Customer payments and allocations: understanding what has actually been settled

Receiving money and applying money are related but distinct tasks. The receipt records the payer, date, payment method and receiving account. Allocation connects that amount to the invoice or other receivable it settles. A cheque also needs lifecycle tracking because possession of a cheque and cleared bank funds are different events.

DNA Customer Payment supports bank, cash and cheque methods, invoice allocations, multi-currency and retention collection. The selected party and account must match the real transaction. Third-party payer settlement has its own claim selection rather than being treated as the customer's ordinary balance.

Receipt and settlement

Money received identifies a financial event. Allocation identifies the debt that event settles. The distinction becomes important when a customer has several invoices, makes a partial payment, or sends a payment without a clear reference.

A receipt for USD 5,000 does not prove that every USD 5,000 invoice is paid. The relationship must be established. Without a correct allocation, one invoice may appear overdue while another is incorrectly treated as settled.

A practical example

A customer sends 1,500 for invoices of 1,000 and 800. Applying 1,000 to the first and 500 to the second leaves 300 outstanding. The receipt amount is 1,500; the total original invoices remain 1,800. A promise to pay the final 300 is not another receipt.

Where cheques are involved, their recorded status also matters. A cheque received and a cheque successfully cleared do not necessarily represent the same stage of collection. The payment method and its current state should remain visible in the explanation.

DNA's allocation model

Allocation matches open debits and credits for the same party. It answers which debt a receipt or credit settles. Releasing an allocation changes that match; it does not mean the customer paid again or that money left the bank.

DNA's allocation workbench shows both sides, remaining amounts, the current Applying amounts and party position. Auto-match produces a selection or proposal for review; it does not post. Allocate posts immediately, and the workbench has no drafts. Currency and settlement category must match: the customer's own share, a third party's share and retention are settled separately.

The workbench is useful when several open amounts must be matched coherently. A proposed automatic match saves effort, but the commercial references still need to make sense. Matching equal amounts alone does not prove that the customer intended to settle those particular invoices.

Correcting the match without inventing another payment

A 500 receipt was applied to the wrong invoice. Reverse the allocation with a reason, confirm that the 500 becomes unapplied and the original invoice reopens, then allocate it to the correct invoice. The original receipt remains the evidence of cash received.

This example separates the receipt from its allocation. Releasing a match makes the amount available for a different supported settlement; it does not imply that the company received another USD 500 or refunded the original amount.

Settlement categories and remaining balances

Customer liability, a third party's share, and retention can have different settlement responsibilities. Combining them indiscriminately can conceal which party still owes money. Currency also needs to be consistent with the supported allocation.

An amount still collectible should remain identifiable rather than be written off merely to close a document. A genuine write-off is a separate commercial or accounting decision with its own reason and authority.

The useful end position explains the original debts, actual receipts or credits, applied amounts, and remaining open balances. DNA's connected payment and allocation records provide the evidence for that explanation.