Introduction
Accounts Receivable (AR) and Accounts Payable (AP) are essential for tracking money owed to and by your business. In your accounting system, AR represents outstanding customer invoices, while AP tracks amounts you owe to suppliers.
This article covers how to create AR / AP accounts with and without system types, how they function in transactions, and how to organise them effectively, in Bukku.
Understand AR & AP with System Type
When an AR or AP account is assigned a system type, it integrates with the Sales or Purchases module only.
This allows the system to automatically apply the correct account when transactions are created.
Default AR / AP Accounts in Bukku
By default, Bukku provides system-type accounts for managing receivables and payables:
1001 Accounts Receivable (Trade Debtors)
3001 Accounts Payable (Trade Creditors)
These are set as the Default Payable & Receivable Accounts under Control Panel > Company Settings > Accounts.
How AR / AP Accounts are Assigned to Contacts
When you assign a contact type, Bukku automatically links the appropriate AR or AP account based on the system default:
Customers are assigned 1001 Accounts Receivable.
Suppliers are assigned 3001 Accounts Payable.
How AR / AP Accounts Are Used in Sales / Purchase Modules
Once AR and AP accounts are assigned, Bukku automatically handles the accounting entries behind the scenes during transaction creation:
When a Credit Sales Invoice is created and a customer is selected, the Accounts Receivable (AR) account is debited automatically.
When a Credit Purchase Bill is created and a supplier is selected, the Accounts Payable (AP) account is credited automatically.
These AR and AP accounts with a system type can be tracked in the Debtor Ledger and Creditor Ledger reports, which provide a detailed view of your outstanding receivables and payables.
When using modules such as Bank or Journal Entry, the system will not automatically apply an AR or AP account based on the selected customer or supplier. In these cases, you’ll need to manually select the appropriate account in the double-entry fields.
Assigning Specific AR / AP Account to a Contact
In Bukku, while customers and suppliers are automatically linked to the default AR and AP accounts, you may sometimes want to assign a different account to a specific contact.
This is useful when you want to track receivables or payables separately by grouping multiple contacts under one account—for example, tracking receivables from related companies, or separating accruals and prepayments from your main payables.
⚠️ Important Note:
You don’t need to create separate AR or AP accounts for every individual customer or supplier. The system already tracks outstanding balances per contact, and you can filter by contact name in reports to view their individual ledgers.
Only create a separate AR or AP account if you truly need to group multiple contacts under one account. Avoid creating accounts like “AR – Customer A”, “AR – Customer B”, etc.
How to Assign a Specific AR or AP Account
Step 1: Go to Accounting > Chart of Accounts > +New.
Step 2: Choose Accounts Receivable or Accounts Payable as the System Type.
Step 3: Enter the specific account name (e.g., “Accounts Receivable – ABC Subsidiary” or “Other Payable – Accruals”) and click Save.
Step 4: Head to the Contacts module, edit the relevant customer or supplier, and assign the new AR or AP account under the Type & Grouping section.
Example – Assigning AR to a Customer
You regularly invoice your subsidiary, ABC Sdn Bhd, and want to track their receivables separately.
Create a new account named “Accounts Receivable – ABC Subsidiary”, set the System Type to Accounts Receivable.
And then assign this account to the ABC Sdn Bhd's contact profile. From then on, all credit sales to this customer will automatically post to this AR account.
Example – Assigning AP to a Supplier / Employee
Scenario 1: – Assigning Other Payable – Accruals to a Supplier
If you want to track accrued expenses separately from regular trade payables—such as unbilled utilities, professional fees, or any services rendered but not yet invoiced—you can assign a dedicated accrual account to the relevant supplier.
Create an account called “Other Payable – Accruals”, set the System Type to Accounts Payable.
Assign it to the supplier’s contact profile (e.g. your legal firm, audit firm, or service provider).
Then, when you record a bill to accrue the expense (e.g. dated at month-end or year-end), the system will automatically credit this account—keeping accruals separate from regular trade payables for clearer reporting.
Scenario 2: Assigning Other Payable to a Staff Claim
If employees submit claims for expenses (e.g., travel or supplies), and you want to manage this separately from suppliers.
Create an account called “Other Payable – Staff Claims ”, with the System Type set to Accounts Payable.
