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Receipts and Allocation

A receipt records money a customer has paid you and sets it against the invoices it settles. Part payments, overpayments and cash that arrives before anyone knows what it is for are all normal: whatever is not allocated stays on the customer's account as unapplied cash, ready to be set against invoices later.

Where to find it

Admin Panel → Receivables:

  • Receivables — the Receipts tab: record a receipt, allocate it, and see every receipt recorded

Before you start

  • Post access: recording a receipt posts to the ledger, so you need ERP: Receivables and post access to the company. Without it the tab says "You cannot record cash here".
  • A bank account: the company needs at least one bank account in its chart of accounts. If it has none, Paid into says "No bank account is set up for this company". Bank accounts are set up by Finance (see Setting Up a Bank Account).
  • Posted invoices: only posted invoices can be paid. A draft invoice is not yet owed.

Recording a receipt

  1. Open the Receipts tab, or press Record a receipt on the console, on a customer, or on a posted invoice (which fills in the customer for you).
  2. Choose the Customer. With more than one company in view, every customer is offered with its company, and choosing one sets the Company to theirs.
  3. Enter Amount received, Received on and Paid into (the bank account). Currency defaults to the customer's.
  4. If the receipt is in a different currency from the bank account, a Bank credited box appears: enter the amount on the bank statement, or leave it empty to convert at the day's rate.
  5. Add the Reference the customer quoted, if any.
  6. The open invoices are listed oldest due first. Press Allocate oldest first, or type amounts into the Allocate column yourself. Clear the allocation starts again.
  7. Check the summary line: Received, Allocated, and Left on the account (unapplied). It turns to Over-allocated by if you have allocated more than was received.
  8. Press Record the receipt.

The confirmation names the receipt journal, what was allocated, what was left on the account and which invoices are now paid in full. Each of those invoices moves to Paid. Pressing the button twice, or retrying after a lost connection, does not post the money twice: the second attempt reports that the receipt was already recorded.

Unapplied cash and credits

When you choose a customer, any cash received and not yet allocated, and any posted credit note not yet applied, is listed under Unapplied cash and credits. Press Set against invoices on one, enter how much to apply to each invoice, and confirm. Nothing new is received; the open items are matched off, and invoices settled this way move to Paid.

Receipts recorded

Below the form, Receipts recorded lists every receipt banked in the companies in view, newest first, with Paid into, Reference, Amount and what is still Unapplied. A receipt that came from matching a bank statement line is labelled as such. Where cash is still unapplied, the row offers to set it against the customer's invoices.

Receipts can also arrive through bank reconciliation, where a statement line is matched to a customer's invoice. Those appear here too. Bank feeds and reconciliation are covered in Accounting & Bank Feeds.

What goes wrong

  • "The allocations come to more than the amount received": reduce an allocation or correct the amount.
  • "More than is open" beside an invoice: you allocated more than its remaining balance.
  • The customer list is empty for a company: that company has no customers of its own and no shared customers. Add one under Customers.
  • The posting is refused for a foreign receipt: there is no exchange rate for the day. Enter Bank credited or add the rate.

Worked example

A customer owes three invoices of 1,200, 800 and 950, oldest first, and pays 2,500 with the reference "REMIT 4471". The clerk chooses the customer, enters 2,500, the date and the current account, and presses Allocate oldest first. The first two invoices are allocated in full and 500 goes against the third, leaving nothing unapplied. They record the receipt; the first two invoices move to Paid and the third shows 450 open. A week later the customer's credit note for 450 is posted, and they use Set against invoices to clear the third invoice.

Recommendations

  • Allocate oldest first unless the remittance says otherwise.
  • Record unidentified cash anyway and allocate it later; it is better in the ledger than in a drawer.
  • Always enter the customer's reference; it is what you will search for later.
  • Clear unapplied credits weekly so statements and reminders show the true position.