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Payments

This comprehensive guide explains how payments work in the accounting system, covering creation, management, multi-currency support, and reconciliation. Written for all users — accountants and non‑accountants — it provides practical guidance following double‑entry accounting best practices.

What is a Payment?

A Payment represents money movement between your company and a business partner (customer or vendor). Payments are fundamental to cash flow management and accounts receivable/payable settlement.

Payment Types

  • Inbound Payment — Money received from customers (reduces Accounts Receivable)
  • Outbound Payment — Money sent to vendors (reduces Accounts Payable)

Payment Categories

  • Settlement Payment — Linked to specific invoices or vendor bills to settle outstanding amounts
  • Partner Advance/Credit — Standalone payments for customer deposits or vendor advances

Each Payment includes:

  • Journal (Bank or Cash account where money moved)
  • Payment date and currency
  • Amount in both payment currency and company base currency
  • Payment method and optional reference
  • Partner information and status tracking

System Requirements

Journal Configuration

  • Bank Journals: At least one bank journal configured for payment processing
  • Payment Methods: Payment methods must be set up for processing options
  • Currency Setup: Currencies must be active and exchange rates configured
  • Partner Records: Customers and vendors must exist for payment linking

Prerequisites

  1. Bank Account Setup: Bank journals properly configured with accounting integration
  2. Partner Information: Customer or vendor records created with payment details
  3. Invoice/Bill Records: For linked payments, invoices or bills must be posted
  4. User Permissions: Appropriate access to banking and payment features

Where to find it in the UI

Navigate to Accounting → Banking & Cash → Payments

Payments also appear in:

  • Customer Invoices: "Register Payment" action for posted unpaid invoices
  • Vendor Bills: "Register Payment" action for posted unpaid bills
  • Bank Reconciliation: Confirmed payments available for matching with bank statements
  • Dashboard: Recent payment activity and cash flow summaries

Tip: The header's Help/Docs button opens this guide.

Payment Status Workflow

Payments follow a controlled workflow to ensure data integrity:

Draft

  • Newly created payment, fully editable
  • Can be modified or deleted
  • No accounting impact yet
  • No journal entries created

Confirmed

  • Payment finalized and posted to accounting
  • Journal entries created automatically
  • Immutable to preserve audit trail
  • Cannot be edited or deleted
  • Exchange rates locked at confirmation

Reconciled

  • Payment matched with bank statement line
  • Confirms actual bank transaction occurred
  • Additional reconciliation journal entry created
  • Final status in normal workflow

Canceled

  • Confirmed payment that has been reversed
  • Reversal journal entry created
  • Maintains complete audit trail
  • Cannot be undone once canceled

Important: Only Draft payments can be edited or deleted. Confirmed payments require proper reversal procedures to maintain accounting integrity.

Payment Methods

The system supports multiple payment methods:

  • Manual — General manual entry
  • Check — Paper check payments
  • Bank Transfer — Electronic bank transfers
  • Credit Card — Credit card transactions
  • Debit Card — Debit card transactions
  • Cash — Physical cash payments
  • Wire Transfer — International wire transfers
  • ACH — Automated Clearing House transfers
  • SEPA — Single Euro Payments Area transfers
  • Online Payment — Digital payment platforms

Creating Payments

1) Standalone Payment from Payments Menu

Use this for money movements not directly tied to specific invoices/bills (customer deposits, vendor advances, or immediate payments to be linked later).

Steps:

  1. Go to Accounting → Banking & Cash → Payments
  2. Click Create
  3. Fill the payment form:
    • Payment Type: Select Receive (inbound) or Send (outbound)
    • Partner: Choose the customer or vendor
    • Journal: Select the bank or cash account
    • Payment Date: When the money moved
    • Currency and Amount: Payment currency and amount
    • Payment Method: Choose from available methods
    • Reference: Optional internal note or bank reference
  4. Save to create as Draft
  5. Confirm when ready to post to accounting

Result:

  • Draft payment created and editable
  • Upon confirmation, journal entries posted automatically
  • Payment available for settlement or reconciliation

2) Register Payment on Invoice (Customer Payment)

Use this to collect money for posted customer invoices.

Prerequisites:

  • Invoice must be Posted (not Draft)
  • Remaining amount due must exist

Steps:

  1. Open the posted Invoice
  2. Click Register Payment (banknotes icon)
  3. Fill the payment dialog:
    • Journal: Usually your main bank account
    • Payment Date: When money was received
    • Amount: Defaults to remaining amount; adjust for partial payments
    • Reference: Optional bank reference or note
  4. Confirm to create and post payment

What happens:

  • Inbound payment created and immediately confirmed
  • Payment linked to invoice, reducing due amount
  • Invoice status updates (Partially Paid or Paid)
  • Journal entries posted automatically
  • Payment available for bank reconciliation

3) Register Payment on Vendor Bill (Vendor Payment)

Use this to pay posted vendor bills.