Assign this account to the employee’s contact profile.
This way, any bills or reimbursements processed through the Purchases module will be posted to this specific payable account—making it easier to track outstanding staff claims without mixing them into trade creditors.
Creating AR / AP Without System Type
If you need an AR or AP account but do not require it to integrate with the Sales or Purchases module, you can create the account without a system type.
This is suitable when you don’t intend to issue invoices or record bills, and instead plan to use the account in other modules such as Bank or Journal Entry.
Go to Accounting > Chart of Accounts > +New, leave the system type field blank (do not select any system type), choose the appropriate account type, name the account, and save.
These accounts can then be used in the Bank or Journal Entry modules, where you’ll need to manually select the correct accounts during transaction entry.
Note that these transactions will not appear in the Debtor Ledger or Creditor Ledger reports. To monitor transactions involving these accounts without a system type of AR / AP, go to Reports > General Ledger, select the relevant account, and view the linked entries.
Grouping AR / AP with Parent and Sub-Accounts
To better organise your Accounts Receivable (AR) and Accounts Payable (AP) accounts in Bukku, you can group them using Parent and Sub-Account structures.
How It Works:
Parent Account: Used for grouping purposes only. Leave the System Type blank.
Sub-Accounts: Can be created with or without a System Type, depending on how you plan to use them.
Example – Grouping Accounts Receivable:
Let’s say your 1001 - Accounts Receivable account is actively used in transactions and you want to group it with other receivable accounts under a common parent.
Step 1: Create a Parent Account
Create a new account called “All Receivables” and leave the System Type blank.
Note: If you wish to use 1001 as the parent account, you’ll need to first edit the existing 1001 account and change its code to something else to free up 1001 for the parent.
Step 2: Link Sub-Accounts to the Parent
Click view into 1001 - Accounts Receivable, and assign “All Receivables” as its Parent Account.
Repeat this for other receivable accounts (e.g. “Accounts Receivable – ABC Subsidiary”) that you want grouped under the same parent.
After setting this up, your Chart of Accounts might look like:
The same principle applies to Accounts Payable linked with transactions.
You can follow the same steps to group multiple AP accounts under a parent account like “All Payables”. Just ensure the parent has no system type, and sub-accounts are configured according to their intended usage.
Conclusion
Setting up AR and AP accounts correctly ensures accurate tracking of receivables and payables.
Use system-type accounts for automated tracking in Sales/Purchases modules.
Use non-system-type accounts for manual transactions in Bank or Journal modules.
Group accounts using parent and sub-accounts for better organisation.
By following these steps, businesses can maintain clear records of money owed and payable efficiently.
Frequently Asked Questions (FAQ)
Do I need to create a separate AR or AP account for each customer or supplier?
No. Bukku automatically tracks balances by contact. You only need to create a separate AR or AP account if you want to group multiple contacts together for specific tracking purposes—such as for subsidiaries, accruals, or staff claims.
Why can’t I select my AR or AP account in the Bank or Journal Entry module?
If the AR or AP account has a system type, it can only be used in the Sales or Purchases module (e.g. invoices or bills).
To use an AR/AP account in the Bank or Journal Entry module, you must create it without a system type.
Can I remove the system type from an AR or AP account after it’s created?
No. Once a system type (Accounts Receivable or Accounts Payable) is set, it cannot be removed.
If you need an AR or AP account without a system type, you’ll have to create a new account.
How do I unlock or adjust the AR or AP account?
System AR/AP accounts such as 1001 – Accounts Receivable (Trade Debtors) and 3001 – Accounts Payable (Trade Creditors) cannot be “unlocked”. They are system-protected because they are directly tied to the Sales (AR) and Purchases (AP) modules.
If you need to use an AR/AP account in Bank or Journal Entry, you’ll need to create a new AR/AP account without a system type under Accounting > Chart of Accounts > +New.
Further, for adjustments to receivables or payables, you must process them through the correct module:
Accounts Receivable (AR):
To increase / debit AR: Record a Sales → Invoice
To reduce / credit AR: Record a Sales → Credit Note
Accounts Payable (AP):
To increase / credit AP: Record a Purchases → Bill
To reduce / debit AP: Record a Purchases → Credit Note
