Tracking Payables and Receivables (Accounts Payable and Accounts Receivable) in Tally Prime
Managing payables and receivables is a crucial aspect of business operations. Tally Prime provides efficient tools for tracking and managing accounts payable (AP) and accounts receivable (AR), helping businesses maintain cash flow and ensure timely payments. In this article, we will guide you step by step on how to track payables and receivables in Tally Prime, using real-life examples to make the process easier to understand.
1. Enabling Accounts Payable and Accounts Receivable in Tally Prime
Before you begin tracking payables and receivables, you must enable the necessary features in Tally Prime.
Go to Gateway of Tally → F11: Features → Accounting Features.
Ensure that the option Enable Accounts Receivable and Accounts Payable is set to "Yes".
Press Enter to save the settings.
2. Creating Ledger Accounts for Debtors and Creditors
In Tally Prime, you need to create ledger accounts for customers (debtors) and suppliers (creditors) in order to track receivables and payables.
Go to Gateway of Tally → Accounts Info → Ledgers → Create.
Create a new ledger for a debtor (customer) under Sales Accounts:
Ledger Name: John Doe
Under: Sundry Debtors
Create a new ledger for a creditor (supplier) under Purchase Accounts:
Ledger Name: XYZ Suppliers
Under: Sundry Creditors
Press Enter to save the ledgers.
Example: Creating Debtor and Creditor Ledgers
Debtor (Customer): John Doe
Creditor (Supplier): XYZ Suppliers
3. Recording Receivables (Sales Transactions)
To track receivables, you need to record sales transactions in Tally Prime. Here’s how to enter a sales invoice for a customer.
Go to Gateway of Tally → Accounting Vouchers → F8: Sales.
Enter the customer’s name (John Doe) and the items sold.
Enter the amount of the sale, along with any applicable taxes (e.g., GST).
At the bottom, ensure that the amount is linked to the "Sundry Debtors" account (John Doe). Tally will automatically track the receivable amount.
Press Enter to save the transaction.
Example: Sales Invoice for John Doe
Customer Name: John Doe
Item Sold: Product A
Sale Amount: $1,000
GST (18%): $180
Total Receivable: $1,180
4. Recording Payables (Purchase Transactions)
To track payables, you need to record purchase transactions in Tally Prime. Here's how to enter a purchase invoice for a supplier.
Go to Gateway of Tally → Accounting Vouchers → F9: Purchase.
Enter the supplier’s name (XYZ Suppliers) and the items purchased.
Enter the amount of the purchase, along with any applicable taxes (e.g., GST).
At the bottom, ensure that the amount is linked to the "Sundry Creditors" account (XYZ Suppliers). Tally will automatically track the payable amount.
Press Enter to save the transaction.
Example: Purchase Invoice from XYZ Suppliers
Supplier Name: XYZ Suppliers
Item Purchased: Product B
Purchase Amount: $800
GST (18%): $144
Total Payable: $944
5. Viewing Accounts Receivable (Debtors) Report
Once you’ve entered sales transactions, you can view the outstanding receivables report to track the amounts due from your customers.
Go to Gateway of Tally → Display → Statements of Accounts → Receivables.
In this report, you will see the total amount receivable from each customer, including any pending payments.
You can also filter the report by customer name, date, or other criteria.
Example: Receivables Report for John Doe
Customer Name: John Doe
Total Receivable: $1,180
Pending Payment: $1,180
6. Viewing Accounts Payable (Creditors) Report
Similarly, after entering your purchase transactions, you can view the outstanding payables report to track amounts due to your suppliers.
Go to Gateway of Tally → Display → Statements of Accounts → Payables.
This report will show the total amount payable to each supplier, including any pending payments.
Filter the report by supplier name, date, or other parameters as needed.
Example: Payables Report for XYZ Suppliers
Supplier Name: XYZ Suppliers
Total Payable: $944
Pending Payment: $944
7. Settling Receivables and Payables
Once you make payments to your suppliers or receive payments from your customers, you can update the accounts payable and receivable by recording payments in Tally Prime.
For recording a payment to a supplier, go to Gateway of Tally → Accounting Vouchers → F5: Payment and select the creditor (XYZ Suppliers) along with the amount paid.
For recording a receipt from a customer, go to Gateway of Tally → Accounting Vouchers → F6: Receipt and select the debtor (John Doe) along with the amount received.
Example: Payment to XYZ Suppliers
Supplier Name: XYZ Suppliers
Amount Paid: $944
Bank Account: XYZ Bank
Example: Receipt from John Doe
Customer Name: John Doe
Amount Received: $1,180
Bank Account: XYZ Bank
8. Conclusion
Tracking payables and receivables is an essential part of business management. Tally Prime simplifies this process by allowing users to create ledgers for debtors and creditors, record sales and purchase transactions, and generate accurate receivables and payables reports. With Tally Prime, you can easily keep track of amounts owed and amounts to be paid, ensuring smooth cash flow management and timely payments.