The Invoice Number then Invoice Category method applies payments first to all overdue balances in the oldest Invoice according to the Invoice Category sequence as set up in the customer's Accounts Receivable Group Details. If the payment amount is more than the total of overdue balances, the remainder of the payment amount is allocated to the current balance.
Example
With this method, if a customer has two overdue invoices with the same three Invoice Categories, the payment is applied to the Invoice Category with a sequence of "1" on the oldest Invoice Number first. The remaining amount of the payment is then applied to the Invoice Category with a sequence of "2" on the oldest Invoice Number. If any amount remains of the payment after paying the total balance of the oldest invoice, it is applied to the Invoice Category with a sequence of "1" on the second oldest Invoice Number.
Assumptions
Accounts Receivable Group Details | ||
Invoice Category | Sequence | |
Basic | 1 | |
Toll | 2 | |
Non-Basic | 3 | |
Balances (Invoice # 1111, 2222 are overdue.) | |||
Invoice # | Invoice Category | Amount | |
1111 | Basic | $15.00 | |
1111 | Toll | $10.00 | |
1111 | Non-Basic | $12.00 | |
2222 | Basic | $15.00 | |
2222 | Toll | $20.00 | |
2222 | Non-Basic | $13.00 | |
3333 | Basic | $15.00 | |
The customer has made a $95.00 payment.
Allocation
Since the customer's Accounts Receivable Group's allocation method is Invoice Number then Invoice Category, the allocation order would be as follows.
Payment Allocation Order | Invoice # | Invoice Category | Invoice Category Sequence | Amount |
1 | 1111 | Basic | 1 | $15.00 |
2 | 1111 | Toll | 2 | $10.00 |
3 | 1111 | Non-Basic | 3 | $12.00 |
4 | 2222 | Basic | 1 | $15.00 |
5 | 2222 | Toll | 2 | $20.00 |
6 | 2222 | Non-Basic | 3 | $13.00 |
7 | 3333 | Basic | 1 | $10.00 |
If the payment amount is larger than the total overdue amount, the remaining payment is allocated to the current balance based on the Invoice Category sequence number.