Applying Payment

Note: This chapter is not applicable to the most common scenario of payments automatically registered in the system as part of the existing order flow: for example, when an order is placed with an electronic payment automatically charged immediately after the checkout. In such cases, once an order is placed, the payment is automatically applied first to the order and then to the invoice. There is no special action for payment application to be taken.

When a payment occurs outside the system (for example, in the case of credit sales, where invoices are created unpaid and payments are created manually outside the order flow), you must register the payment in the system manually and apply it manually to the respective order and invoice as described below.

Important: Unapplied payments can lead to accounting problems. For example, a customer account balance can be zero. However, there may be payments and invoices in the Open status in the system linked to the customer which are in fact interrelated but are not interlinked in the system. Such hanging AR documents can affect the customer balance ageing and account statements. To ensure the proper processing of customer account statements, regularly review and apply outstanding payments.

To apply a payment:

1. Open Finance > Documents > Payments. The list of payments available in the system appears on the screen.
2. Select one of open payments by clicking on the respective link in the Document # or Document ID column. Selected payment details appear on the screen.
3. Proceed to the Applications tab.
4. Click the Add New Application button. The list of all documents the selected payment can be applied to appears.
5. Check the box(es) next to document(s) number to select invoices and/or debit memos that you want to be paid.
6. Click the Apply button.

General notes

1. More than one invoice can be selected for payment application. The payment is applied to the oldest invoice for its outstanding balance and the invoice gets closed. If payment still has a non-zero balance after that, it is applied to the oldest of the remaining selected invoices, and so on until payment balance becomes zero.
   
2. It may happen that the payment balance will be insufficient for the last invoice; such invoice will remain open with the balance reduced by a remaining payment balance amount, i.e., this invoice will be paid in part. It may also happen that payment amount is greater than total balance of the selected invoices. In this case, all selected invoices will be closed with zero balance, while the payment will remain open with a non-zero balance.
3. Payments can also be applied in:
   • Finance > Documents. Filter by Document Type (payment) and Status (open) to find payments to apply.
   • Finance > Documents > Open AR Document. Filter by Document Type (payment) to find payments to apply.
   • Operations > Customers. Select an account, then proceed to the AR Documents tab. Filter by Document Type (payment) and Status (open) to find payments to apply.
4. Credit memos are applied in exactly the same way as payments.

Apply several payments to a number of invoices simultaneously

The scenario above describes application of one particular payment. If you have many customers with many unapplied payments, it can be very tiresome and time-consuming to repeat the procedure for each payment. In such a case, you can take advantage of “en-mass” payment application, described further.

1. Go to Finance > Apply Payments. A list of customers that have unapplied payments appears on the screen with the following fields:
   • Customer Balance: please see account "balance".
   • Number of Unapplied Payments: the number of Payments and Credit Memos with a positive Balance linked to the customer account.
   • Unapplied Balance: the summary balance of all open Payments and Credit Memos linked to the customer account.
2. Mark customers, for whom you want to apply the outstanding payments, by selecting respective check boxes.
3. Click Auto Apply. For each selected customer, the system takes the oldest unapplied payment and applies it to the oldest open invoice. If payment still has a non-zero balance after this application, the system takes the next oldest open invoice and applies the payment to it, and so on until the payment balance becomes zero. Then the system takes the next oldest unapplied payment and repeats the procedure. When all payments of a customer are applied or there are no more open invoices, the system repeats the application process with the next selected customer.

   Note: payments here stand for both payments and credit memos – all the documents that can be applied. Invoices mean both invoices and debit memos – all the documents the payments can be applied to. Thus, with just few mouse clicks you can apply multiple payments of multiple customers.

4. If you do not want to apply all payments of a customer, click select particular customer by clicking respective link in the Customer ID or Customer Name column. Selected customer details with a list of unapplied payments appear on the screen. Mark payments you want to apply by selecting respective check boxes.
5. Click Auto Apply. The application procedure here is the same as described earlier with one small difference – the system applies only selected payments rather than all payments. You still take the advantage of mass application but can be more specific in what to apply.
6. If you want to indicate what specific invoices should be paid by a payment, select a payment by clicking on the respective link in the Document # or Document Type column. The list of invoices appears on the screen. Mark invoices you want to apply the payment to by selecting respective check boxes.
7. Click Auto Apply. If total of selected invoices is greater than payment balance, the system will apply the payment to the oldest invoice first and some newer invoices can remain open.

Important information about payments related to resellers

1. In some cases issuing a credit or a debit memo can be inappropriate from the accounting point of view; instead, you can make a correction to an order.
2. In some cases for a reseller, there may be Credit Memos and Payments (with the Open status) for which Available Balance ≠ Balance. This happens because there are some not invoiced purchases (linked to those Payments and Credit Memos) which have been made by the reseller's customers after the last invoice from the provider, for which you (the provider) have not yet issued a billing order. Though it is not displayed in the Billing UI, such documents are linked to those not invoiced purchases, which correspond to order items in the respective orders made by the reseller's customer. As soon as the provider issues a billing order for those items, the inequality disappears and Available Balance = Balance.