A Payment Entry is a record indicating that payment has been made for an invoice.

Payment Entry can be made against the following transactions.

• Sales Invoice
• Purchase Invoice
• Sales Order (Advance Payment)
• Purchase Order (Advance Payment)
• Expense Claim
• Internal Transfer

In BizCentric, there are two options through which User can capture the payment:

• Payment Entry (Default)
• Journal Entry

To access the Payment Entry list, go to:

Home > Accounting > Accounts Receivable/Payable > Payment Entry

1. Prerequisites

Before creating and utilizing a Payment Entry, it is recommended to first create the following:

1. Customer
2. Supplier
3. Bank Account

If you’re following the Sales/Purchase Cycle, you’d need the following:

1. Sales Order (Advance Payment)
2. Purchase Order (Advance Payment)
3. Sales Invoice
4. Purchase Invoice

Set up:

1. Chart Of Accounts
2. Company (for default accounts)

2. How to create a Payment Entry

Upon submitting a document for which a Payment Entry can be created, you will discover the Payment option under the Create button.

1. You can modify the posting date if needed.
2. The Payment Type will be automatically determined based on the originating transaction, with options such as ‘Receive’, ‘Pay’, and ‘Internal Transfer’.
3. The Party Type, Party, and Party Name will be retrieved automatically.
4. The Account Paid to and Account Paid From will be retrieved as configured in the Company form.
5. The Amount Paid will be obtained from the Invoice.
6. Save and Submit.

2.1 Creating a Payment Manually

A manually created Payment Entry won’t be linked to any specific order or invoice. Payments processed in this manner will be logged in the Customer’s/Supplier’s account and can be reconciled later using the Payment Reconciliation Tool.

To create a Payment Entry:

1. Navigate to the Payment Entry list and click on New.
2. Choose the Party Type and the corresponding Customer/Supplier.
3. Select the Bank Account/Cash Account Paid To and Paid From. Provide the Cheque Number and date if it’s a bank transfer.
4. Enter the Amount Paid.
5. Save and Submit.

3. Features

3.1 Setting Mode of Payment

Payment Mode: Specifying this assist in categorizing Payment Entries according to the mode of payment utilized. Payment modes may include Bank, Cash, Wire Transfer, and others.

Tip: In the Mode of Payment master, default Account can be set. This default payment Account will be fetched into Payment Entries.

3.2 Payment From/To

• Party Type: Identifying the entity as Customer, Supplier, Employee, Shareholder, Student, or NGO Member.
• Party: The particular entity for which the Payment Entry is created.
• Party Name: The name of the entity automatically retrieved.
• Company Bank Account: Your company’s designated bank account.
• Party Bank Account: The bank account associated with the party.
• Contact: If the party is an organization, contact details of a designated person can be stored here.

3.3 Accounts

• Party Balance: The overall amount receivable or payable from the customer or supplier based on the invoices set in the current Payment Entry. Paid amounts will be depicted as positive, whereas advance payments will appear as negative.
• Account Paid From: The Account from which the amount will be deducted upon submission of the payment.
• Account Paid To: The Chart of Accounts (CoA) account to which the amount will be added upon submission of the Payment Entry.
• Account Currency: The currencies associated with these accounts will be retrieved as configured in the Account settings and cannot be modified here. For further details on transactions involving multiple currencies, please refer to this page.
• Account Balance: The total balance amount from all the invoices associated with the selected accounts.
• Paid Amount: The total amount paid for the current Payment Entry is displayed in this field.

Note: When making Payment Entries, the default bank account will be fetched in the following order if set:

• Company form
• Mode of Payment default account
• Customer/Supplier default bank account
• Select manually in Payment Entry

3.4 Reference

Fetching outstanding Invoices

This feature facilitates the settlement of payments for multiple Sales Invoices using a single Payment Entry. When initiating a new Payment Entry, clicking either the ‘Get Outstanding Invoices’ button or the ‘Get Outstanding Orders’ button retrieves all outstanding Invoices or open Orders, respectively, for the party. To enable this function, you must input the ‘Paid Amount’. Subsequently, a date range and the desired invoices to be fetched can be selected.

If the party has not made a full payment, the partial amount paid can be entered in the ‘Allocated’ field.

When creating a Payment Entry for a Customer, the Payment Amount will be allocated against a Sales Invoice. Similarly, when generating a Payment Entry for a Supplier, the Payment Amount will be allocated against a Purchase Invoice.

Payment References table

• Type: Indicates whether the payment is associated with a Sales Order, Sales Invoice, or a Journal Entry.
• Name: Specifies the particular transaction ID fetched or selected for this entry.
• Total Amount: Represents the total amount of one Invoice or Journal Entry in the row.
• Outstanding: Denotes the outstanding amount to be received or paid for this invoice.
• Allocated: If the Paid Amount is less than the invoice amount, only the paid amount will be allocated to the fetched invoice(s) in the Payment Entry. Payment may be made in installments; for instance, if there are three invoices with amounts of 20, 20, and 20 respectively, and the Paid Amount is 60, then this Paid Amount will be distributed equally. Payment Terms may also apply.

What is Unallocated Amount?

When a Payment Entry is recorded in BizCentric, and the Paid Amount exceeds the total invoice amount, the excess is retained in the Customer’s/Supplier’s account, thus rendering it ‘Unallocated’. This unallocated amount can then be applied to future invoices.

