4015-Unapplied Revenue as the GL Account for Unapplied Revenue in the Cash Basis Accounting section of the Default GL Accounting Settings screen and the business has one Bank GL Account, which is configured as 1000-Cash.

The customer paid the Billing in full, which is the total amount of $3,360.00. When the Cash Receipt is posted, the following transactions will be generated.

GL Account	Debit	Credit
1000-Cash	3,360.00
4015-Unapplied Revenue		3,360.00

Cash Receipt - Header Level Posting

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Cash Receipt - Line Level Posting

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When the Cash Receipt is applied to the Billing, the BCR (Billing Cash Receipt) will generate a debit transaction(s) on the Cash Ledger (to reverse the previous credit transaction) to the Unapplied Revenue GL Account and generate the credit transactions based upon the related Billing Line(s) items.

BCR (Billing Cash Receipt) - Header Level Posting

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BCR (Billing Cash Receipt) - Line Level Posting

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Example 1: Payable Paid in Full

A Payable invoice was received on March 22, 2024, and posted in the Accounting Period of 2024-03.
The Payable Total Amount is $3,360.00.
All Payable Lines are taxable, and the tax rate is the same on all lines.
Payable Lines

Payable Lines

Payable Lines	Qty	Unit Cost	Sub-Total	Tax Rate	Tax Amount	Total	Expense GL Account
Line 1	1	2,000.00	2,000.00	12%	240.00	2,240.00	6000-Marketing Expense
Line 2	1	1,000.00	1,000.00	12%	120.00	1,120.00	6050-Travel Expense

Header Level Posting

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Line Level Posting

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The business selected 8000-Unapplied Expense as the GL Account for Unapplied Expenses in the Cash Basis Accounting section of the Default GL Accounting Settings screen and the business has one Bank GL Account, which is configured as 1000-Cash.

The full invoice amount was paid to the vendor, which is the total amount of $3,360.00. When the Cash Disbursement is posted, the following transactions will be generated.

GL Account	Debit	Credit
8000-Unapplied Expense	3,360.00
1000-Cash		3,360.00

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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When the Cash Disbursement is applied to the Payable, the APD (Accounts Payable Disbursement) will generate a credit transaction(s) on the Cash Ledger (to reverse the previous debit transaction) to the Unapplied Expense GL Account and generate the debit transactions based upon the related Payable Line(s) items.

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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Example 2: Billing Partial Payment

Everything from the previous example is the exact same as far as the Billing Amount. However, the customer made a partial payment of $500 towards the total of $3,360.00.
When the Billing is posted, since this is Cash Accounting, no transactions will be generated.

When the Cash Receipt is posted, the transactions will be generated similar to the Cash Receipt in the first example, with the partial payment amount going into the Unapplied Revenue GL Account.

GL Account	Debit	Credit
1000-Cash	500.00
4015-Unapplied Revenue		500.00

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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When the Cash Receipt is applied to the Billing, on the BCR (Billing Cash Receipt), the partial payment will be proportionally distributed across the Billing Lines and Sales Tax Liability. In this example, $500 was the partial payment amount. Therefore, proportionally distributing this amount would be calculated as:

$500 (partial payment) X $2,000 (Line 1 amt) / (divided by) $3,360 (total amount) = $297.62

$500 (partial payment) X $1,000 (Line 2 amt) / (divided by) $3,360 (total amount) = $148.81

$500 (partial payment) X $360 (Tax amt) / (divided by) $3,360 (total amount) = $53.57

Header Level Posting

GL Account	Debit	Credit
4015-Unapplied Revenue	500.00
4000-Product Revenue		500 X 2,000/3,360 = 297.62
4010-Services Revenue		500 X 1,000/3,360 = 148.81
2015-Sales Tax Liability		500 X 360/3,360 = 53.57

Note: Click here to view the above image in full screen.

Line Level Posting

GL Account	Debit	Credit
4015-Unapplied Revenue	297.62
4000-Product Revenue		500 X 2,000/3,360 = 297.62
4015-Unapplied Revenue	148.81
4010-Services Revenue		500 X 1,000/3,360 = 148.81
4015-Unapplied Revenue	53.57
2015-Sales Tax Liability		500 X 360/3,360 = 53.57

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Example 2: Payable Partial Payment

Everything from the previous example is the exact same as far as the Payable Amount. However, you made a partial payment to the vendor of $500 towards the total of $3,360.00.
When the Payable is posted, since this is Cash Accounting, no transactions will be generated.

When the Cash Disbursement is posted, the transactions will be generated similar to the Cash Disbursement in the first example, with the amount going into the Unapplied Expense GL Account.

GL Account	Debit	Credit
8000-Unapplied Expense	500.00
1000-Cash		500.00

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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When the Cash Disbursement is applied to the Payable, on the APD (Accounts Payable Disbursement), the partial payment will be proportionally distributed across the Payable Lines and Purchase Tax Expense. In this example, $500 was the partial payment amount. Therefore, proportionally distributing this amount would be calculated as:

$500 (partial payment) X $2,000 (Line 1 amt) / (divided by) $3,360 (total amount) = $297.62

$500 (partial payment) X $1,000 (Line 2 amt) / (divided by) $3,360 (total amount) = $148.81

$500 (partial payment) X $360 (Purch Tax amt) / (divided by) $3,360 (total amount) = $53.57

Header Level Posting

GL Account	Debit	Credit
6000-Marketing Expense	500 X 2,000/3,360 = 297.62
6050-Travel Expense	500 X 1,000/3,360 = 148.81
6080-Purchase Tax Expense	500 X 360/3,360 = 53.57
8000-Unapplied Expense		500.00

Note: Click here to view the above image in full screen.

Line Level Posting

GL Account	Debit	Credit
6000-Marketing Expense	500 X 2,000/3,360 = 297.62
8000-Unapplied Expense		297.62
6050-Travel Expense	500 X 1,000/3,360 = 148.81
8000-Unapplied Expense		148.81
6080-Purchase Tax Expenses	500 X 360/3,360 = 53.57
8000-Unapplied Expense		53.57

Note: Click here to view the above image in full screen.

Example 3: Billing Partial Payment – Manual

Assume you have a Billing with the following Billing Lines:

A partial payment of $500.00 was received and you want to apply this payment to the first billing line. You can do this in two ways:

Option 1: Create the Billing Cash Receipt manually

When the Cash Receipt is created and posted, it will generate Transactions to debit and credit the following GL Accounts:

To apply the partial payment to the first billing line, create a Billing Cash Receipt record, and on this record populate the field called “Billing Line” with the name of the Billing Line to which you want to apply the payment, in this example it would be “BL-00191”. Complete the remaining fields on the Billing Cash Receipt, save and post. The Transactions generated on the Billing Cash Receipt will then debit and credit the following GL Accounts:

Note: When using the Manual method, entering a value in the Adjustment Amount field reduces the Billing Balance by that amount. However, no discount is recorded because no funds were exchanged.

Option 2: Use the Cash Receipt Apply screen to do a line-level apply

(Coming in Summer 26)

Prerequisites:

Install Summer '26 version (Sandbox push: 8/2).
Follow the configuration steps outlined in "Apply Cash Receipt to Billing Lines" section of the Apply Cash Receipts article to set the Cash Application method to Manual.
Optional: configure the field sets if needed.

To do the line-level apply, follow the steps listed in the same section.

Once saved, the Billing Cash Receipt is automatically created with Billing Line populated and the same GL Account tagged on the BCR's transaction:

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Title

Cash Basis Processes

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1169652992