Allocating existing transactions

In this article we explain how to match payments, receipts or credit notes that you have already entered in Accounting but not yet used to pay or part pay an invoice or credit note.

Do this so

  • You can see which invoices still need to be paid.

  • The outstanding balance for each customer or supplier contact is accurate.

  • The invoice doesn't appear on customer statements.

How it works

Once matched

  • The invoice is marked as paid or part-paid and the outstanding amount is updated.

  • The balance of the customer or supplieraccount updated.

  • If you use Cash BasisVAT scheme, the value is recorded on your next VAT return.

Use the Unallocated Receipts or Payments report to easily identify sales receipts and purchase payments that aren’t allocated to a specific sales or purchase invoice.

If you’ve already allocated a transaction and you need to remove the allocation, for example, you allocated a credit note to the wrong invoice, you can unallocate it

Watch how

Match a single payment on account or a credit note

  1. From Contacts, select the relevant customer or supplier.
  2. From the Manage drop-down, choose Account Allocation.
  3. Select the check box for each the payment on account or credit note. The Oustanding value is changed to 0.00 and the amount is moved to the Paid column.

  4. The Left to Allocate box at the bottom should be 0.00.

  5. Click Save.

Match multiple payments or credit notes

  1. From Contacts, select the relevant customer or supplier.
  2. From the Manage drop-down, choose Account Allocation.
  3. Select the payments on account or credit notes you want to use.

  4. Select the invoices you want to pay.

  5. The Left to Allocate box at the bottom should be 0.00.

  6. Click Save.

Part pay transactions

This is where you only use part of the value of payment on account or credit note or part-pay an invoice.

  1. From Contacts, open the relevant customer or supplier.
  2. From the Manage drop-down, choose Account Allocation.
  3. Choose next to the transaction you want to part pay.
  4. Enter the value in the Amount to pay section and select Apply.

    For payments on account, enter this a negative value.

  5. Make sure the Left to Allocate box at the bottom is 0.00.

  6. Click Save.


Check your allocations

Check which payments, receipts and credit notes have been allocated to invoices.

  1. Open the invoice credit note from the relevant list or from the Activity section for the relevant customer or supplier.
  2. Select the payment link under the Amount Paid value.

    This open the Payments and Allocations option.

  3. From here you can see all the payments links related to the invoice or credit note. Slect the link in the Amount column to see the details.

Error - There is a mismatch between the net and VAT element of allocated items

If you use the Cash Basis VAT Scheme and you try to allocate invoices and standalone credit notes which have different VAT rates, the following message appears.

On this scheme, the VAT calculated on invoices is placed in a VAT holding nominal ledger account until you record a receipt or payment. Once you record the receipt or payment against the invoice, the VAT moves to either the VAT on sales or VAT on purchases nominal ledger account and is then included on a VAT Return.

If no payment is received and instead you create an invoice and then issue a credit note, this removes the value in this account meaning no VAT is due. If the credit note has a different VAT rate, a value remains in the holding account.

See an example

You issue an invoice for €100 plus VAT at the standard rate of €23. The customer pays the invoice and the receipt appears on your VAT Return. The customer then returns the items because they were faulty, for which you issue a credit note. The credit note leaves a debit balance of €20 in the VAT on sales holding account.

They then place a further order for you for €120 with a mixture of different VAT rates:

€90 at the standard rate

€10 at the reduced rate of 9%

€1.40 which is exempt from VAT

Total VAT €21.60

If you allocate the credit note and the new invoice, this leaves an outstanding debit of €1.40 in the VAT on sales holding account. As credit notes aren’t included on VAT Returns on this scheme, it means you overpaid VAT when the original receipt was included on the return.

To resolve this:

  • Click No. Issue a refund for the credit note and record the invoice as paid. The refund and payment are included on the VAT Return ensuring the difference is included. Your bank balance doesn’t change as the refund and receipt are for the same value and cancel each other out.
  • Unallocate the original receipt and invoice. You can then allocate the credit note to the original invoice and the receipt becomes a payment on account which you can allocate to the new invoice.
  • Manually journal the VAT mismatch from the VAT holding account to the VAT on sales account. In this example you would post the following journal:
Ledger Account* Debit Credit Include on VAT Return?
VAT on Sales – Holding Account (2205) 0.00 1.40 No
VAT on Sales (2200) 1.40 0.00 Yes
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