Accounting question
-
An accounting question here? Well, maybe not. Maybe you can direct me to a better forum, however here is the question: When developing an accounting system, should you allow an invoice to go negative (a negative balance) if it is overpaid? In other words, one day it's an invoice, the next day it's a credit. I prefer to never mix and match. The invoice balance can go to zero and a separate credit invoice can be generated, which can later be applied against another invoice.
-
An accounting question here? Well, maybe not. Maybe you can direct me to a better forum, however here is the question: When developing an accounting system, should you allow an invoice to go negative (a negative balance) if it is overpaid? In other words, one day it's an invoice, the next day it's a credit. I prefer to never mix and match. The invoice balance can go to zero and a separate credit invoice can be generated, which can later be applied against another invoice.
Converting an invoice into a credit doesn't make sense. When you receive payments, programatically you apply it to a customer account (customer balance). Money in the customer's account is then applied towards outstanding invoices. When the outstanding balance of an invoice reaches zero, you mark it paid-in-full. If you receive more money from a customer than they owe, the difference remains in the customer's account as a credit.
modified on Tuesday, June 17, 2008 2:37 PM
-
Converting an invoice into a credit doesn't make sense. When you receive payments, programatically you apply it to a customer account (customer balance). Money in the customer's account is then applied towards outstanding invoices. When the outstanding balance of an invoice reaches zero, you mark it paid-in-full. If you receive more money from a customer than they owe, the difference remains in the customer's account as a credit.
modified on Tuesday, June 17, 2008 2:37 PM
This would not be practical in my opinion. What you receive is a payment from a customer. That payment is then applied towards outstanding invoices (whether or not you let an invoice balance go negative or not). Any amount applied over an invoice balance creates a credit. Any amount not applied at all creates a credit. The customer's balance is the sum of the unpaid invoices plus any credits.
-
This would not be practical in my opinion. What you receive is a payment from a customer. That payment is then applied towards outstanding invoices (whether or not you let an invoice balance go negative or not). Any amount applied over an invoice balance creates a credit. Any amount not applied at all creates a credit. The customer's balance is the sum of the unpaid invoices plus any credits.
I think we are saying the same thing. The main point being that the excess payment (the credit) is not stored with the invoice, but with the customer.
-
I think we are saying the same thing. The main point being that the excess payment (the credit) is not stored with the invoice, but with the customer.
It just sounded like you meant something a little different, I guess. The excess payment is stored with an invoice, but just not the original. It's stored with a new invoice that's created as a credit invoice and is, of course, for that same client. Thanks for your replies.
-
It just sounded like you meant something a little different, I guess. The excess payment is stored with an invoice, but just not the original. It's stored with a new invoice that's created as a credit invoice and is, of course, for that same client. Thanks for your replies.
rcampbell12 wrote:
course
It looks like you're just adding an extra document, that of the credit, to what you both agreed on above, because you have an additional requirement to link a payment to some sort of invoice.
-
It just sounded like you meant something a little different, I guess. The excess payment is stored with an invoice, but just not the original. It's stored with a new invoice that's created as a credit invoice and is, of course, for that same client. Thanks for your replies.
IMHO, the pure accounting transactions involved are the invoice and the payment. That you choose to set off the payment against the invoice forms part of the Accounts Receivable system - where it is perfectly acceptable for a customer to have a credit balance (this will anyway be reflected in the customer's ledger).