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.

Please check with your accountant before writing balances off.

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

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

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, and over payment or exchange rate differences.

These steps can be used where the adjustment is being made at the same time as entered the payment.

  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. An adjustment code field appears below the table where you can select the nominal code to post the write-off amount to, for example, "bad debt" or "write-offs" or "gains and losses". (Nominal codes are listed when they are set to "Yes" for "Allocate discounts to this account?").
  6. Click the Allocate payment button.

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.

How to write-off a balance as bad debt using an adjustment

The following steps provide the quickest way to write-off account balances where no payment needs to be recorded:

  1. Search for the customer and navigate to the Payment Allocation screen.
  2. Identify the invoice with a balance to be written off. Enter the whole amount to be written off into the Adjustment field. In order for the process to work Brightpearl requires a balance in the payment field too, so just enter 0.01 for now, this will be removed in a moment.
  3. At the bottom select the account code to which the balance needs to be written off to. Only account codes with "Allocate discounts to this account?" set to Yes, will be available to select here.

payment allocation

  1. Enter a reference and then click the Allocate payment button. If you see a warning about the over allocation, that's just that 0.01 you entered which you will remove now.
  2. Go to Reports > General ledger and click on the journal ID to view it.
  3. Change that 0.01 to the bank account to 0.00, enter a reason for modification and then save.

edit journal

The balance  has been succesfully cleared from the customer account.

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. 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, or the credit it might never be taken, in which case 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.

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 invoice

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

Note that prior to version 4.90 you could correct this error by editing the journal. Now that order payments have been introduced it is not possible to correct it via accounting. 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.

How to handle a payment discrepancy

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, and over payment or exchange rate differences.

These steps can be used where the adjustment is being made at the same time as entered the payment.

  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. An adjustment code field appears below the table where you can select the nominal code to post the write-off amount to, for example, "bad debt" or "write-offs" or "gains and losses". (Nominal codes are listed when they are set to "Yes" for "Allocate discounts to this account?").
  6. Click the Allocate payment button.

How to enter a quick invoice for a customer

  1. Go to  Customers > Quick Invoice .
  2. Search for the customer (only primary customer contacts are searchable) or add a new customer.
  3. Select the invoice date and due date. Automatically calculate a due date by clicking  +30 Days .
  4. Enter any further details.
  5. Enter the net amount.
  6. Select the tax code to calculate the tax and total values.
  7. Select the nominal code the charge relates to (e.g. Rent).
  8. To add more rows using a different tax rate or nominal code click the  Add row  button and then enter the details.
  9. To simultaneously create a bank receipt and mark this invoice/credit as paid, select the Mark as paid at the same time checkbox.
  10. Click the  Extra Options  link if you want to associate this invoice with a department, project or lead source.
  11. Click the  Enter Invoice  button. 

The journal is created and posted and the reference displayed in a green message box.

 
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