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Understanding Advanced Payment Scenarios

This guide explains how to handle complex payment situations like partial payments, overpayments, and prepayments. Whether a customer pays early, pays too much, or pays in installments, we've got you covered.

What are Advanced Payment Scenarios?

In the real world, payments don't always match invoices exactly.

  • Partial Payments: Paying a large bill in smaller chunks.
  • Overpayments: Sending more money than the invoice due.
  • Prepayments: Paying before the invoice even exists.

Understanding these scenarios helps you keep your books accurate and your customers happy.

Partial Payments

A Partial Payment happens when a customer pays less than the full invoice amount. The system keeps track of what's paid and what's still owed.

The Workflow

Here is how a partial payment flows through the system:

graph LR A[Invoice $1,000] --> B[Payment $400] B --> C[Remaining Due $600] C --> D[Status: Partial]

Understanding Statuses

The system uses statuses to tell you where an invoice stands:

Status Meaning
Open No payment has been made yet. Full amount due.
Partial Some payment received, but balance remains.
Paid Fully paid. Balance is $0.

Example

  1. You send an invoice for $1,000.

  2. Customer pays $400.

  3. You record a payment of $400 against the invoice.

  4. The invoice status changes to Partial.

  5. The Amount Due shows $600.

  6. Later, the customer pays the remaining $600.

  7. You record the second payment.

  8. The invoice status changes to Paid.

Overpayments

An Overpayment occurs when a customer pays more than they owe. This creates a "Credit" on their account that can be used later.

Scenario

Scenario: You send an invoice for $1,000. The customer accidentally writes a check for $1,200.

What to Do

You have two main options:

  1. Keep as Credit: Record the full $1,200 payment. The invoice will be marked as paid, and the extra $200 sits on their account as a credit. Next time you invoice them, the system will ask if you want to use this outstanding credit.
  2. Refund: Issue a refund for the $200 difference back to the customer.

How the System Handles It

When you validate a payment larger than the invoice:

  1. The invoice is marked Paid.
  2. The extra amount is recorded as an Outstanding Credit for that partner.
  3. You will see this credit on the Partner Ledger and typically on the next invoice creation screen as an option to apply.

Prepayments (Advance Payments)

A Prepayment is money received before an invoice is created. This is common for deposits or custom orders.

Use Case

Use Case: A customer wants to order custom furniture. You require a 50% deposit before you start work.

How to Record

  1. Go to Accounting → Customers → Payments.
  2. Create a new Payment for the amount received (e.g., $500).
  3. Do not link it to an invoice (leave the invoice field empty/unselected).
  4. Select the Partner name.
  5. Click Confirm.

Later, when you create the final invoice:

  1. The system will detect the existing payment for that partner.
  2. It will show a notification prompt to Add this outstanding credit to the new invoice.
  3. Clicking "Add" applies the prepayment to reduce the invoice due amount.

[!TIP] This is exactly like an "Opening Balance" payment—it's money you hold for the customer until it's applied to a valid bill.

Multi-Currency Payments

Dealing with international clients? You can receive payments in a different currency than the invoice.

  • Invoice: Issued in USD ($).
  • Payment: Received in EUR (€).

Key Concepts:

  • Exchange Rate: The system uses the rate effective at the date of payment.
  • Gain/Loss: If the exchange rate changed between the invoice date and payment date, the difference is automatically recorded in the Exchange Gain/Loss account.

Best Practices

🔄 Reconciliation

  • Check Partner Ledgers: Regularly review partner balances to ensure credits are applied or refunded.
  • Clear Old Credits: Don't let small overpayments sit forever. Apply them to new invoices or write them off if insignificant.

📝 Clear Communication

  • Send Statements to customers so they know their remaining balance (for partials) or available credit (for over/prepayments).

Troubleshooting

"My invoice still shows unpaid after payment?"

  • Did you Confirm the payment? A draft payment doesn't lower the balance.
  • Did you apply it to the wrong invoice? Check the payment record details.

"How do I refund an overpayment?"

  • Go to Accounting → Customers → Payments.
  • Create a new payment with Payment Type: Send Money (Refund).
  • Link it to the original payment or partner credit if applicable, or simply pay the partner back and match the transaction in reconciliation.

"Where is my prepayment credit?"

  • Check the Partner Ledger report.
  • Ensure the prepayment was Confirmed and creates a journal entry.
  • Verify it belongs to the correct partner account.