Under & over payments from customers

Occasionally a customer may over or under pay. There are numerous reasons why this might happen, and you'll need to decide what you want to do in each different case.

We recommend you consult your accountant before writing-off accounts receivable / debtors balances.

Underpayments from customers

An underpayment is where a customer doesn't send enough money to cover the total amount of the order or invoice(s) they are paying. The remaining balance might be an amount that they will pay later, in which case it can be left outstanding on their account, or it might never be paid, in which case it is likely that you will want to write it off in order to balance the account.

Small balance write-offs can be made one customer at a time, Brightpearl doesn't currently have an automated small balance write-off process. The write-off of a customer balance can be made by either:

  • Entering a payment with an adjustment.
  • Entering a quick credit and allocating that against the balance.

Note that manually entered (JJ) journals cannot be assigned to a contact and therefore cannot be used to write-off accounts receivable / debtors balances.

How to handle a payment discrepancy using adjustments

Use these steps when a payment doesn't match the invoice amount, but the balance needs to be cleared from the account. This can occur due to an under payment, an over payment, or exchange rate differences.

  1. Search for the contact.
  2. Open the contact record and navigate to the payment allocation screen via the financials box on the right-hand side.
  3. Enter the amount paid against the relevant invoice(s).
  4. Enter the difference between the invoice and payment amount into the Adjustment field.
  5. Choose the adjustment account (nominal codes are listed here when they are set to "Yes" for "Allocate discounts to this account?").
  6. Click the Allocate payment button.

This invoice of £200 has had £199 paid by the customer into the current bank account, and the £1 difference written off against the bad debts account:

Screen_Shot_2019-06-24_at_3.07.06_PM.png

You may wish to use a different "payment adjustments" account, and reserve the bad debts account for writing off complete invoices.

How to record bad debt using a quick credit

  1. Go to  Customers > Quick Credit .
  2. Search for the customer (only primary customer contacts are searchable).
  3. Enter a note in the details section to record this as a bad debt write-off.
  4. Enter the Net Amount.
  5. Select the correct tax code to calculate the tax and total values.
  6. Select your "bad debt" nominal code (you may need to create one).
  7. Click the  Enter Credit  button.

You then need to allocate this credit to the outstanding invoices on the customer's account so that they no longer appear on your aged debtors listing.

Overpayments from customers

An overpayment is where a customer has sent more money than is needed to cover the total amount of the order or invoice(s) they are paying. Entering more than the invoice value on the payment allocation screen will create an on-account amount with the reference ovr_{invoiceRefHere}:

Screen_Shot_2019-06-24_at_3.20.57_PM.png

The remaining balance might be an amount that they can use later on a future purchase, in which case it can be left outstanding on their account, or it might be refunded to the customer.

However if the credit is never taken, it is likely that you will want to write it off in order to balance the account. Please check with your accountant before writing balances off.

In exactly the same way as writing off an under-payment, the write-off of a small customer balance can be made by either:

  • Entering the entire write-off amount in the 'adjustment' column and choosing an adjustment code instead of a bank account.
  • Entering a quick invoice and allocate against the overpayment.

Note that manually entered (JJ) journals cannot be assigned to a contact and therefore cannot be used to write-off accounts receivable / debtors balances.

How to fix an allocated overpayment error

Occasionally you will come across an overpayment error on a contact account which looks like this:

payment allocation error

What causes this error?

One scenario which causes this error is where a payment has been made against a purchase order (before receiving the invoice), then when the invoice is received, the prices are changed resulting in that pre-payment being for more than the order total - there is an overpayment. On a sale we would automatically see that the overpayment amount is split off of the order and added to the customer account as on account payment with no errors. Currently, purchases does not operate in the same way and we see this error. The problem cannot be fixed by allocating the transaction or making further payments. It must be corrected as follows:

  1. Enter a reverse payment against the order to remove the overpaid amount.
  2. Enter an on account payment directly against the contact.

If the journal is edited this will fix the error on the supplier financials but the order will remain overpaid. When the overpayment is later allocated to another order the payment amount is recorded against that order as well - the result is the overpayment is duplicated on your purchases reporting, however, your accounting is correct.

 
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