Processing a Single Payment for Two Different Customer Invoices

It is possible to apply a single payment to two different customer invoices.  For example, a holdings company has sent a check to pay for 2 invoices that belong to 2 different subsidiary companies.

Applying a single payment to two different customer invoices differs depending on if your organization uses the General Accounting & Analysis (GL) module.  The below scenarios are based on the following example:

Invoice 1 = $100.00
Invoice 2 = $200.00

Payment = $300.00

Not Using General Accounting & Analysis Module (GL)

The below process should only be used if your organization is not using the General Accounting & Analysis (GL) module.  The below process does not create journal entries.

1.  Apply the full payment to one of the invoices.  See the Adding a Payment to an Invoice article for more information.  Using the example scenario above, apply the $300.00 payment to invoice 1.  This leaves the payment with an open amount of -$200.00.

2.  On the Invoices screen on the Payments tab, select the payment which was just added.  Right-click and select Tools -> Application.

3.  On the Cash Application screen, in the Account field, use the ellipses button to open the Select From All Accounts screen.

4.  On the Select From All Accounts screen, select the bill-to account for the second invoice and click the Select button.

5.  The Cash Application screen refreshes and displays the open invoices for the bill-to account of the second invoice.

6.  Select the invoice to be paid and click OK.

7.  Refresh the Invoices screen and the second invoice is updated to be paid with the appropriate application payment transaction.

Using General Accounting & Analysis Module (GL)

The below process should only be used in if your organization is using the General Accounting & Analysis (GL) module.  The below process creates the appropriate journal entries.

1.  In the Receivable Transaction Types screen, create the following transaction types.  See the Adding and Editing a Receivable Transaction Type article for more information on adding receivable transaction types.

• If using deposits, create an Event Deposit receivable transaction type called Deposit Transfer Between Accounts.  This transaction type should debit and credit the same GL accounts as all other deposit transactions except rather than debit a cash account, select the Transfer Clearing Account GL account.  Be sure to check the Transfer to GL checkbox for the receivable transaction type.
• If using payments, create an Event Payment receivable transaction type called Payment Transfer Between Accounts.  This transaction type should debit and credit the same GL accounts as all other payment transaction except rather than debit a cash account, select the Transfer Clearing Account GL account.  Be sure to check the Transfer to GL checkbox for the receivable transaction type.
• If using payment plans, create an AR Adjustment receivable transaction type called Transfer Between Accounts.  This transaction type should debit the Trade Debtors account and credit the Transfer Clearing account.  This allows the system to identify an issue if only one part of the transfer takes place.  Be sure to check the Transfer to GL checkbox for the receivable transaction type.

2.  Apply the full payment to one of the invoices.  See the Adding a Payment to an Invoice article for more information.  Using the example scenario, apply the $300.00 payment to invoice 1.  This leaves the payment with an open amount of -$200.00.

3.  On the Invoices screen on the Payments tab, select the payment which was just added.  Right-click and select Add -> Add Payment.

4.  On the Add Payment screen, select the appropriate Transfer Between Accounts transaction type (deposit or payment).  In the Amount field, enter a negative (credit) amount for the open amount of the payment.  This reduces the open amount to zero for the invoice.  In the example scenario, enter -$200.00.

5.  Click OK.

6.  On the Invoices screen, select the second invoice and select the Payments tab. 

7.  On the Payments tab, click the Add button.

8.  On the Add Payment screen, select the appropriate Transfer Between Accounts transaction type (deposit, payment or AR).  In the Amount field, enter the remaining amount of the payment.  This fully pays the second invoice.  In the example scenario, enter $200.00.

9.  Click OK.

During the daily Cash Receipt & Reconciliation process, the transfer in and transfer out is validated as the total net will be $0.00. 

When the journal entries are created for these adjustments, they have the correct account in the Trade AR and Deposit Liability accounts; therefore, AR and GL reconciliation per account is correct.

Notes:

• Users must have access to the Allow Cash Application Across Customer Accounts privilege in order to apply a payment to two different accounts.