Resolve automatic credit allocations on sales invoices

When you enter a new sales or purchase invoice, you might find that Manager automatically credits the invoice with some amount, making the Balance due less than the invoice Total.

You issue a sales invoice to Antonio Moreno Taquería for 3,370.00 and Manager automatically applies credit of 2,345.30, leaving a balance due of 1,024.70:

An automatic credit allocation happens when the customer has a pre-existing credit balance. In other words, you owe a customer money. Normally this is the desired outcome. You want any credits to be automatically applied to invoices, so you are not trying to collect from a customer more than is really owed to you. For example, if a customer has a credit balance of $100 due to a previous credit note, Manager will remember this until the next invoice is issued to that customer and will automatically apply the $100 credit to it without your having to keep track of anything. But if you are certain the customer or supplier didn’t have a credit balance, such an automatic credit allocation indicates something has been recorded incorrectly.

Continuing with the example above, the problem is easy to diagnose. The mini-statement at the bottom of the invoice tells you a receipt was applied to the sales invoice. You could look up that receipt in Manager, determine who it was from, and decide whether an error was made. Perhaps the receipt was mistakenly recorded as coming from the wrong customer. Or, the customer may have simply overpaid its account, in which case Manager stored the leftover credit, applied it to the new sales invoice, and everything is as it should be.

Some bookkeeping errors can be discovered immediately; some can take weeks or even months to discover. Used properly, Manager’s double-entry accounting system ensures all errors will be ultimately discovered.

In the example above, even if you did not notice the bookkeeping error, eventually the customer who actually paid 2,345.30 on 26/04/2021 would complain that its customer statements did not reflect the payment. Or your Aged Receivables report would show that customer’s account becoming more and more overdue. Sooner or later, you would discover the payment having been attributed to the wrong customer.

Some automatic allocations are not so obvious.

Consider a sales invoice for the same goods to Antonio Moreno Taqueria on which the mini-statement shows the following:

That receipt on 26/04/2021 is still there, but now shows only 1460.22 having been applied to this sales invoice. And there is another receipt on 17/02/2021. Only 67.48 is due on the sales invoice. What happened? The full answer is not available by examining the sales invoice.

Two other sources of information are helpful. The first is to go to the Customers tab, locate the customer, and click on the Accounts receivable figure:

Drilling down reveals every transaction contributing to the balance:

Another source is to view a Customer Statement (Transactions) for the customer:

Both show the same information, but in different formats and orders. One key to understanding what happened on this sales invoice is the presence of a starting balance, indicating a start date for the business of 01/01/2019. The customer had a 350.00 credit balance unassociated with any other transaction and a pending, pre-start-date invoice for 1842.30. But when a receipt for that sales invoice was entered on 17/02/2021, it was not allocated specifically to the old invoice. Likewise, a credit note for return of some of the goods on that invoice was not allocated to it, but was left undesignated. So Manager applied both to the next sales invoice.

Overall, there are three errors to correct: (1) proper allocation of the first receipt for the old invoice, (2) allocation of the credit note to the old invoice, and (3) posting of the second receipt to the correct customer. When all these have been accomplished, the new sales invoice mini-statement shows:

This is correct. Because the receipt and credit note for the old invoice are now properly posted, the starting credit balance cannot be automatically assigned, either to it or any other invoice.The starting credit balance is now cleared by applying it to the new sales invoice.

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