Home > Dynamics AX > Customer check payments in Dynamics AX as a two step process of apply payments and deposit checks

Customer check payments in Dynamics AX as a two step process of apply payments and deposit checks

For businesses like Ignify that still receive checks from customer (and we are glad that we do), it is important to differentiate the two elements of receiving a customer payment.

1. Applying the payment to an invoice.

2. Depositing the check.
From an accounting perspective this distinction is important as one reduced the customer balance while keeping the check in the undeposited funds GL account while the second step moves the undeposited check into the deposited state.  These could be two different dates and potentially different periods.  I noticed that several consultants implement customer payments as a single step only mechansmis.

Explaining this further – the GL entry looks like this When check is received
Cr – Customer Receivable
Dr – Undeposited funds

When check is realized after deposit (which could be a few days later and another period)
Cr – Undeposited funds
Dr – Bank Account

Dynamics AX has a nice way of handling this through bridging accounts – however it is not the most intuitive and your consultant needs to know this well hidden feature. .
I've outlined the steps to do this.


1. Set up of Bridging accounts

Go to AR > Set up > Payment > Method of Payment



Create a Method of Payment “Check”.



Go to General Tab > Posting and select Account type as “Bank” and select the Payment account.

Check “Bridging account” and select Bridging account as “Un deposited Funds” (1130)



2. Posting AR Payments (When the Check is received but not realized in the Bank)

Go to AR > Journal > Payment Journal



Create AR Payment Journal Header and Click Lines



On the Journal line, Select Customer, Invoice Number and the Invoice amount will be populated.

Select Method of Payment as “Check “and enter the Check number in the “Payment reference” field.

The Bridging account “Un deposited Funds” (1130) will be automatically populated upon selection of Method of Payment as “Check “.



Validate & Post the Journal.

3. Posting of Bridging transactions of AR Payments  (When the Check is realized in the Bank)

Go to GL > Journal > General Journal



Create a new General Journal line and Click Lines



On the Journal lines Click Functions > Select Bridged transactions



Following form will open.

Select the relevant Transaction (the Check amount has been realized) and accept it.



The Date will be the Date of creating the General Journal.

Credit will automatically be the Bridging account “Un deposited Funds” (1130) and Debit will be the Bank.



Validate & Post the General journal.


We can use the past dates in AR Payment Journal as well as in GJ Journal.

If the AR Payment Journal is posted on 9/1/2009, when we accept the Bridging transactions in General Journal, the automatically created journal line with bridging transactions will have the AR Payment journal posted date i.e. 9/1/2009.However we can change this to past date i.e. 9/3/2009 before posting it.

Please refer screenshot below which is created & Posted on 10/13/2009 (AR Payment date 9/1/2009, GJ posting date 9/3/2009):

AR Payment journal line:


General Journal line:


Now you have achieved the the two step process of applying a payment to a check and then depositing the check to a separate step. Of course more and more businesses are moving to a single step electronic payment process such as lockbox (where the bank codes the deposits for you) or wire transfers and ACH as has Ignify also.

This post is jointly written by Yogesh Kasat and Partha Chattopadhyay. Yogesh is a Senior Manager and Partha is a Senior Business Analyst in the Microsoft Dynamics AX Practice at Ignify . Ignify is a Global Microsoft Dynamics Inner Circle Partner specializing in Dynamics AX for Retail, Distribution, Manufacturing and Chemicals verticals. For help on Microsoft Dynamics ERP email us at dynamics@ignify.com

  1. Eric
    February 2nd, 2010 at 07:30 | #1

    Hi, Thx for sharing the information.
    But, i have a question. How to cancel the bridged transaction that already in the bridged transaction list? Let say that the payment was void in certain reason. How to cancel the bridged transaction that already hanging in the bridged transaction list?
    Thank you,

  1. November 21st, 2009 at 16:30 | #1