Payday Loan Accounting For Dummies
The suggested accounting processes of Synaptic Database have been built to mark and document its business activities for several different reasons; profitability, economic trends, tax savings, and transaction reconciliation. The documentation of Synaptic Database’s accounting process contains 6 steps: Transaction Capture, Daily Activity Detail Invoice, Transit Reconciliation, Month End Actualization, Month End Journal, and Accounting Month Close. Disclosed below is the detail of each step.
Transaction Capture – This step of the accounting process is used to capture the financial activities of your payday loan store (YOUR PDL). Transaction capture is used to record loan origination, loan renewals, due date changes, late fees on loans, origination charges, payments, petty cash activities, etc.
Daily Activity Detail Invoice – At the close of everyday, managers are required to download the Daily Activity Detail Invoice. This report will serve as a detailed summary of all financial activity for the day. Payments, originations, late charges, ACH transactions, etc will be captured and documented as transactions for the current closing day.
Transit Reconciliation – This process is used to actualize the cash flow of the bank account. Since check and ACH transactions do not hit the banking ledger until post Federal Reserve approval, many of the financial activities of YOUR PDL will be delayed up to 8 days. Transit reconciliation was created to take the guess work out of pending ACH and check cashing activities. Corporate offices will email bank activity batches to its store managers in the morning.
Using the bank activity batch, opening managers will upload the batch file containing all transactions in the bank account and reconcile realized activities from prior invoiced activities. All prior invoiced activities not captured in the current day reconciliation will remain in the invoicing system until a batch picks up the transaction. This step of accounting allows YOUR PDL to originate as many loans as possible without the possibility of bouncing a check to a customer in need.
Month End Actualization – After submitting the financial activities of YOUR PDL through the Transit Reconciliation process, a last look is produced and a final step of actualization between your software application and the bank is performed. Final adjustments are made to month end balances and documented. A Month End Store file is produced for the corporate office in preparation for the Month End Journal.
Month End Journal – In the Month End Journal process, a monthly journal will log a summary of the store’s activities. The summary of the log documents activities based on forward and realized receivable/payables, deposits, withdrawals, collection totals, write-offs, and expenses to compute the grand intra month PNL as well as the rolling month PNL. In the Synaptic Database accounting process, the journalizing process not only helps in keeping track of income and expenses but also helps build references to track yearly activity trends, marketing accuracy, and ROI. Because each step of the Synaptic Database accounting process is a summary of its proceeding step, a journal entry can be broken back down to its originating transaction for taxing or auditing purposes.
Accounting Month Close – After journal entry, the accounting month is closed for further adjustments. Any adjustments with a date taking place in a closed month will be prohibited without the consent of the general manager. In the case of post journal adjustments, the adjustment will take place in the forward accounting month. The account month close should be enforced by the software application forbidding adjustments to activities made in the closed accounting month.
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