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Xero - customer and supplier payments on account

Xero - customer and supplier payments on account

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Hello,

I like Xero but some of the basic sales and purchase ledger functionality seems to be extremely poor and has not been addressed for some time.

All other systems that I have used allow for payments on account (sales and purchase ledger)................Xero does not. So statements issued do not include payments on account. How do other's get around this?

A client's customer has asked for an activity statement today showing a significant sum due which the client has sent from Xero. This did not include a payment on account which my clients customer is now using as a reason to delay payment i.e. he wants to review the activity in detail....................not a great time saving tool!

Not being able to allocate credit notes as part of the process of matching payments is also a pain........

Surley this basic functionality should be sorted ASAP?

 

 

Replies (11)

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By JDBENJAMIN
20th Nov 2019 09:48

I regularly say on this forum that Xero has no proper sales or purchase ledger, and I recommend not using it for that and other reasons. This is one example of why.

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By david.bransbury
20th Nov 2019 10:08

Xero calls payments on account "overpayments". Yes they have been moaned about this.

If you post correctly they appear on the statements and when you post invoices you can allocate the money received in advance.

Us, our clients and I assume 500,000 businesses using Xero have no major problems with the Xero sales ledger and purchase ledger.

(Yes the credit note/matching is a whinge.)

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Replying to david.bransbury:
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By CWservices6064
20th Nov 2019 10:13

Thanks for coming back on this. So how should these be posted to correctly show on the statements and be processed correctly for VAT cash accounting?

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By Cloudcounter
20th Nov 2019 10:17

"Overpayments" is not (for me) the correct option - there is also an option for "prepayments", which in my opinion is correct. I always distinguish the two by using overpayments for amounts that will be repaid to the customer - usually mistakes - and prepayments for payments on account.

When you receive a payment on account, post it against the customer name with the prepayment option selected from the drop down box in the receive money dialogue - you will normally have to use the add details option to see this. You can post the net amount to any nominal ledger code - I have a separate code for income in advance. When the invoice is raised for the goods or service you can allocate the prepayment to that invoice. The original posting to income in advance is then reversed.

It's all explained in Xero Central, and works very well, correctly accounting for VAT on receipt

https://central.xero.com/s/article/Record-a-prepayment

(You might need to be logged in to Xero to use that link)

The ledgers in Xero work fine for us and for all of our clients.

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Replying to Cloudcounter:
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By CWservices6064
20th Nov 2019 10:21

Thanks for taking the time to reply.

So posting a prepayment for a customer would result in this showing on any statement issued to him showing activity or the balance due?

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Replying to CWservices6064:
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By CWservices6064
20th Nov 2019 10:31

Just tested this and seems to work fine. Thanks!

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Replying to Cloudcounter:
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By CWservices6064
20th Nov 2019 10:52

Just checked the statements generated by Xero and the Contact 'balance' both of which ignore the the payments on account as an 'invoice' and 'payment' have been generated cancelling each other out. So, in this case, the statement and contact balance shows as £60k, rather than £60k less £30k paid on account i.e. £30k..........is there a statement report that I am missing that shows the correct position for a customer with payments on account i.e. balance due £30k?

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Replying to CWservices6064:
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By daniel_
20th Nov 2019 11:38

If the correct situation is £60k invoiced and £30k paid then you should have one invoice raised for £60k and one payment for £30k.

The £30k payment transaction can be created from the bank rec screen by applying to the £60k invoice and clicking 'split' to make the invoice part paid. Or it can be created from the invoice page and reconciled later.

Creating a Prepayment will create an additional sale as you have described. The sale is reversed when the prepayment is applied to an invoice.

Creating an Overpayment will not create an additional sale and is more like an unallocated payment on account.

Prepayments are to be used when an invoice has not been raised yet, but money has been received in advance and for VAT purposes a sale is to be recorded at the earlier of invoice date and payment date.

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Replying to daniel_:
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By CWservices6064
20th Nov 2019 15:36

Thanks Daniel,

The client does not want to allocate the payments to invoices yet as there is a dispute. He simply wants to provide his customer with an account 'history' or 'statement' showing all invoices to his customer and all receipts with the correct balance.

Is this possible in Xero?

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Replying to CWservices6064:
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By daniel_
20th Nov 2019 16:22

Yes it's possible, but not without creating each payment as an 'overpayment' transaction.

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Replying to daniel_:
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By CWservices6064
25th Nov 2019 10:39

And posting as an overpayment will handle VAT correctly for standard and cash accounting for VAT?

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