Prerequisites:

  • Bill must be Posted (not Draft)
  • Remaining amount due must exist

Steps:

  1. Open the posted Vendor Bill
  2. Click Register Payment (banknotes icon)
  3. Fill the payment dialog:
    • Journal: Usually your main bank account
    • Payment Date: When money was sent
    • Amount: Defaults to remaining amount; adjust for partial payments
    • Reference: Optional reference or note
  4. Confirm to create and post payment

What happens:

  • Outbound payment created and immediately confirmed
  • Payment linked to bill, reducing due amount
  • Bill status updates (Partially Paid or Paid)
  • Journal entries posted automatically
  • Payment available for bank reconciliation

Payment Confirmation and Management

Confirming Payments

Draft payments can be confirmed to post them to accounting:

  1. Open the Draft payment
  2. Click Confirm Payment
  3. Confirm the action when prompted

Upon confirmation:

  • Journal entries created automatically
  • Exchange rates locked (for multi-currency)
  • Payment becomes immutable
  • Status changes to Confirmed

Editing Restrictions

  • Draft payments: Fully editable and deletable
  • Confirmed payments: Immutable, cannot be edited or deleted
  • Reconciled payments: Final status, no changes allowed

Deletion Rules

  • Draft payments: Can be deleted safely
  • Confirmed/Reconciled payments: Cannot be deleted
  • Use cancellation for confirmed payments requiring reversal

Multi-Currency Payments

The system handles payments in any configured currency with automatic conversion:

Currency Handling

  • Payment Currency: The currency in which payment was made
  • Company Currency: Your company's base currency for reporting
  • Exchange Rate: Captured automatically at payment confirmation
  • Conversion: Automatic conversion to company currency

Exchange Rate Management

  • Rates captured at payment date
  • Locked upon confirmation to prevent manipulation
  • Used for realized gain/loss calculations
  • Displayed in payment details for audit trail

Realized Exchange Gains/Losses

When settling foreign currency invoices/bills:

  • System calculates difference between invoice and payment rates
  • Automatic journal entries for realized gains/losses
  • Posted to configured exchange gain/loss accounts
  • Maintains accurate financial reporting

Example:

  • Invoice: $1,000 USD at rate 1,300 IQD/USD = 1,300,000 IQD
  • Payment: $1,000 USD at rate 1,310 IQD/USD = 1,310,000 IQD
  • Realized Loss: 10,000 IQD posted to exchange loss account

Linked Documents

Payments can be linked to multiple documents:

  • Invoices: Customer payment settlements
  • Vendor Bills: Vendor payment settlements
  • Amount Applied: Track specific amounts allocated to each document

Viewing Relations

Each payment shows related information:

  • Invoices Tab: All linked customer invoices
  • Vendor Bills Tab: All linked vendor bills
  • Journal Entries Tab: All accounting entries
  • Bank Statement Lines Tab: Reconciliation history

Document Settlement

  • Payments can settle multiple documents
  • Partial settlements supported
  • Remaining balances tracked automatically
  • Settlement history maintained for audit

Bank Reconciliation

Reconciliation Process

  1. Import or create bank statements
  2. Navigate to Accounting → Banking & Cash → Bank Statements
  3. Open statement and click Reconcile
  4. Match confirmed payments to statement lines
  5. System updates payment status to Reconciled

Reconciliation Effects

  • Payment status changes to Reconciled
  • Bank statement line marked as reconciled
  • Additional reconciliation journal entry created
  • Confirms actual bank transaction occurred

Reconciliation Requirements

  • Payments must be Confirmed before reconciliation
  • Amounts must match between payment and statement line
  • Currency conversion handled automatically
  • Multiple payments can reconcile to one statement line

Best Practices and Tips

Payment Management

  • Confirm carefully: Confirmed payments cannot be edited
  • Use references: Add bank references for easier reconciliation
  • Regular reconciliation: Keep books aligned with bank statements
  • Partial payments: Use for installment collections/payments

Multi-Currency Best Practices

  • Monitor exchange rates: Significant rate changes affect cash flow
  • Hedge currency risk: Consider forward contracts for large amounts
  • Review gain/loss: Monitor exchange gain/loss impact on profitability

Audit and Compliance

  • Maintain documentation: Keep supporting documents for all payments
  • Review journal entries: Verify accounting impact of payments
  • Lock date compliance: Respect accounting period lock dates
  • Segregation of duties: Separate payment creation and confirmation

Troubleshooting

Common Issues

Q: Cannot edit confirmed payment A: Confirmed payments are immutable. Create a reversal entry if changes needed.

Q: Payment not appearing in reconciliation A: Ensure payment is Confirmed and matches statement currency/amount.

Q: Exchange rate seems incorrect A: Exchange rates are locked at confirmation. Check rate source and date.

Q: Cannot delete payment A: Only Draft payments can be deleted. Use cancellation for confirmed payments.

Error Messages

"Only draft payments can be confirmed"

  • Payment is already confirmed or in wrong status
  • Refresh page and check current status

"Payment date is in locked period"

  • Payment date falls within locked accounting period
  • Change date or request period unlock from administrator

"Insufficient remaining amount"

  • Trying to apply more than document's remaining balance
  • Check document status and previous payments

Frequently Asked Questions

Q: Can I delete a confirmed payment? A: No. Financial documents become immutable once confirmed to preserve audit trail. Use cancellation for reversals.

Q: Can I do partial payments? A: Yes. Enter a smaller amount when registering payment. The document remains partially paid with updated balance.

Q: How does foreign currency work? A: We store amounts in both payment and company currencies. Exchange gains/losses are calculated and posted automatically when settling documents.

Q: What's the difference between settlement and advance payments? A: Settlement payments are linked to specific invoices/bills. Advance payments are standalone and can be applied to future documents.

Q: Can one payment settle multiple invoices? A: Yes. Use document links to allocate payment amounts across multiple invoices or bills.

Q: How do I handle payment fees? A: Record fees separately through bank statements or miscellaneous journal entries. Payment amounts should reflect net amounts received/sent.

Glossary

  • Partner: Customer or vendor in the system
  • Journal: Bank or cash account where transactions are recorded
  • Settlement: Applying payment to specific invoice or bill
  • Reconciliation: Matching system payments to bank statement lines
  • Document Link: Connection between payment and invoice/bill with amount applied
  • Exchange Rate: Currency conversion rate locked at payment confirmation
  • Realized Gain/Loss: Exchange difference when settling foreign currency documents

Need more help? Use the Help/Docs button in the Payments section or contact your system administrator for additional support.