A customer’s total balance can be right while the list of unpaid invoices is wrong. That happens when receipts are recorded against the customer but not against the invoices they pay.
Allocate every receipt
When money comes in, record which invoices it settles. A receipt can pay several invoices, part of one invoice, or be held as an advance for invoices not raised yet.
Why it matters
- Follow-up calls are about the right invoices.
- Ageing reports show what is really overdue.
- Disputes are easier to resolve when each payment is tied to specific bills.
Handling advances
Record an advance as a receipt that is not yet allocated. When the invoice is raised, apply the advance to it so the invoice shows the correct balance due.