Suppose a supplier issues an invoice for $800 to a company. Upon payment, the company remits $1,000. The excess amount of $200 is left unallocated in the supplier’s account. Later, if the company receives another invoice from the same supplier for $700, the previously unallocated $200 can be applied towards this new invoice, reducing the amount owed to $500.

3.5 Deductions or Loss

When creating a Payment Entry against an invoice, there may be a discrepancy between the actual Paid Amount and the outstanding amount on the invoice. This variance could arise from rounding errors or fluctuations in currency exchange rates. You can designate an account here to record this difference amount.

Any losses or deductions can be accounted for and written off. For example, if the paid amount is $25 but the allocated amount is $30 as per the invoice, resulting in a difference of $5. This difference may occur due to discounts or currency exchange fluctuations. To reconcile the Payment Entry, the Difference Amount needs to be adjusted to zero. This can be done using the Make Difference Entry button, and the amount will be adjusted in the Write Off account.

3.6 Write Off

A write-off occurs when the paid amount is lower than the allocated amount. In other words, the remaining amount is regarded as lost due to miscellaneous charges or it is determined that the amount will not be paid. This is recognized as a loss.

3.5 After Submitting

Save and Submit the Payment Entry. Upon submission, the outstanding balances in the invoices will be updated accordingly.

If the payment entry was generated against a Sales Order or Purchase Order, the ‘Advance Paid’ field in those orders will be adjusted accordingly. When creating an invoice against those transactions, the Payment Entry will be automatically updated within the invoice, enabling the allocation of the invoice amount against the advance payment entry.

For incoming payments, the account posting will be as follows:

• Debit: Bank or Cash Account
• Credit: Customer (Debtor)

For outgoing payments:

• Debit: Supplier (Creditor)
• Credit: Bank or Cash Account

4. Other cases

4.1 Multi Currency Payment Entry

If you wish to manage a receivable/payable account in a foreign currency, you can create accounts denominated in that foreign currency (distinct from the Company’s currency) and associate them with the party account.

BizCentric facilitates the management of accounts and invoicing in multiple currencies. When creating an invoice in the party’s currency, the Currency Exchange Rate between the Company’s base currency and the party’s currency is also inputted in the invoice.

Note: A separate Debtor/Creditor account needs to be created and selected in the Sales Invoice/Order for currency exchange to work correctly. For example, if the Customer is from the US, create a receivable account called ‘Debtors US’.

When generating a Payment Entry against that invoice, the present exchange rate will be retrieved. However, you have the option to adjust the Currency Exchange Rate during payment to align with your records.

Click on the Set Exchange Gain/Loss button to automatically append a row for writing off the difference amount.

Given the fluctuating nature of Currency Exchange Rates, disparities may arise between the payment amount and the total on the invoice. This variance can be recorded as the Currency Exchange Gain/Loss Amount.

Payments can also be made independently of invoices by creating a new Payment Entry.

To know more about managing transactions in multiple currencies visit this page.

4.2 Internal Transfer

Internal Transfer is employed when funds are moved between accounts belonging to the same company. For instance, if a customer from the US using PayPal transfers money from PayPal to a bank account, it qualifies as an Internal Transfer.

The following types of internal transfers can be handled within the Payment Entry:

1. Bank – Cash
2. Bank – Bank
3. Cash – Cash
4. Cash – Bank

4.3 Managing Different Payment Scenarios

For an unpaid invoice, the outstanding amount equals the grand total. When Payment Entries are created, the value of the outstanding amount decreases.

In most cases, except for retail sales, billing and payments are distinct activities. Various combinations exist for conducting these payments, applicable to both Sales and Purchases:

1. Upfront payment (100% in advance).
2. Post-shipment payment, either upon delivery or within a few days afterward.
3. Partial payment in advance and the rest upon or after delivery.
4. Lump-sum payments for a group of invoices.
5. Lump-sum advances for a group of invoices (which can be distributed across invoices).

BizCentric supports the creation of invoices, purchase invoices, or payment entries for advance payments (in special cases, an invoice can be created through a Sales Invoice too).

The total outstanding amount against an invoice comprises the sum of all accounting entries made “against” (or linked to) that invoice. This allows for the combination or splitting of payments within the Payment Entry to manage various scenarios.

4.4 Difference between Payment Entry and Journal Entry

1. Utilizing a Journal Entry necessitates comprehension of which accounts will be debited or credited. In contrast, the Payment Entry manages this process in the backend, making it simpler for the user.
2. Payment Entry proves more efficient in handling payments in foreign currencies.
3. Cheques can be printed directly from Payment Entries using the Cheque Print Format.However, Journal Entry remains useful for:
   • Updating opening balances in accounts.
   • Recording fixed asset depreciation entries.
   • Adjusting credit notes against sales invoices and debit notes against purchase invoices, particularly when no actual payment occurs.

4.5 Payments Using Journal Entry

To make payment using Journal Entry follow these steps:

1. Activate Payment via Journal Entry. Go to Accounting > Accounting Masters > Accounts Settings, check the box ‘Make Payment via Journal Entry’. 
2. On submitting a document against which Journal Entry can be made, you will find the Payment under the Create button.
3. Save and submit the journal entry to record the payment against the invoice.

5. Related Topics

1. Payment Request
2. Payment Terms
3. Sales Invoice
4. Purchase Invoice