Allocating customer account balances

Allocating is the process of matching open invoices, credits and on account payments.

When a payment is receipted directly against an invoice they are automatically matched together, but if the payment is placed on account it will need to be matched with the invoice(s) by allocation.

Cleared and uncleared transactions

If a transaction is cleared, it means it is 'complete' - an invoice which is fully paid or a payment which has been fully allocated.

Brightpearl determines the cleared status of a transaction based on invoice references.

If all transactions:

  • posting to 1100 Accounts Receivable (Debtors Control) or 2100 Accounts Payable (Creditors Control) 
  • with the same invoice reference
  • balance against one another

All of those rows will be marked as cleared.

For example:

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These two transactions are cleared, because the rows are posting to the accounts receivable account with the same invoice reference (SI-100228), and the debit and credit values balance.

Here is an example of uncleared transactions:

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While these transactions both use the same invoice reference, the debits and credits do not balance, so they are not cleared. When the remaining balance of £60 is paid, all three transactions will be cleared:

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Similarly, it is possible to have the entries on a contact's account balance off, but not be allocated together, in which case they will not be cleared either:

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In these cases, the transactions can be cleared by allocating them against each other.

Allocating account balances

In the event that a contact has transactions which are uncleared but net off against one another, they can be allocated against each other using the payment allocation screen.

In this example, there's an unpaid invoice and a payment on account. The invoice and payment are for the same value, but they are not allocated to one another:

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They can be allocated together in order to clear them both.

To do so, they would both be marked as paid, such that the allocated boxes go green and the total at the top remains zero:

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In the event the payment only partially covers an invoice amount, it can still be allocated to an invoice by entering the full amount of the payment against the payment line and the invoice line. The total at the top will still be zero, but only the payment's allocation box is green:

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In this case the payment will be cleared, but the invoice will still be outstanding.

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The same concept applies to credits on account.

Tip: When allocating account balances together, always make sure the total at the top of the page is zero - this indicates that no actual money is being processed! If there's a value there, a bank account would have to also be selected in order to receive or refund money. 

Linking journals

When items on account are allocated against one another, a journal called a linking journal is created.

A linking journal is a journal which only posts to 1100 or 2100, so it has no impact on the account balance.

Its purpose is to balance the 1100 or 2100 codes for the specific invoice references involved in order to allow the transactions to be cleared.

So for example, consider this invoice and credit on a customer account:

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Once they're allocated against each other, a third entry will be posted to the accounts:

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Note both rows are posting to 1100 Accounts Receivable, but the invoice references are different.

If we look up either the invoice or the credit, we will now see that they're cleared against a payment journal:

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Even though no actual payment has been recorded.

The linking journals are necessary in order to clear entries - they ensure the allocated invoices, payments and credits meet the criteria needed to be marked as cleared.

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