Introduction
Welcome to this comprehensive guide on Advance Payments in Empress. This practical guide will help you understand the feature, its applications, and how to leverage it for effective business transactions.
Introduction to Advance Payments
Advance Payments are payments made or received before an invoice is issued. This occurs in transactions involving significant value items. In Empress, managing these payments is seamless and user-friendly, ensuring your business’s financial operations are efficient and accurate.
Why are Advance Payments Important?
Let’s consider a scenario: A customer, Jane D’Souza, orders a high-value furniture item costing ₹24,000. To secure the order, she pays an advance of ₹10,000 in cash. In Empress, this is recorded through the Payment Entry feature. This feature allows you to create a Payment Entry for the advance amount directly from a Sales Order. Alternatively, you can create a standalone Payment Entry via Purchase Order.
Note: Any payment not linked to an invoice is considered an advance payment. Advance payments are visible in the Accounts Receivable and Payable reports.
Getting Started with Advance Payments
Before recording an advance payment, please ensure that you have:
- Party (Customer/ Supplier)
- Payment Account (Bank or Cash account)
How to Create an Advance Payment Entry
Follow these steps to create an Advance Payment against a Sales Order:
- Go to the Sales Order and click on Make > Payment Entry.
- Confirm or set the accounts.
- Save and submit the form.
In Empress, any payment entry not linked to an invoice is automatically considered an advance payment. For instance, if a customer pays a cash advance of $5,000, it is recorded as a credit entry against the customer’s Receivable account. To maintain balance in the double-entry accounting system, $5,000 is debited against the company’s cash account.
Allocating Advance Payment in Invoice
When creating an invoice, you can verify if the party has made an Advance Payment.
Once you click on the Get Advance Received button, Empress fetches all Advance Payment Entries for that party. After retrieving the entries, you can allocate the advance amount against this invoice. This allocation immediately reduces the Outstanding Amount for that invoice.
Ensure you save and submit the Sales Invoice after making these changes.
Conclusion
Managing advance payments in Empress is a simple yet crucial aspect of your business’s financial processes. By understanding and effectively using this feature, you can maintain accurate financial records, ensure efficiency, and streamline your operations.
For further assistance or resources, please visit the Empress Help Center or reach out to Empress Support.