Payment Entries

Learn how to record and manage payments received from customers and made to suppliers.

Overview

A Payment Entry is used to record the movement of money in your business.

It helps you:

• Track payments received from customers
• Record payments made to suppliers
• Manage outstanding balances

Types of Payment Entries

Receive Payment

Used when you receive money from a customer.

Example:

• Customer pays invoice

Pay Payment

Used when you pay money to a supplier.

Example:

• Payment for purchase

Internal Transfer

Used to transfer money between accounts.

Example:

• Bank to Cash transfer

When to Use Payment Entry?

Create a payment entry when:

• A customer makes a payment
• You need to record a receipt
• You want to settle an invoice

Create a Payment Entry

Method 1: From Sales Invoice (Recommended)

1. Open Sales Invoice
2. Click Create → Payment
3. System auto-fills:

• Customer
• Invoice amount
• Outstanding balance

Method 2: Manual Creation

1. Go to Accounts → Payment Entry
2. Click Add New

Enter Payment Details

Basic Information

• Payment Type (Receive / Pay / Internal Transfer)
• Party Type (Customer / Supplier)
• Party (select customer or supplier)

Payment Accounts

• Paid From (customer account / bank)
• Paid To (your company account)

Amount

• Enter payment amount
• Can be full or partial

Allocate Payment to Invoice

If payment is for an invoice:

1. Select the invoice
2. Enter allocated amount

System will:

• Reduce outstanding balance
• Update invoice status

Save and Submit

1. Click Save
2. Click Submit

Payment becomes recorded.

Payment Status

Invoice status updates:

• Unpaid
• Partially Paid
• Paid

Partial Payments

You can receive partial payments.

Example:

• Invoice: $1000
• Payment received: $600

Remaining balance = $400

Refunds

To issue a refund:

• Create payment entry with opposite flow
• Link with credit note if required

Multi-Invoice Payment

You can allocate one payment to multiple invoices.

Best Practices

• Always link payment to invoice
• Verify payment amount before submitting
• Use correct accounts (bank/cash)
• Regularly track outstanding payments

Common Issues

• Payment not reflecting → Check allocation
• Wrong balance → Verify amount entered
• Invoice still unpaid → Check submission

Example

Customer: ABC Traders

Invoice: $1000

Payment Received: $1000

👉 Invoice marked as Paid

What Next?

• Track outstanding → Reports
• Manage invoices → Sales Invoice
• Handle returns → Credit Notes