Balancing instructions – Procountor

Automatic posting in normal situations

Sales invoice posting chain when using the bank reference number

When approving the sales invoice in Procountor, the invoice automatically becomes an open invoice in Receipt search. The invoice was already posted when saving: (1700/3000) per Trede debtors, accounts receivable an sales new.
When receiving a reference payment to the sales invoice, this generates the following automatic actions:

1. The entry (1990/1700) per payments in transit and balancing difference an accounts receivable is created automatically in the accounting page of the reference payments.

2. The entry (1910/1990) per bank account an payments in transit and balancing difference is created automatically in the accounting page of the bank statement.

3. The invoice is automatically set off by the reference number to status paid and is no longer shown in open invoices (Receipt search search type Search open invoices).

Purchase invoice posting chain when using the bank reference number

When the purchase invoice is verified or approved in Procountor, it automatically becomes an open invoice in Receipt search. When saving or receiving the invoice, it will be automatically posted according its default postings. Procountors default postings: (8450/2880) per other administration expenses an payment transactions account.
When the invoice is paid as a reference payment through Procountor, this generates the following automatic actions:

1. The entry (2880/1910) per payment transactions account an cash in bank is created automatically in the accounting page of the bank statement.

2. The invoice is automatically set off to status paid and is no longer shown in open invoices (Receipt search search type Search open invoices).

Payment identifier (internal identifier, does not show in user interface) is used as a primary information in allocation when executing payments in Procountor, and the reference number is used as the secondary (if reference number is used).

Monthly balancing

Work procedure

1. Go through the Bank statements and reference payments, i.e. all payment transactions. Process deposits to the bank account without a reference or unallocated reference payments. Check that no invoices are remaining in the Payment allocation view (Payments > Payment allocation). There is a list of receipts including payments with status Payoment sent to bank on the Payment allocation view. The reason for a receipt to be showing on the Payment allocation view can be that the payment has not been successfully allocated from bank statement to the invoice, or that the payment has been rejected in the bank and, thus, it has not been charged at all. Further information of payment errors and processing of payment errors can be found here.

2. Check the postings and VAT markings of receipts entered in the month. For example, General ledger, Account inspection report and Partner checking report can be useful tools in reviewing.

3. Use the Account inspection report or Transfer of unfinished transactions to check that the period no longer contains any unfinished transactions. Those transactions are not included in the VAT processing. Note that if you approve a receipt in an Unfinished status after creating the VAT summary, you must re-create the VAT summary to update that month’s VAT to the next open periodic tax return.

4. Create the necessary journal receipts, e.g. monthly write-offs and accrual journals.

5. Use the accounting account inspection reports to go through the accounts.

6. Make sure that the balance of the account 1990 Payments in transit and balancing difference is zero. If the balance is not zero, the reason can be, for example, that there are payments without reference numbers on the bank statement. In this case, the accounting must be corrected by transferring the payments to sales receivables (1700 or other sales receivables account).

7. Balance all balance accounts, especially the account 1700 Trade debtors, accounts receivable to open sales and the account 2880 Payment transactions account to open purchase, travel and expense invoices. Use the Reconciliation report for open invoices.

Accounts that will come to sales ledger and purchase ledger can be modified in Management > Accounting info > Chart of accounts > Show receivable and payable accounts.

8. Create the VAT summary. Procountor automatically creates the accounting behind the VAT summary to the account 2930 VAT liability (this is Procountor's default account and if it has been changed, the change should be taken into consideration). By clicking the Search information and Search all transactions buttons you can see the transactions on which the VAT summary is based on.

9. Update the report database and make sure that the income statement and balance sheet of the period are in balance.

10. Create the tax return for self-assessed taxes. Procountor automatically creates the accounting behind the tax return, in which the VAT payable or receivable is transferred from the account 2930 VAT liability, to the account 2935 Tax Account transactions

These are Procountor's default accounts and if they have been changed, the change should be taken into consideration.

11. Procountor automatically posts all VAT, tax withholding and social security fee liabilities to 2935 Tax Account transactions. Balance that account monthly with the Tax Account statement.

