How do I deal with finance settlement on a unit?
Contents
Summary
This article explains how to deal with Finance Settlement on a part exchange unit, both where the finance for the new unit is taken out with the same company and when the companies are different.
More Information
When a unit is taken as part exchange towards a new unit, has a finance balance outstanding on it and you agree to settle this balance, you will need to pay the relevant finance company.
 | In most instances, where the same finance company is providing the new finance as well as the settlement, they will generally "contra" the settlement amount against the new amount financed and only pay you the nett balance of the transaction, i.e. the total new amount financed (generally the invoice balance) less the settlement on the part exchange. This is not always the case, but is very common now. |
Same Company Hire Purchase Settlement
If the new finance is with the same company as the outstanding finance on the part exchange unit, once you have completed and invoiced the deal, go to " Sales Ledger Receipts".
Posting the Payment for the Unit Sold
- At "Customer:", type in the Finance Company's account code or search for their account.
- You can search for a particular document by entering the number or press <Enter> to display all documents.
- Press the <Down Arrow> arrow until '<=' is pointing at the invoice you are receiving payment for.
- Press <P> to make a partial payment where the finance company has sent a contra payment.
- Press <F> for full payment if they have actually paid the invoice balance. You will need to pay them in full for the outstanding finance.
- Enter the 'Amount' that has been paid.
- Press <Esc>.
- Enter the 'date' the payment was received, and press <Enter>.
- Enter a "Comment:" e.g. "BACS" and the sale unit stock number that the payment is for, i.e. not the Part exchange number.
- Enter the appropriate payment centre e.g. 'Z992' for Current Bank Account.
- Press <Esc> and click [Accept] to complete the payment.
| You will notice now that the 'Balance Held' on the invoice has now dropped by the amount you have entered, leaving the finance settlement amount that was on the Part Exchange. |
Posting the Payment for HP Settlement on the Part Exchange
To pay off the HP settlement on the part exchange, stay in " Sales Ledger Receipts" with the same account code, and find the same invoice again, which will now have just the finance settlement balance left outstanding.
- Press <F> to pay off the remaining amount of the invoice, which will move the balance over to "Payment".
- Press <Esc>.
- Enter the 'date' that the payment is made and press <Enter>.
- On the "Comment", type 'HPSett' and also the unit stock number for the part exchange.
- Enter '19850' or your centre for 'Finance Settlement Control'.
- Press <Esc> and click [Accept] to complete the payment.
| This has now cleared the invoice balance completely by posting the money that you actually received and the settlement that you agreed to make. |
- You should now go to " Purchase Ledger Payments" to post the same amount against the outstanding invoice on the Finance Company.
- At "Supplier:", type in the Finance Company's account code or search for their account.
- You can search for a particular document by entering the number or press <Enter> to display all documents.
- Press the <Down Arrow> arrow until '<=' is pointing at the invoice for the part exchange.
- Press <F> for full payment.
- Press <Esc>.
- Enter the 'date' the contra was made and press <Enter>.
- On the "Comment", type 'HPSett' and also the unit stock number for the part exchange.
- Enter '19850' or your centre for 'Finance Settlement Control'.
- Press <Esc> and click [Accept] to complete the payment.
- Alternatively if you have had to pay the settlement then enter the appropriate payment centre e.g. 'Z992' for Current Bank Account.
Different Company Hire Purchase Settlement
If the new finance is with a different company to the outstanding finance on the part exchange unit, once you have completed and invoiced the deal, go to " Sales Ledger Receipts" again.
Follow the instructions as above for posting the money received from the finance company for the new unit, remembering that they should be paying the invoice balance in full.
You still need to deal with the finance settlement since you owe this to the "old" finance company, and you have agreed to settle this with the customer.
The system has posted an invoice to the finance company on the Purchase Ledger (in the standard Platinum set-up) and you will need to pay this invoice when you send payment to the finance company.
Go to the " Purchase Ledger Payments" and pay the outstanding invoice for the part exchange unit.
Further Information
Finance settlements are quoted when a deal is being proposed and can change if the deal takes time to come to fruition. You should ensure that the settlement figure entered is as up to date as possible otherwise you may end up having to post adjustments for any differences and potentially refunding the customer any difference.
Historic Notes
If your system is not set to post an invoice to the Purchase Ledger then you should follow these steps to clear the finance settlement liability centre.
- Go to " Nominal Ledger Journal Entries Cashbook Entry".
- Enter your bank account nominal code.
- Type 'O' for Out.
- Enter the date that you are making the payment.
- Enter the finance settlement control account.
- Enter the finance settlement amount.
- Enter 'HPSett' and also the unit stock number for the part exchange.
- Press <Esc> and accept the journal.
See also
- Posting payments received
- How do I find a customer?
- How do I deal with contras?
- How do I create a new Unit Sales finance company?
VS01, VS84, VS88
