Payment processing is controlled by payment status codes. Different payment instruments follow different status sequences. The number of statuses you need depends on your particular implementation. At a minimum, you must have two statuses: Paid and Bounced. Typically, you also want to have a For Collection status for payments sent to the bank. The Initial status is used if you want to do an initial payment registration.

You can define an account for each status through which the payment is processed, or use one GL account to record the transitions. For example, if you are processing a check through the Initial, Allocated, For Collection, and Paid statuses, you can define a GL account of type Supplier Payment for each status. This approach supports detailed reporting requirements.

Each status transition usually generates a posting, which updates the account associated with the status and bank or liability accounts.