Credit Card Accounting Process

All credit card sales will be recorded in the General Ledger system using the on-line E-deposit system effective June 1, 2003.

To initiate Credit Card Accounting:

Determine the MFK(s) that you intend to utilize to process credit card receipts. A single MFK may be used to process all credit card receipts, or each credit card merchant (Mastercard/Visa, Discover, or American Express) may be related to a specific MFK. The iacct of each MFK will always be 1100. If you have questions on how best to determine the MFK(s), contact Marty Miller at the Cashier’s office (5-0067) or Laurie Lentz at the Treasurer’s Office (5-1398).  Should you wish to establish new MFK “whokeys” for this purpose, contact your “org representative” within Accounting Services:

http://www.bo.uiowa.edu/~glaccman/action.cfm?Action=contact

Complete and send (or fax 353-2442) the approved E-deposit access application to the Cashier’s Office, Attn: Marty Miller, 5 Calvin Hall:

http://www.uiowa.edu/~eforms/cashier/cashedepDSS.pdf

Provide to the Treasurer’s Office, either by phone (5-1398) or via email (laurie-lentz@uiowa.edu):

• the list of each MFK (all with iacct 1100) and the corresponding credit card merchant’s name that your department will be utilizing.
• the effective date your department will initiate Credit Card Accounting

Process for Departments:

At time of E-deposit posting:

• Departmental revenue account(s) (iacct 4XXX) should be credited with the total daily sales.
• Credit card MFK (iacct 1100) is debited for total amount of all credit card sales.

E-deposit Posting Examples:

A. Departments who only receive credit card payments (no cash or checks are received) or who prefer to report cash and checks separately from the credit card activity will do this by creating a ‘CV profile’ (a type of CV) through the E-deposit system for the credit card activity only.

In this example, the revenues of $1,400.00 ($500.00 + $900.00) are posted to the ‘Merchandise’ and ‘Other Sales’ MFK’s immediately. Credit will be posted to the ‘Discover,’ ‘Visa,’ and ‘Mastercard’ Control accounts when the payments appear at the bank by the E-deposit system. (No action is needed from the Department).

B. Departments who receive cash and checks in addition to credit card payments and want to report them on the same E-deposit form will use the following example.

In this example, Bank Deposit slip 0305000123, with cash of $100.00 is deposited at US Bank. The revenues of $1,400.00 ($500.00 + $900.00) are posted to the ‘Merchandise’ and ‘Other Sales’ MFK’s when the $100.00 cash deposit is made at the bank. Credit will be posted to the ‘Discover,’ ‘Visa,’ and ‘Mastercard’ Control accounts when the payments appear at the bank by the E-deposit system. (No action is needed from the Department).

2. Departments will need to reconcile the monthly Statement of Account reports to the deposit documentation for cash, checks, and credit cards to verify that deposits were made and credit card payments were received. Discrepancies on Credit Cards can result from data entry, doubled charges, or credit card holders calling back or putting transactions on hold. Usage fees will also vary.

Reconciliation Process:

As transactions are batched and transmitted, retain the batch totals and the itemized report of the transactions within the batch. Good business practice is to batch charges and transmit within 24 hours of the first transaction in the batch to ensure that the lowest discount rate is applied to the transactions

To make reconciling easier, E-Deposit forms should be completed each day that a credit card transaction occurs. The department should record which batches or transactions are included in each deposit.

As money comes to the bank from the credit card merchants, entries will automatically be made to the MFK by the business office, reducing the Accounts Receivable balances. Additionally, departments will receive statements from the various merchants.

Depending on the timing and the frequency of the batching, the University account monthly statement may have an outstanding receivable balance.

Variances can occur:

• Dollar amount is less than batch total: Go through the report of transactions for the batch to identify any missing transactions. If you cannot determine why the payment did not process contact the merchant card vendor. Mastercard/Visa payment details can be accessed online through the University’s merchant card provider. Contact Laurie Lentz at 335-1398 for access information. Documentation of discrepancies must be maintained in the department with sales records. University guidelines for record retention are to be followed.
• Dollar amount is more than batch total: First, make sure two batches did not deposit together. Then, if the amount received from the Bank exceeds the batch total, try to match to the transaction reports. If you cannot determine why there is a discrepancy, contact the merchant card vendor. Records documenting the reason for the discrepancy and any remedy must be retained.

Credit Card Refunds/Chargebacks:

In the event that a credit card must be credited for an amount already submitted, create an E-deposit ‘CV Profile’ to reverse the entries described in Example A above; (debit the revenue iacct(s) 4XXX, and credit the receivable MFK with the 1100 iacct).