Advance Payment Entry

Advance Payment Entry records payments that are not linked to a specific invoice. This includes customer advances, supplier deposits, and employee advances.

When to Use Advance Payments

• A customer pays a deposit before an order is fulfilled
• You pay a supplier a deposit before goods are delivered
• An employee receives a cash advance for travel or expenses
• A prepayment for services not yet received

Creating an Advance Payment

From Customer (Advance Receipt)

1. Go to Accounting > Payment Entry and click New.
2. Set Payment Type to Receive.
3. Select the Customer.
4. Enter the Amount.
5. In Payment References, keep it empty (no invoice referenced) — this makes it an advance.
6. Click Save and Submit.

To Supplier (Advance Payment)

1. Go to Accounting > Payment Entry and click New.
2. Set Payment Type to Pay.
3. Select the Supplier.
4. Enter the Amount.
5. Keep Payment References empty.
6. Click Save and Submit.

Applying Advances to Invoices

When an invoice is later created for the same party:

1. Create the invoice as usual.
2. Create a Payment Entry against the invoice.
3. In the Payment References table, you can see both:

- The new invoice (to be paid)

- The outstanding advance (available to allocate)

1. Allocate the advance against the invoice.

Advance Accounts

Ensure your Company master has the correct default accounts set:

• Default Employee Advance Account: For employee advances
• The receivable/payable accounts for customer/supplier advances

Related Topics

• Payment Entry
• Payment Request