12. If needed, create monthly balance sheet itemisation and close the tracking period.

Going through bank statements and reference payments

Bank statements

Reference payments made through Procountor have been entered and set off automatically. These transactions rarely require manual measures.
Along reference payments, many other payments are automatically posted correctly based on bank transaction code of the default accounts. For example, banks’ interest charges, that are considered as withdrawals and that have the transaction code 740 (interest charge), are posted as a default to the account 9440 Interest and other financial expenses, others if there is no other posting rules made to these withdrawals. The bank transaction code specific default accounts can be found in Procountor from Management > Accounting info > Posting defaults > Bank statement posting defaults. These transactions are shown in the bank statement by entry explanation 702 invoice payment service. These transactions seldom require any actions.
Transactions in the bank statement that need actions, e.g. manual setting off or correction of entry, usually include:

Payments through the net bank or another payment device. Check if a corresponding receipt of the transaction has been entered in Procountor. If not, create the invoice and mark it Paid elsewhere.
Bank card purchases are entered directly from the bank statement. Alternatively, you can create a consolidated journal receipt of the purchases each month.
Foreign payments: In foreign payments, you must also enter the possible currency rate difference. Procountor’s own price difference processing is used with the currency payments sent from Procountor, if the payment is allocated from bank statement to purchase invoice and the charged sum is different from the sun that was paid.
Received reference payments are entered automatically correct according to Procountor’s defaults to the accounts 1990 Payments in transit and balancing difference / 1700 Trade debtors, accounts receivable. Thus, the manual corrections are not needed.
If payments are received without a reference, the entry must be corrected in the bank statement’s accounting page. In case of a payment to be a sales invoice, the invoice must also be set to status Paid elsewhere.
Bank statement’s transactions can also be searched with bank statement search (Payments > Bank statements and reference payments > Show detailed search).

Checking the Payment allocation page:

It must be checked that the Payment allocation page (Payments > Payment allocation) does not contain transactions. The page contains the payments that are in status Sent to bank, but that have not been signed for receipt (the status has not changed to Paid or the payment has not been marked Paid elsewhere). If the page contains transactions, it should be checked from the bank statement whether or not the payments have been charged correctly.
If the bank statement shows that the payment has been charged, but it has not been allocated to an invoice, the invoice status can be changed to Paid on the Payment allocation view. Doing so will remove the invoice from the list of open invoices. Alternatively, the payment can be allocated to an invoice on Bank statement allocation view. Doing so will add the information of the purchase invoice regarding the payment.
If the invoice is shown in the Payment allocation view and the payment has not yet been charged, it is possible that the processing of the invoice has been rejected in the bank, for example, because of the lack of assets in the bank account. If the payment is rejected in the bank, the payment’s Payment sent to bank status must be removed and then the payment can be re-sent. Further information can be found here.

Reference payments

All reference payments of the month can be viewed by using the Reference payment report (Reports > Payment reports > Reference payment report).
Reference payments allocated to the invoice without payment difference are automatically correct. They do not require any actions.
Reference payments not targeted at an invoice must be examined and an it should be figured out, why the payment has not been allocated to any invoice.
When verifying the reference number used for the payment, the free text search can be utilized in Receipt search.
Below there is a list of possible reasons for why the payment has not been allocated and what kind of correcting measures can be done.

1. The sales invoice had not been approved, i.e., it has been in Unfinished status, when the reference payment has arrived to Procountor:

Approve the invoice and allocate the payment to the invoice with Edit reference payment

2. The invoice, on which the payment is allocated to, has already been paid, i.e., there is a double payment in question:

Return the money to the payer or agree about allocating the payment to some other invoice of the same payer (for example, the next open invoice of the payer) with the Edit reference payment function. Further information about double payments can be found here.

3. The payment has been allocated to a wrong invoice, since the incorrect reference number has been used.

Allocate the payment to a right invoice with Edit reference payment function.

4. Reference payment has been allocated to a right invoice, but the open sum on the invoice and the amount of payment do not match. Possible reasons are:

Only a part of the open sum is paid, so the invoice’s status will change to Partly paid and the rest of the sum will stay open.
There is a cash discount or other sum to be corrected in question.
Also, when the customer has paid too much, the invoice’s status will change to Partly paid, and the open sum on the invoice is negative.
If the customer has paid too much, the situation can be corrected by allocating the over paid part to some other invoice of the customer, or by paying the over paid part back to the customer.
In order to get the overpaid invoice out of the Partly paid status, the negative Paid elsewhere transaction (same amount as the over paid part) must be added to the invoice on invoice’s Special situations view.
Procountor will consider the invoice paid, if the difference between the payment and the invoice’s sum is less four cents.

