Allocating existing transactions

Summary

How to allocate existing transactions in Sage Accounting.

Description

You may have receipts or credit notes entered in Accounting. If you have not yet used these to pay or part pay an invoice or credit note, we show you how.

Do this so:

You can see which invoices still need paying
The outstanding balance for each customer or supplier contact is accurate
The invoice doesn't appear on customer statements

Resolution

How it works

Once matched:

Accounts mark the invoice as paid or part-paid and the outstanding amount updates
The balance of the customer or supplier account updated
If you use VAT Cash Accounting VAT scheme, the value records onto your next VAT return

Use the Unallocated Receipts or Payments report. This identifies unallocated sales receipts and purchase payments easily.

To correct allocation errors, you can unallocate a transaction. For example: a wrongly assigned credit note to an invoice.

Match a single payment on account or a credit note>

From Contacts, select the relevant customer or supplier.
From the Manage drop-down, choose Account Allocation.
Select the check box for each payment on the account or credit note. The Outstanding value changes to 0.00 and the amount moves to the Paid column.
The Left to Allocate box at the bottom should be 0.00.
Select Save.

Match multiple payments or credit notes>

From Contacts, select the relevant customer or supplier.
From the Manage drop-down, choose Account Allocation.
Select the payments on account or credit notes you want to use.
Select the invoices you want to pay.
The Left to Allocate box at the bottom should be 0.00.
Select 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.

From Contacts, open the relevant customer or supplier.
From the Manage drop-down, choose Account Allocation.
Choose next to the transaction you want to part-pay.
Enter the value in the Amount to pay section and select Apply.
For payments on account, enter this as a negative value.
Make sure the Left to Allocate box at the bottom is 0.00.
Select Save.

Troubleshooting>

Check your allocations

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

Open the invoice credit note from the relevant list. You can also do this from the Activity section for the relevant customer or supplier.
Select the payment link under the Amount Paid value. This opens the Payments and Allocations option.
You can see all the payment links related to the invoice or credit note. Select the link in the Amount column to see the details.

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

You may use the VAT Cash Accounting Scheme. You may have invoices and standalone credit notes that have different VAT rates. Allocating these gives the following:

In this scheme, VAT from invoices goes to a holding account. When you receive payment, it moves to VAT accounts for tax reporting. If you issue a credit note without payment, it cancels VAT. Different VAT rates leave some value in the holding account.

An example

You issue an invoice for €100 plus VAT at the standard rate of €20. 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 the 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 lower rate
€1.50 which is exempt from VAT
Total VAT €18.50

Allocating a credit note and new invoice results in a €1.50 debit in the VAT sales holding account. Credit notes aren't on VAT Returns. Therefore, it leads to an overpayment when reporting the original receipt.

To resolve this, do one of the following:

Select No. Issue a refund for the credit note and record the invoice as paid. The refund and payment are on the VAT Return so it includes the difference. Your bank balance doesn’t change as the refund and receipt are for the same value and cancel each other outYour 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. Allocate the credit note to the original invoice. 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 the 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	1.50	No
VAT on Sales (2200)	1.50	0.00	Yes