The Advance Payment Returns module enhances the management of returned customer and vendor prepayments. This tool allows businesses to efficiently handle situations where advance payments need to be refunded or adjusted, ensuring accurate financial records and seamless reconciliation processes. By integrating this module, companies can maintain clear and up-to-date accounting information, even in cases of payment reversals.
Key Features
Return of Customer Prepayments: Easily process and record the return of advance payments received from customers.
Return of Vendor Prepayments: Manage and document the return of advance payments made to vendors.
Automatic Reconciliation: Automatically reconcile returned prepayments with corresponding journal entries.
Flexible Payment Methods: Support various payment methods for processing returns, including bank transfers and cash refunds.
Detailed Reporting: Generate comprehensive reports on returned advance payments for better financial analysis.
Integration with Existing Workflows: Seamlessly integrate with existing accounting and invoicing workflows.
User-Friendly Interface: Intuitive interface for managing and processing return transactions efficiently.
Benefits
Accurate Financial Records: Maintain precise and up-to-date accounting records by properly handling returned prepayments.
Streamlined Accounting Processes: Simplify the reconciliation process, reducing manual effort and potential errors.
Improved Cash Flow Management: Effectively manage cash flow by accurately tracking returned payments.
Enhanced Customer and Vendor Relations: Provide transparent and efficient handling of payment returns, fostering trust and satisfaction.
Comprehensive Financial Insights: Gain detailed insights into returned advance payments through robust reporting features.
Advance Payment Returns
Way to create advance payments for specific account and apply them later on invoices or return the advance payments
Features:
- New Advance Payments menu
- Apply advance payments later on customer invoices or vendor bills
- The true advance payment! Uses a different account to record advances, rather than Accounts Receivable and Payable
- Multiple currencies are supported
- Multiple advance payments can be applied to multiple invoices / bills
- Return advance payments
Configurations
Create new Accounts for Advance Payments
Create new accounts to be used for customer and vendor advance payments in Accounting > Configuration > Accounting > Chart of Accounts. Make sure that the created account is used for advance payment, is reconcilable and does not have a currency.
On the example, Unearned Revenue is created which is a liability to be used for customer advance payments.
Create new Journal for Advance Payments
Create new journal to be used for customer and vendor advance payments in Accounting > Configuration > Accounting > Journals. This new journal will be used when advance payment is applied on invoices.
Set Default Configuration for Advance Payments
Set default configuration for the advance payments in Accounting > Configuration > Settings and set the advance payment account and journal that will likely be used often.
Configure Bank Journal Payment Methods
Make sure that the payment methods used for advance payments have both Outstanding Receipts and Outstanding Payments accounts configured. To do this, go to Accounting > Configuration > Accounting > Journals, select the relevant Bank Journal, and under the Incoming Payments and Outgoing Payments sections, fill in the Outstanding Receipts Account and Outstanding Payments Account, respectively. If the account selected on Outstanding Receipts/Payments is the same as the Bank account, then manual reconciliation for the advance payment is not necessary.
Procedures
Create new Advance Payments
Create new customer advance payments in Accounting > Customers > Advance Payments (or create new vendor advance payments in Accounting > Vendors > Advance Payments).
Select the Customer (or Vendor), Payment Journal and Payment Amount. Set also the Payment Date when the customer (or vendor) has paid. If you set the default configuration for advance payment account, the default will be shown unless you need to change it. Save the advance payment as draft or confirm it so that it will be posted.
Posted advance payment can now be used to apply advance payments on invoices.
Posted advance payment will also create journal entry such that the accounts are based on the selected Payment Journal and Advance Payment Account.
Return the Advance Payments
Select an advance payment in Accounting > Customers > Advance Payments (or in Accounting > Vendors > Advance Payments).
Click the Return Advance Payment button. Note that this button will be shown only if there is amount to return.
Input the Amount to return, Date of return, Journal and Payment Method. Confirm the payment to return the advance payment. Note that the posted return will be reconciled with the advance payment.
Application of Advance Payments on Invoices
To apply advance payments on customer invoices (or vendor bills), select an Posted status invoice on Accounting > Customers > Invoices (or Accounting > Vendor > Bills).
If the customer (or vendor) has advance payment, there will be a button named Apply Advance Payment on the invoice header. If there is no button shown, it means that customer (or vendor) has no advance payments, advance payments have already been applied or invoice is already paid.
On the Apply Advance Payments window, specify the Application Journal, the default will be the configured Advance Payment Journal in settings. Select the application date and advance payments to apply. TIP: You can select multiple advance payments and you can also select multiple invoices on the invoice list.
When applied on the invoice, payment will be shown below the invoice Total and in Advance Payments tab. TIP: You can unreconcile the payment by using the icon below the invoice Total but just make sure that the Advance Payment Journal is allowed on cancelling entries.
Application of advance payment on invoices will create a journal entry such that the accounts are based on the invoices account and advance payment account on payments. The amount (debit or credit) is the total of all advance payments applied.