I have a regular customer who has paid one of his invoices twice. How do I transact the adjustment when he pays only the balance on his next invoice rather than the full amount? Do I need to raise a debit/credit note? otherwise the latest invoice will have a balance even though the customer total will be zero
Tag the second payment as “payment from a customer” in the same way as usual, but since there’s no invoice to assign it to choose “pay down multiple invoices or assign to an account”, and assign it to the customer’s account.
This will leave the amount showing on their account as a “prepayment”, and when you create their next invoice you can log payment and “apply from credit” to assign the prepayment to that invoice. If the new invoice is for more than the prepayment then the invoice will show as part-paid with the correct outstanding balance, if the new invoice is less than the prepayment then it’ll show as fully paid and you can do the same thing again next time round to use up the remaining prepayment balance against the next next invoice.
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How does this overpayment reflect in the ledgers, for VAT cash Accounting? and when the customer paying is invoiced both Standard & Zero Rated.
The payment will be considered as “received” (in terms of which quarter it reports in) on the date that they paid. When you enter a payment that is unallocated you have to select a VAT rate, and if the payment is still unallocated at the point when you submit the relevant VAT quarter then that’s the rate at which it will be reported, but if you’ve allocated it to one or more invoices (even a later dated invoice) before submitting that quarter then the VAT will be determined by the invoice values.
I believe that if you were to submit a return that includes an unallocated payment that was logged as 20%, and you subsequently allocate that payment to an invoice at a different rate, then the next return will be adjusted automatically to compensate. But I’m not on cash accounting myself so will need someone with direct experience to confirm this.
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