How to do Credit and Cashflow Management in tally prime

Published on: 12-02-2025

How to do Credit and Cashflow Management in tally prime

Credit and Cashflow Management in TallyPrime are essential aspects of business finance. TallyPrime provides several tools to manage and monitor both these critical elements effectively. Below is a step-by-step guide to help you manage credit and cash flow in TallyPrime.

1. Credit Management in TallyPrime

Credit Management involves controlling the terms of credit extended to customers and managing outstanding amounts, ensuring timely collections, and reducing bad debts.

a. Setting Credit Limits for Customers

To manage credit limits for customers, you can define credit limits for each customer in TallyPrime. This ensures you have control over how much credit you give to a customer.

1. Go to the Gateway of Tally.
2. Select Accounts Info. > Ledgers > Create (or alter if the customer ledger already exists).
3. Enter the Ledger Name (e.g., Customer Name).
4. Under the Party Type, select Sundry Debtors.
5. In the Credit Limit field, enter the maximum amount of credit you want to extend to this customer.
6. Press Enter to save.

Now, TallyPrime will automatically monitor the outstanding balance for that customer and warn you when their credit limit is exceeded.

b. Monitoring Outstanding Receivables

To track customer credit (outstanding amounts), you can use TallyPrime’s Outstanding Receivables reports.

1. Go to the Gateway of Tally.
2. Select Display > Outstanding Receivables.
3. TallyPrime will display a report showing all the outstanding amounts for each customer.

In this report, you can see:

• Due date of payment
• Amount outstanding
• Aging analysis (how long the amount has been due)
• Outstanding amounts by individual customer

c. Generating Statements of Accounts for Customers

You can also generate statements of accounts to send to customers, informing them of their outstanding amounts and helping you follow up for payments.

1. Go to the Gateway of Tally.
2. Select Display > Statement of Accounts > Outstanding Payables/Receivables.
3. You can customize the statement based on different criteria (e.g., date, age of outstanding amounts).

This will help keep customers aware of their due amounts, and you can follow up accordingly.

d. Ageing Analysis of Receivables

Ageing analysis in TallyPrime helps you categorize outstanding amounts by how overdue they are. You can track customer payments based on the following time periods:

• 0–30 days
• 31–60 days
• 61–90 days
• Above 90 days

To generate an ageing analysis:

1. Go to the Gateway of Tally.
2. Select Display > Outstanding Receivables.
3. You will see the ageing categories, and the outstanding balances for each customer will be displayed in the relevant time slot.

This helps identify overdue amounts and focus on collecting older debts first.

2. Cash Flow Management in TallyPrime

Cash Flow Management refers to the tracking of cash inflows (receipts) and outflows (payments) within your business. Effective cash flow management ensures that your business has enough liquidity to meet its operational expenses and debt obligations.

a. Enabling Cash Flow Reporting

In TallyPrime, cash flow reporting is enabled by default, but it can be customized for more specific needs.

1. Go to the Gateway of Tally.
2. Select Display > Cash Flow/ Fund Flow.
3. Choose Cash Flow to view the cash flow statement for your business.

The Cash Flow report shows:

• Operating activities: Cash generated or used in core operations (sales, purchases, expenses).
• Investing activities: Cash flows from investments in assets (e.g., buying fixed assets).
• Financing activities: Cash flows from borrowings, loan repayments, and equity funding.

b. Tracking Receipts and Payments

To manage cash flow effectively, you need to track both receipts (incoming cash) and payments (outgoing cash) accurately.

1. Record Receipts:
   • Go to the Gateway of Tally.
   • Select Accounting Vouchers > Receipt (F6).
   • Enter the receipt details, such as the customer’s name, amount received, and ledger (e.g., Sundry Debtors).
   • Save the voucher.
2. Record Payments:
   • Go to the Gateway of Tally.
   • Select Accounting Vouchers > Payment (F5).
   • Enter the payment details, such as the amount paid, vendor name, and ledger (e.g., Sundry Creditors).
   • Save the voucher.

By recording every transaction as receipt or payment, TallyPrime will track all cash flows automatically.

c. Cash and Bank Reconciliation

TallyPrime offers tools for reconciling your cash and bank accounts with actual bank statements, ensuring that your records are accurate.

1. Go to the Gateway of Tally.
2. Select Banking > Reconcile.
3. Select the relevant Bank Ledger and Reconciliation Date.
4. Compare the transactions listed in TallyPrime with your bank statement and mark them as reconciled.

This helps identify discrepancies and ensures your cash flow data is accurate.

d. Customizing Cash Flow Reports

You can generate detailed cash flow reports that give insights into specific aspects of your business.

1. Go to the Gateway of Tally.
2. Select Display > Cash Flow/ Fund Flow.
3. Choose to Display Cash Flow or Fund Flow as per your needs.
4. You can filter the reports by various parameters like date ranges or specific accounts.

This helps you analyze cash movement in your business over specific periods.

3. Managing Payments and Receipts (Advanced Options)

In addition to the basic receipt and payment functions, TallyPrime provides advanced features for credit management and cash flow tracking.

a. Advance Payments/Receipts

You can track and record advance payments/receipts against customers or suppliers.

1. Go to the Gateway of Tally.
2. Select Accounting Vouchers > Receipt (F6) or Payment (F5).
3. In the voucher, enter Advance in the narration field, specify the amount, and link it to the appropriate ledger (e.g., Sundry Debtors/ Creditors).

This helps track advance payments or receipts separately from the regular sales/purchase transactions.

b. Managing Credit Notes and Debit Notes

You can issue Credit Notes or Debit Notes to adjust customer accounts.

• Credit Notes reduce the amount owed by customers (e.g., for returned goods).
• Debit Notes increase the amount owed by customers (e.g., additional charges).

To record them:

1. Go to the Gateway of Tally.
2. Select Accounting Vouchers > Credit Note or Debit Note.
3. Enter the details and adjust the amounts accordingly.

These documents affect both credit management and cash flow by adjusting customer balances.

Conclusion

Effective Credit and Cash Flow Management in TallyPrime helps your business maintain financial health by:

• Managing and controlling customer credit limits.
• Monitoring outstanding receivables.
• Generating real-time cash flow reports.
• Ensuring timely collections and payments.

By using TallyPrime’s features for tracking payments, receipts, and outstanding balances, businesses can maintain better control over their financial operations and ensure smooth cash flow management.