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Bookkeeping: Allocating Payments To Invoices

It can initially be overwhelming ...


Posted by Alison Mead on 14/06/2021 @ 8:00AM

When you are just starting out using a bookkeeping package to raise invoices and log expenses, you may not realise the full implication of making sure you log payments and receipts against the correct invoices in your system ...

If this is all a bit overwhelming for you then why not arrange one of my bookkeeping handholding sessions?

If this is all a bit overwhelming for you then why not arrange one of my bookkeeping handholding sessions?

copyright: antonioguillem / 123rf

If you are using the full features of your package, whether it is Xero or Sage50c, to raise invoices, track receipts and product statements then making sure you are accurate is of extreme importance.

"No matter how automated your systems
might be, it needs a human touch!"

Imagine the scenario where you have raised three invoices to the same customer, and then you have received a payment covering two of them, but rather than double-check which invoices they think they have paid, you just allocate their payment to the oldest invoices.

Then you send them a statement or call them to chase the payment for the third invoice and they look at their system and say, "But we have already paid for that one!" It might be that one of the earlier invoices never made it through to the accounts department and now you have to spend time looking into the problem and explaining that they owe you for the older invoice. It can cause confusion and problems on all sides.

By asking for a remittance advice from your customers, or just asking them to clarify what they are paying via email when you get a payment from them, just keeps you on good terms with their accounts department and gives you a heads up sooner rather than later that an invoice hasn't made it through to the correct person to be paid.

If you have taken over the bookkeeping from someone who was not recording everything accurately, it can take a bit of time and detective work to get the accounts sorted and looking neat!

Try running a debtors (accounts receivable) or creditors (accounts payable) report and review the details on the report as a first step. If you have invoices and credits or payments in advance showing which cancel each other out, you may need to do some allocating in the accounts package to keep everything neat and tidy.

If this is all a bit overwhelming for you, or you feel you need support in how to make the corrections you need, then why not arrange one of my bookkeeping handholding sessions and we can go through the accounts together and tidy any messes?

"I've written more on this subject!"

You might also find my previous posts on Bookkeeping For Utility Bills and Do You Know, About My Bookkeeping Handholding Service? quite useful.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.

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About Alison Mead ...


Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.

She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.

Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.

You know what they say: if you want something done well ask a busy person!


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