Recording underpayments in Xero.

[nicebloke]

Hi all, sorry for the reecent spate of Xero related questions - as you can probable tell, I've just moved over to this package from an excel based spreadsheet so am having a few 'issues'!

I'm not sure how to deal with one transaction in particular for £585 where the customer only paid £553. This is £32 short so seems a lot to put through as Minor Adjustment (which i guess reflects onto the Rounding Current Liabilities account). Also, does this then effectively 'lose' the £32 so the customer does not ever see it oweing on a statement etc?

Doesn't seem right somehow. The help in Xero on underpayments is non-existant.

Any ideas?

 

[Scalloway]

If you expect the customer to pay it at a later date then leve it in his account. If you want to remove it I would put through a credit note, but not post it out.

 

[David Griffiths]

When you match the transaction from the bank rec, select the invoice that you want to pay. When you do that, you will see that "Split" comes up in blue in the invoice line,

When you click that, you will be able to enter the amount of the part payment in the box, and reconcile your transaction.

There is another way to do it. Go to the invoice itself (Accounts> Invoices> Waiting payment) and in the Make a Payment box at the foot of the invoice, enter the amount actually received.

The first way is better if you are reconciling from the bank statement, the second if you receive a cheque that you are going to bank with others.

You also do the Xero help centre a disservice. Look in the left hand box. Expalnd Using Xero day to day, the expand Bank Reconciliation and there is a line for statement line not equalling the amount in Xero. Or search part payment, and it's covered in the results.

 

[nicebloke]

Thanks Dave, but I cannot see this 'split' option anywhere. The second option works OK though - thank you.

I said "the help in Xero on underpayments is non-existant", which is true. I should of course been seraching for "part payments"

 

[nicebloke]

Ah - found it!! Thanks again.

 

[ph001]

<Had to logon to my old username so can post images>...

Hmmm... not quite!! I found the split payment thing in help but it is isn't there in the application... see pic below.

And the second option doesn't work in my case as these are transactions from a previous accounting year so they don't exist as proper invoices (only need to put them in for bank reconcilliation, but this doesn't create an invoice as such).

 

[David Griffiths]

That's because you've created a bank receipt for £585.00, almost certainly by going to the invoice and marking it as paid with that amount. Icons with the green arrows designate bank payment recorded, either in or out

When you go to an invoice to mark it paid, the amount paid defaults to the total and it's easy to overlook the need to overwrite that with the actual amount received. You need to go back to the invoice and delete that payment and start again

If you'd left the invoice untouched and gone to the find and match routing, the icon against the invoice would be white with a red arrow, denoting that it is an invoice or a bill (the arrows point different ways) and the split option would be avaliable.

It's illogical to have the split option for a payment because the presumption is that you'd record the amount actually received so a split would be superfluous

 

[ph001]

I think the issue here is there is no invoice. Our ARD is 30th June so I am only recording bills and invoices from 1st July onwards (we were using excel prior to that).

Of course, in terms of the bank reconciliation I have amounts coming in from April, May, June invoices so they have to be reconciled. When you click 'Create' on the bank reconciliation it doesn't actually create an invoice as such (well not in the same way as going into Sales & Purchases etc.)

 

[David Griffiths]

Sorry but I'm competely perplexed. You say that this transaction doesn't relate to a sales invoice that is in Xero, but then complain that Xero can't deal with an underpayment.

So if you received £553 for an old invoice, why did you record it as being £585? Why not record the £553 that you have actually received, and the balance when that comes in?

And there was nothing stopping you entering all outstanding bill and invoices at 30 June into Xero anyway.

 

[ph001]

Sorry David - it's probably me not explaining myself very well!

This is a payment from an 'old' sales invoice dated 6th June. I have only imported invoices and bills into Xero from 1st July onwards as that is the start of our accounting year. The invoice was for £585 but the customer only paid us £553 (shortfall of £32).

The bank reconciliation screen shows the payment of £553 came in on 3rd July so I 'Create' the transaction in the bank reconciliation of £585.

This of course shows an underpayment of £32, and it this underpayment that is proving difficult to process.

If I just 'create' the transaction as £553 well then the customer gets away with the £32 and the underpayment goes unrecorded.

 

[David Griffiths]

If I just 'create' the transaction as £553 well then the customer gets away with the £32 and the underpayment goes unrecorded.

No more than a customer on your pre-Xero list who doesn't pay at all. If you choose not to put the entries on Xero then you'll have to use your spreadsheet as a control.

It's just totally illogical to create a bank receipt for £585 when you haven't recieved that money.

 

[ph001]

I think the answer here then is to import all sales and bills from April onwards, rather than just July. We don't have any debtors or creditiors over 90 days so this should then capture everything and allow me to process properly in Xero.

 

[David Griffiths]

You should only import the invoices and bills that were actually unpaid on 30 June

 

[ph001]

Gotcha. Many thanks.

 

[ph001]

Quick update. I think importing these transactions has created a problem in my conversion balances.

What I should have done I think is entered them as historical invoices, bills & credit notes as described here...

https://help.xero.com/uk/#Setup_HistoricalInvoices

 

[ericbrown]

Nice thread regarding underpayments in Xero, I have get great knowledge from your discussion......