Accounts Payable and Accounts Receivable

This page will teach you how to use the two main features in Steelhead Native Accounting. Accounts Receivable (AR) is the system used for invoices, and Accounts Payable (AP) is what is used for tracking bills.

Accounts Receivable:

You can refer to this step-by-step guide to using Accounts Receivable.

Suppose you have a Sales Order that is split out into two Work Orders, each going through a different process. Going into one of the Work Orders, you can move parts into Invoicing and in Invoicing see that it shows a breakdown of the parts on the Sales Order that are ready to invoice, meaning they're in the Invoice node:

When you create an invoice, you can choose a ship date, due date, and bill-to address, among others.

Automatic Journal Entries:

Once you create the invoice and finalize it, it automatically creates journal entries into Steelhead Accounting. In this example, the powder coating product goes to the powder coating income account, and Cerakote goes into its income account, so there are two entries into AR with that income breakdown:

Accounting Balance:

Once an invoice is finalized, go to accounting and click the menu for AR. Here you will see an outstanding balance for the customer:

• Click on the invoice and notice there is a new entry in the AR list.

• In the Accounting module there is a new balance of $58.75 in AR, due to the new invoice:
  

• You can record a received payment here from the customer, set a destination bank account and choose to enter either a partial payments or full payments, whatever is needed.

• Press save, so that now there is no more outstanding AR:
  

If you go to AR and click AR Payments, you can see all payments listed. If you go to the AR payment lines, you can observe the one payment that had two lines that correlated with the invoice lines, showing how Steelhead's native accounting system is linked together to track every Sales Order line through the accounting system:

Accounts Payable:

To demonstrate AP, let's say you place a Purchase Order just for one item to be powder coated. In many cases when ordering powder the customer would get the invoice immediately upon ordering from the website. Then you can set dates, and enter a Vendor Invoice number, and create the Bill.

Tie-in with Bills:

Similarly to invoicing, the Bills menu does not make any entries into the accounting system when you enter data, until you click the finalize button. If we click this button we see a warning here that the the bill amount of twelve exceeds the unbilled received amount of zero, which shows we haven't received the items yet:

You don't need to make any entries into the accounting system before you receive items, or you can choose to make the entries right away. Steelhead allows both options.

• If you do create the entry, your asset account is prepaid expenses and your liability is Accounts Payable.
  • If you finalize that entry, it does show up in Accounts Payable.
• However, if you click into the bill, you can see that you have your PO for $30 but you received zero and the bill is for $30.
  • This allows you to quickly see that things are matching as they should.
    

When items come in the door to your receiving manager, they are moving that prepaid expense to your powder inventory

• Therefore, the journal entry is no longer a prepaid expense, because you've received the items and turned them into inventory.
• If that item is received and closed out, then the bill in Accounts Payable will show that you ordered 12 parts and received them all as desired.
• The same thing can be seen on the Purchase Order.

Final Payment:

Now you are ready to make the payment:

• If you select the powder you used, and your source account is your bank account and you make the payment, it is no longer an AP.
• Then in the payments screen you can see your latest one is this $30 payment. It's all linked together.
• Looking at the bill we can see the linked payments there also, integrated completely into Steelhead Accounting.
  

--