Purchase Ledger Help
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Allocation is the process of matching outstanding credit transactions (credit notes, discount, payments, refunds or adjustments) to outstanding debit transactions (invoices or adjustments). Once matched, the transactions are considered to be 'cleared' and are removed from the data files when you use the End of Period command, provided the transactions exceed the number of periods specified in the Keep Transactions box on either the Options form associated with the Supplier form or the Purchase Options form. Allocation can be done at the same time as entering a payment or refund using the Payment and Refund commands on the Action menu associated with the Supplier form, provided the On Account option is cleared. Alternatively, you can use the Allocate command on the Action menu that provides access directly to the Allocations form. You can then allocate existing transactions, including other credits, such as credit notes.
Settlement discount is automatically taken into account according to supplier settlement discount terms. These are defined according to the settlement discount terms defined under Settlement Discount on the Trading Terms form associated with the Supplier form or on the Purchase Options form.
The Allocations form displays all the outstanding transactions for the selected supplier account. To include a transaction in an allocation action, click to select the transaction in the grid. You then select the relevant command from the Action menu according to what you want to do.
Use this command | To |
|---|---|
Pay Full |
Allocate the full value of the transaction as paid. |
Pay Part |
Allocate part of the transaction value. You enter the amount to be allocated in the Part Pay box that appears. Unless settlement discount is being taken, the Part Pay box is automatically updated with a calculated part payment amount. If settlement discount is being taken, you must enter the part payment amount. |
Exhaust |
Allocate the payment to as many outstanding invoices as possible, starting with the oldest outstanding item, until the value of the payment is exhausted. The command does not part-pay invoices; it pays the oldest outstanding items provided these can be fully paid by the value of the payment. If an item cannot be fully paid, the next oldest outstanding item (which can be paid in full) will be paid instead. Click here for an example. This command only applies to allocations made when using the Payment Allocations form (posting a new payment in the Purchase > Processing > Payment command). Important: The Exhaust command ignores transactions that are in dispute, those in a foreign currency, and Brought Forward Balance transactions. Brought Forward Balance transactions are created by the End of Period command for accounts that are not set as Open Item accounts. |
Cancel Allocation |
Cancel the allocation for the selected transaction. |
No Disc |
Settlement discount is calculated if a payment pays one or more invoices in full and settlement discount is due. If you pay your supplier in full, you can cancel the settlement discount calculations by using this command. The No Disc command will revert settlement discount that has been calculated for all the lines displayed in the grid. This command only applies to allocations made when using the Payments Allocations form (posting a new payment in the Purchase > Processing > Payment command). |
Accept |
Accept the allocations, assuming that the value alongside the to Allocate title is zero. If the balance to allocate is not zero, you must amend your entries otherwise you cannot accept them, except as noted below for foreign currency transactions. |
This only applies if you have the multi-currency module installed and activated. When you are allocating foreign currency invoices, you can view values in both the home and foreign currency. The exchange rate shown is the one that was current when the transaction was posted. Allocations can then be made in the transaction currency, or any other currency including the home currency. If you allocate to an invoice in the transaction currency, the system compares the exchange rate prevailing at the time the debit and credit postings were made. If a discrepancy arises, the loss or gain is posted to the nominal account defined on the System Exchange Rates form for the foreign currency concerned. If you allocate a payment to an invoice in a currency other than the transaction currency, the system converts both currencies to the home currency using the exchange rates prevailing at the time the debit and credit postings were made and posts the value of any difference to the nominal account identified in the Exchange Gain/Loss box on the Adjustment Names form.
You can allocate debits to credits, in part or in full, regardless of whether they are 'advanced' transactions. For example, you can allocate a payment posted for the current period to an invoice that has been posted to the next period. Similarly, a payment posted to the next period can be allocated to invoices in the current period. Advanced transactions are only possible if the Allow Advanced Posting option is selected on the Purchase Options form.
Where a payment or refund is posted to a balance forward account, you can use the allocation procedure to allocate the payment or refund to the appropriate period balance and/or any of the current period open item details.
When receipts or payments are posted and allocated to invoices, the Allocations form shows the balance to allocate. When receipts or payments are posted within settlement terms, the form shows both the settlement discount taken, and the balance to allocate. However, once the transactions are allocated together the ‘to Allocate’ value will be shown as a negative value. The reason is just mathematical. You need to ignore that it is negative when understanding what the VAT adjustment must be.
Using an example to explain why this is.
You buy standard rate VAT (20%) goods for £100 with 10% settlement discount. You pay the next day and take £10 goods discount and reduce the VAT by £2. The VAT should now be £18 ((£100 - 10%) * 20% ) rather than £20 on the original posting. £108 will now clear the invoice.
The £120 invoice is fully allocated with the discount of £10 (£120 - £10), the allocated value is then subtracted from the actual receipt value (£110). So £108-£110 = -£2.