When Are Payment Types Used?

Payment types are used primarily when entering customer payments, either through creating an order or through the Payments service, and when cancelling orders. Each time a payment type is used, entries are made using the general ledger (GL) account associated with that payment type. Payment General Ledger entries are created when a customer payment is made. Order General Ledger entries are created when an order is marked as shipped.

In the simplest case, when a user takes an order using a payment type of check and pays the order in full, a Payments record is created. On the Payments record, a Cash account is debited, and an Account Receivable is credited for the same amount. The Cash account to debit is determined by the account setup on the Payment Types record.

If that order is cancelled, a refund is generated to the customer. A payment record is created with a credit in a Cash account and a debit in the A/R account.

The cancellation creates a "wash" of the relevant GL accounts and returns the account balances to where they would be if the payment had not been placed.

See the following topics for items to consider when creating new payment types:

• About Sample Payment Types
• Creating Payment Types
• Configuring the Default Purchase Order Payment Type