This blog post and YouTube video has been addressed more extensively in my published book on Business Central ledgers. The book covers many, many other topics like Order To Cash, Procure To Pay, Ad-hoc Analysis.
Check my blog here: Boost Cash Flow in Business Central: Track Payment Metrics – Business Central Musings (svirlan.com) or my YouTube video.
In this blog, I wanted to expand on Customer transactions, by analyzing Customer Ledger Entries.
What are customer ledger entries in Business Central?
I published a book that goes over not only customer ledger entries, but covers many, many other topics like Order-To-Cash, Procure-To-Pay, General Ledger Entries Insights.
Download pdf sample.
In Dynamics 365 Business Central, Customer Ledger Entries represent the financial transactions associated with company’s customers, acting as a detailed record of all sales transactions, payments received, discounts, returns, and any other customer-related financial activity. These entries serve as the backbone for tracking the financial health of customer relationships, enabling accountants, users and business consultants to monitor outstanding balances, analyze payment behaviors, and manage credit control effectively. This functionality supports comprehensive financial reporting and insight generation, facilitating better decision-making regarding sales strategies, cash flow management, and overall customer relationship management.
What use cases will trigger the system to generate Customer Ledger Entries
Let’s consider the typical Order to Cash scenario.
A customer orders, via a sale order, one or more of Cronus items.
For example’s simplicity use Tax Group Code = NONTAXABLE on your sales line in your Cronus database in a sales order for customer Alpine Ski House.
Additionally, input on the line the item ordered by customer, the quantity ordered, and Preview Post the sales order.
Below are all Related Entries associated with this document posting:
If we inspect the only Cust. Ledger Entry record we see an entry of type Invoice:
Moreover, we notice the customer number, the amount and the remaining amount.
Let’s inspect now G/L Entry records:
The sales order posting impacted 4 G/L accounts:
- Inventory and COGS
- Product Sales and Accounts receivables
The posting of the sales order, has inserted one new record in the Item Ledger Entry table:
1 item 1896-S exited our warehouse.
The customer receives the shipment, and it pays us via various ways, a check, an electronic payment, PayPal …
We need to create a transaction of type Payment for our customer and apply this payment against the invoice we generated when we posted the sales order.
Business Central allows you multiple ways to create and apply a payment to an invoice.
Some methods will be described next.
Via Cash Receipts Journal
Search for Cash Receipt Journal and create a transaction to pay customer Alpine Ski House invoice:
Posting this journal line will generate a couple of related entries:
Let’s quickly inspect them. G/L Entry has 3 new records:
Mainly, we received the money from the customer, so we need to debit our chequing account (bank account) and we also need to credit our accounts receivables:
When inspecting the Cust. Ledger entry, we find one record of type Payment:
Via Bank Deposits
Create a new bank deposit and add one line for customer payment.
Apply the payment to the desired invoice using Apply Entries action on the deposit line:
Post the deposit.
Via Register Customer Payments
With the page Register Customer Payments you can pay multiple invoices.
In our case we want to pay the last invoice:
You can Post Payment or if you are not certain of the impact, try Preview Posting Payment first.
Just like in all other cases of applying the payment, the bank account gets debited and receivables account gets credited.
Conclusion
I took one of the most used processes in businesses all over the world, Order to Cash, and I demonstrated how the system creates 2 different types of entries in the table Customer Ledger Entry. The 2 transactions are connected, and they show a remaining amount of 0.
If you want to go deeper in details check this MS Learn lesson:
Cash Receipts: Enter payments in the cash receipt journal and the payment journal in Dynamics 365 Business Central – Training | Microsoft Learn
Customer Returns: Manage customer returns in Dynamics 365 Business Central – Training | Microsoft Learn
Customer Payments: Process customer and vendor payments in Microsoft Dynamics 365 Business Central – Training | Microsoft Learn
You can check my Youtube video covering the same topic including a hands-on example:
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