Cash Application Methods

Cash Application Methods


Balance Forward 

This selection finds the oldest eligible invoice and automatically applies the cash received in the order of the eligible items set in the Cash Application Priorities; then the next oldest etc.

For example, if priority post is set to:

  1. Rent
  1. Sales Tax
  1. Fees

All Rent is paid on the oldest open invoice, then sales tax on the oldest open invoice, and lastly fees. Then pay second oldest invoice based on priority code order.

This continues until remaining cash equals zero, or all open invoices are paid. Any cash that is not used is deposited into the Unapplied Cash Account defined during cash application. 

 


Balance Forward Prorated 

The system will apply cash based upon a balance forward methodology, but will prorate across the open items on invoices that are only partially paid.

Example: The proration works as follows when invoice detail items are included with rent: 

  1. Invoice for $175, consisting of:
  1. Rent = $100
  1. Property Tax = $40 – Included with Rent
  1. Sales Tax = $10 - Included with Rent
  1. Late Fee = $25
  1. Receive a check of $75 and system is set to prorate.
  1. Cash Application will be:
  1. Rent = $64.2825 (prorate the $64.2825 between Rent, Property Tax, Sales Tax)
  1. Late Fee = 15.72

 


Priority Post 

Cash is applied based on predefined cash application hierarchy based by oldest item due by transaction type.

For example, assuming the following priority rankings:

  1. Rent 
  1. Sales Tax 
  1. Property Tax 

The paid first items will be as follows:

Invoiced Items

  1. Transaction Code Priority 1 (Rent) – Oldest to Newest – Pay all before moving on to Sales Tax
  1. Transaction Code Priority 2 (Sales Tax) - Oldest to Newest – Pay all before moving on to Property Tax
  1. Transaction Code Priority 3 (Property Tax) – Oldest to Newest

 


Priority Post Oldest Due By 

Apply cash based on predefined cash application hierarchy based by oldest item due by transaction type (the transaction code).

For example, if the transaction codes are ranked as follows:

  1. Rent
  1. Property Tax
  1. Service Fees
  1. Late Charges

The system will apply cash to oldest rent due, then oldest property tax due, oldest services fees dues, then oldest late charges due.


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