Part 4 · Using software and AI · Chapter 4.4
Order to cash in software
Draft: the wording may change.
The idea
In software, one sale is one chain of linked documents: order, bill, delivery, receipt. Each document is made from the one before, so nothing is typed twice, and the outstanding updates the moment money is received. The chain is finished only when the receipt is matched to the bill.
At the counter
Ravi Stores phones Kumar at 10 a.m. for biscuits and soap. (To keep it simple, Ravi has no advance this time; chapter 1.7 shows the same bill with one.)
| Step | Document | Who | What the software does | What a person checks |
|---|---|---|---|---|
| 1 | Sales order | Kumar, on his phone | Picks prices and schemes from masters; checks Ravi's credit limit and overdue bills | Is the quantity sensible? |
| 2 | Bill #245 | Biller, from the order | Copies the order lines, adds GST, posts the entry: Ravi ₹1,180 debit, Sales ₹1,000 and GST ₹180 credit | Stock on hand matches the bill |
| 3 | Delivery | Driver | Marks the bill delivered, records short or returned items | Ravi's signature or photo proof |
| 4 | Receipt R-02 | Kumar, on the next visit | Records ₹600 cash against bill #245 | Cash handed in at the office matches |
| 5 | Outstanding | — | Ravi now owes ₹580 on bill #245, age counted from 5 October | Follow-up on the due date |
The order (step 1) makes no entry — it is a promise (chapter 1.2). The bill makes the money-and-stock entry. The receipt makes the money-only entry. The software links all three, so from Ravi's ledger you can open the bill, from the bill the order, and from the receipt the bill it paid.
What the software should stop
- A bill above the credit limit or with bills overdue beyond the agreed days — held for the owner's approval, not refused silently (chapter 2.5).
- A bill for stock you don't have — the biller sees the shortage before printing.
- A receipt with no party — every rupee in must say who paid it.
- An edit after delivery — returns go through a credit note, not by changing the bill (chapter 1.10).
Receipts: against a bill, not on account
When Ravi pays ₹600, the software asks which bill. If he has three open bills, the default should be the oldest first, and the person can change it. A receipt left "on account" still reduces Ravi's total, but the ageing cannot say which bill is old. After a few months, you cannot tell whether he is 15 days late or 90.
Common mistake
Treating step 2 as the end. The bill is printed, the goods are gone, and the team moves on. The receipt is collected but entered days later, lumped "on account", or never tied to a bill. The sales report looks fine; the outstanding report quietly grows. The sale is not done until step 5 shows the right figure.
Where you'll use this
This chapter automates cash is the finish line (chapter 2.1) and the signed receipt (chapter 2.10): the chain is not done at the bill, it is done at the matched receipt. The credit check is the limit you can afford to lose (chapter 2.5), applied before the bill instead of after. On the beat, it carries the collection rules from chapter 3.15.
Check yourself
- Which of the four documents in the chain makes no accounting entry?
- Ravi pays ₹600 and has three open bills. Where should the ₹600 go by default?
- A retailer returns two cartons after delivery. Should the biller edit the bill?
Answers
- The sales order — it is a promise, not a transaction.
- Against the oldest open bill, which the person can change if Ravi says otherwise.
- No. Issue a credit note for the returned goods; the bill stays as delivered.