Create Make Payments for Purchase Proforma Invoices
Usually, a make payment document finalizes your purchase process and is a sign of closing a purchase. In this case, you can create the make payment document to clear the liability for an unpaid purchase invoice or to record an advance made before goods or services were received.
If you create the make payment to close an open purchase invoice, external reconciliation takes place - the liability amount is increased (liability account is debited) and the paid amount is recorded in the bank account (bank account is credited).
To create a make payment for a particular purchase invoice:
1. Go to the Purchase Invoice under the Purchase tab.
2. Open the purchase invoice for which you want to create the make payment document.
3. The make payment document can be created in one of the following ways:
- Click the +(picture) button on the toolbar, and then select Make payment.
- From the purchase documents flow, select Make payment.
Codejig ERP will copy all the relevant information from the purchase invoice and transfer it to the make payment. Fields of the make payment document will be populated from the purchase invoice fields. Still, you can change data in any fields, manually modify the purchase invoice data, add other purchase invoices to be closed, override liability and advance accounts, indicate the purpose of payment.
You can also create a make payment document for a purchase invoice or multiple invoices from scratch without reference to a particular purchase invoice. If so, all the payment fields are empty and you have to fill them in manually.
To generate the make payment document for a purchase invoice or multiple purchase invoices from scratch:
1. On the Codejig ERP Main menu, click the Banking tab.
2. Under the Banking tab, click Make payment.
A listing page of the Make payment document opens.
3. On the listing page, click + Add new.
A page for providing details of the make payment document appears.
4. In the payment section, select a relevant type of payment which, in this case, has to be Payment for the vendor, select a payee, specify bank accounts into which and from which payments are to be made; set a currency of the payment and indicate payment amount.
5. If you want to close purchase invoices manually, turn on the Match purchase invoices option.
Purchase invoice closing according to the FIFO method entails:
The purchase invoices issued by a payee are bulk closed automatically, and the first purchase invoices raised are the first invoices to be closed with a make payment. The whole made payment amount is allocated to the unpaid purchase invoices matching the purchase invoice amount of payment. If the payment amount is insufficient to pay down all the open purchase invoices, some invoices (the last invoices raised) will remain unpaid or partially paid. The remaining unpaid amount will persist as a vendor liability. If an over-payment is made, the overpaid amount is recorded as an advance for the vendor.
6. If you turn on the Match purchase invoices option, you get access to the Open purchase invoices section. In this section, you can add and modify open purchase invoices you want to close or partially close with the make payment amount.
To do that:
1.Turn on the Match purchase invoices option.
2. In the Open purchase invoices section, do one of the following:
- To add all open invoices together with their details, select Fill with open purchase invoices click the Fill button.
- To add invoices manually, click + Add new
Purchase Invoice Line Item Fields
Purchase Invoice which you want to close fully or partially.
Once a purchase invoice is selected, all other purchase invoice payment details are auto-completed. However, you can change them, if necessary.
Amount of closed liability
The amount of the liability for the specified unpaid purchase invoice to be closed with the make payment.
The amount of closed liability is calculated as follows:
Amount of closed liability = Amount of payment - Discount amount (if applicable)
An early payment discount in %. It reduces the amount you owe the vendor if you pay before the due date indicated on the purchase invoice.
The amount deducted from what you owe the vendor if you pay before the due date indicated on the purchase invoice.
The discount amount is worked out as:
Discount amount = Amount of payment x Discount %
Amount of payment
Total amount of the purchase invoice after the discount for it is calculated.
After adding the purchase invoice or invoices you want to close, you can view and edit purchase invoice payment details, if required. If your modifications cause any discrepancies between the paid amount and the amount of payment, the difference between the amounts is displayed in the Difference field.
The Difference field is not editable and you cannot override it.
If you create the make payment document from the purchase invoice, the Match purchase invoices option is turned on by default and the section includes the purchase invoice from which the make payment is being created.
Advanced mode - turn on the advanced mode to view or override the vendor accounts for advances and liabilities which are affected by accounting transaction created by the make payment document.
If a payment is identified as a payment for an open purchase invoice, the make payment document clears your liability by crediting the selected liability account with the made total amount.
If the payment is identified as an advance payment, the advance account is debited with the made total amount. The amount can be also allocated to both accounts if the certain residual amount is left after clearing your liability.