Monthly accrual and writing-off

Perform the monthly writing-off and accrual by using journal receipts. An example of these are the holiday salary accruals. Note that in case of repeating receipts, the Copy journal function can be used from the drop-down menu opening from Edit button on receipt’s accounting page.
The Accrual tool provides a convenient way to create multiple journal receipts.

Business transactions

Check that all transactions in the month are business transactions. For example, receipts with statuses Unfinished, Received and Verified are unfinished transactions and, thus, not considered as business transactions. Transactions that are not considered as business transactions are not included in the VAT summary, or official reporting, so it must be ensured, that there are no unfinished transactions on the tracking period.
Unfinished transactions can be searched either through the receipt search or by using the accounting reports:

In Account inspecting report, it is possible to use non-transaction alternative as the search criterion.
In the Receipt search, unfinished transactions can be searched by searching for receipts with statuses Unfinished, Received or Verified.
Unfinished transactions should be either invalidated, approved or transferred to the next tracking period. Transfer for unfinished transactions function can be utilized.

Checking the posting and VAT markings

Check that the accounts in the postings are correct and that the VAT percentages, VAT deduction percentages and VAT statuses are correct.
All transactions for the month can be searched by using e.g. the account inspection report or the general journal or general ledger reports. From those reports it is possible to drill down directly to the accounting page and correct the postings if necessary.
The account, 8450 Other administration expenses, is the default account for purchase invoices. If there are purchase invoices that should not be posted on the 8450 account, depending on the situation, it is possible to define the default postings for the supplier or the product in order to get the postings right for the purchase invoices.
The balance is posted on the account 8890 Balancing differences if an accounting receipt’s postings do not not balance.

Balancing the balance sheet accounts

Balance sheet and Income statement accounts

The Income statement and the Balance sheet accounts do not match until the VAT summary has been saved with the 2930 VAT liability entry in its accounting page (this is Procountor's default account and if it has been changed, the change should be taken into consideration).
The quickest way to compare the Income statement and the balance sheet, is to use the Accounts and transactions report, which can be found from Accounting > Reconciliation tools > Accounts and transactions. Specify the search criteria as from the beginning of the financial year to the end of the month to be balanced and click the Search button in the upper part of the view. The difference between the Income statement and the Balance sheet is displayed in the Total for selected accounts field in the upper right corner of the view. So, the value in the Total for selected accounts should not differ more than a few cents when the VAT summary has been created.
If the Income statement and Balance sheet differ, the reason can be one of the following:

The reporting database has not been updated after creating the VAT summary.
Changes to accounting have occurred after creating the VAT summary.
There is a difference on some receipt.

Measures to fix the situation:

Examine with Receipt reconciliation report (Accounting > Reconciliation tools > Receipt reconciliation report) if there are any receipts with differences.
If the receipts with differences are found, it is possible to drill down to the receipt with the difference and correct the postings. Small differences are not necessarily mistakes, but they can be caused because of rounding. This kind of differences can be posted to the account 8890 Balancing differences by clicking Save on the accounting page and then clicking Update on the opening Receipt transaction sum is not zero window.

Observations regarding the difference between Income statement and Balance sheet when using the old Accounting reports page vs. the new Accounting reports page. Old Accounting reports has been removed in the version update 72, 21.1.2023.

Due to the chart of accounts renewal in Procountor, the default formula for the Balance sheet is a bit different than before.

On the old Accounting reports page the Balance sheet has featured a functionality that has "forced" assets and liabilities to match. Technically due to this functionality the assets and liabilities couldn't differ. To make the assets and liabilities match, Procountor has modified the profit/loss on the Balance sheet with the difference. This resulted in the user being able to tell whether the Income statement and Balance sheet differ, in addition to the Accounts and transactions report, by comparing the profit/loss presented on the Income statement to the profit/loss presented on the Balance sheet.

The new Accounting reports page doesn't feature this kind of functionality. The assets and liabilities may differ from each other and the profit/loss presented on the Income statement and Balance sheet match in turn. The difference between the Income statement and Balance sheet accounts can be still seen from the Accounts and transactions report and the difference between the assets and liabilities directly from the Balance sheet.

The reasons for differences between Balance sheet and Income statement accounts still remain mostly the same, being that some receipt has difference or the VAT summary has not been drafted after some changes were made to the accounting.

