Payments against starting credit balances for customers unrelated to pre-start-date sales invoices are not being handled correctly. To illustrate the problem, first consider a straightforward example. In this example, there are only two relevant financial transactions:
- One customer starting credit balance
- One sales invoice
At the start date of 01/01/2017, ACME Services owes Brilliant Industries 10,000. This is not related to a prior sales invoice, but to an overpayment by Brilliant under a previous accounting system. So the 10,000 credit is set as a starting balance for Brilliant in the Customers tab. On 01/01/2018, ACME raises a new sales invoice to Brilliant for 6,000. Manager properly applies the credit to the new sales invoice, which is then paid in full:
The invoice’s status in the Sales Invoices tab is correct:
And the drill-down on the invoice’s balance due in the Sales Invoices tab is correct:
Brilliant’s Accounts receivable balance in the Customers tab is also correct:
However, if a refund payment is made to Brilliant before the new sales invoice is raised, problems result. To continue the example, we add a single additional transaction:
- One refund payment
ACME refunds 10,000 to Brilliant on 07/01/2017, eliminating Brilliant’s credit balance. Because no sales invoice is involved, the payment is posted to Brilliant’s Accounts receivable subaccount, but not allocated to an invoice:
Despite the fact that the customer’s account was zeroed by the refund payment, before the sales invoice was raised, the sales invoice still shows as paid in full:
And a drill-down on the zero balance shows that 6,000 of the no longer available starting credit balance was erroneously applied:
Meanwhile, in the Customers tab, Brilliant’s Accounts receivable balance reflects the full amount of the sales invoice that shows in Sales Invoices as paid in full:
The discrepancy between invoice status and Accounts receivable is further highlighted by a customer statement, showing clearly that the customer’s balance was zeroed by the refund before the sales invoice was raised:
As a side note, the Customer’s tab shows two invoices for this customer, but there is only one. Could that somehow be related to the problem?
Thanks to @Solnce for first bringing this up on the forum and providing so much information to help understand the problem.