Balancing cash assets and bank accounts

Cash money is balanced with the ledger account 1900 Cash in hand.
Enter cash sales per cash assets an accounts receivables either with journal or with sales invoice. When using sales invoice, the invoice should be marked Paid elsewhere on invoice’s Special situations view.
Compare the balance of the Bank account 1910 to that of the bank statement. Search the bank statement from the last day of the month (if no bank statement arrived on that day, the system retrieves the one from the previous day).
If the company has several bank accounts, balance all of them monthly.

1990 Payments in transit and balancing difference

The balance of the account 1990 Payments in transit and balancing difference should be 0.
The balance of the account 1990 Payments in transit and balancing difference can be negative, if payments to invoices have arrived without a reference. The payments without references should be posted in the bank statement’s accounting page to account 1700 Trade debtors, accounts receivable. Also, the invoice should be marked Paid elsewhere on invoice’s Special situations view.
If there is balance on the account 1990, the reason can be that some other payment than a payment of sales invoice has arrived to the account. In this case, the posting must be corrected on the bank statement’s accounting page in way the situation requires.

1700 Trade debtors, accounts receivable

Compare the balance of the account 1700 Trade debtors, accounts receivable with the list of open sales invoices in the Receipt search.
In the Search of open sales invoices, open the advanced search and set the search criteria to the field Payment transactions until. The date to add the last day of the month.
The criteria can be defined further by setting the last day of the month to be balanced to the Booking date between field’s last late.
Open the Reconciliation report for open invoices (Accounting > Reconciliation tools > Reconciliation report for open invoices). The report shows the balance of open invoices and that of the 1700 Trade debtors, accounts receivable side-by-side for each day. From the Reconciliation report for open invoices it is possible to move to other reports in order to find out the possible difference.

In case there is a difference, possible reasons can be:

If no reference number has been used in the payment, check the payment data in the bank statement, correct the default posting and manually set the invoice paid. In the accounting page of the bank statement, correct the posting (change 1910/1990 to 1910/1700). Set the sales invoice to status Paid elsewhere through the special situations button.
Reference payments, which have been received but not allocated at any invoice, for example, because of incorrect reference number: Non-allocated reference payments can be searched in Reporting > Payment reports > Reference payment clearing report. The report also retrieves the invoices with more than one allocated reference payment. The report allows drilling down to the to reference payment data with the non-allocated reference payment, and allocating it to the right invoice with Edit reference payment function.
The invoice was in status Unfinished when the payment arrived. In this case, approve the invoice and then allocate the reference payment with Edit reference payment function.
There is a cash discount on the invoice and the payer has used it. The cash discount has been taken into account in accounting, but not on the invoice’s payable sum, which means that there is an opens sum (size of the cash discount) on the invoice. In this case, the open sum on the invoice can be marked Paid elsewhere.
On the other hand, the cash discount can be taken into account on the invoice’s sum (the amount of the cash discount has been marked Paid elsewhere), but not in the accounting. In this case, the accounting should be corrected.
If there is an invoice in status Partly paid (and there is no overpayment in question) and it is known, that the open sum will never be paid, the accounting should be corrected by creating a credit invoice with the same sum (but with opposite sign) as the unpaid part of the original invoice. The open sum of the original invoice and the sum of the credit invoice must be marked Paid elsewhere in order to correct the situation in accounting and ledger.
There are several reports that can be used in balancing. For example, Sales transaction report enables observing invoice-specific transactions including manually added Paid elsewhere On Bank statements and reference payments view, the sum can be used as a search criterion, when searching for transactions.
Further information of using the Reconciliation report for open invoices and balancing the ledger can be found here.

2880 Payment transaction account

Compare the balance of the account 2880 Payment transaction account to the list of open invoices in the Receipt search.
In the Search of open purchases (Search > Open purchases), open the advanced search and set the search criteria to the field Payment transactions until. The date to add the last day of the month.
The criteria can be defined further by setting the last day of the month to be balanced to the Booking date between field’s last late.
Open the Reconciliation report for open invoices (Accounting > Reconciliation tools > Reconciliation report for open invoices). The report shows the balance of open invoices and that of the 2880 Payment transaction account side-by-side for each day. From the Reconciliation report for open invoices it is possible to move to other reports in order to find out the possible difference.