Applying Payments to Open Invoices

In order for your customer statements and invoice aging to be accurate, you must reconcile your customer accounts (e.g. apply payments received from customers to the invoices being paid). The Tools>Apply command automates the process of reconciling accounts. When this command is used for the purpose of reconciling customer accounts, it can be run on the Accounts Receivable account table, or on the Bank Deposit journal.

NOTE: For information on Accounts Payable please see Applying Payments to Open Invoices.

The Apply command enters the reference value of the payment in the reconcile fields of the payment and the invoices being paid.

Running the Apply Command on the Accounts Receivable Account Table

If no block is marked on the account table, the Apply command will reconcile the account that is currently active. If a block of accounts is marked on the account table, the Apply command will reconcile all the accounts in the block. If the Confirm/edit payment applications field on the Apply prompt is set to yes, you can move through the account table and choose the accounts that are to be reconciled.

To run Apply on the Accounts Receivable account table:

Activate the customer account you want to reconcile. If you want to reconcile more than one account, use the Block>Start and Block>End commands to mark the accounts to be reconciled in a block. NOTE: If you want to choose the accounts to be reconciled on an account-by-account basis, activate the first account you want to reconcile and set the Confirm/edit payment applications option to yes in the Apply command prompt.
Issue the command Tools>Apply and fill in the prompt as follows:

Hold invoices text	Enter the text string (e.g. HOLD) that has been placed somewhere in the description fields of invoices that are not to be reconciled. If there is no hold text in the description fields, or you want to ignore any hold text, leave this field blank.
Apply Partial Payments	If partial payments are to be applied (and boomerang transactions added if there is a remainder), enter `yes` (press <F3> to select). If partial payments are not to be applied (and no reconciliation is to be done if a payment cannot be applied evenly), enter `no`.
Accounts with reconcile errors	If you want to be warned if the reconcile balance of the account is not zero prior to reconciliation, enter `warning` (press <F3> to select). If you want the reconciliation to proceed despite the reconcile balance of the account not being zero, enter `process`. If you want the command to abort with an error if the reconcile balance of the account is not zero, enter `error`.
Apply method	To reconcile payments with invoices on a first in, first out basis, enter `FIFO` (press <F3> to select). To reconcile payments with invoices on a last in, first out basis, enter `LIFO`. To reconcile payments with invoices by reference, enter `reference`. (NOTE: To reconcile by reference, invoice references are placed in the description fields of payment items, either at the account ledger or transaction detail level. When more than one reference is entered, the references are separated by commas.)
Confirm/edit payment applications	To review and have the option of making changes to the reconciliation that will be done by the Apply command, enter `yes` (press <F3> to select). To reconcile the account without reviewing the reconciliation, enter `no`.

Click the <Continue> button to proceed with the reconciliation.
If Confirm/edit payments is set to yes, a table showing the reconciliation that will be done is displayed.

Payments to be applied are listed at the bottom of the table. You can edit the apply amount for each of the invoices to be reconciled. (NOTE: If a non-zero apply amount generates a remainder, a boomerang transaction is automatically added to the customer account.)
If there is more than one payment, you can click the <Previous Payment> and <Next Payment> buttons to cycle through them and view the reconciliation that will be done for each. NOTE: If you cycle through payments using <Previous Payment> and <Next Payment>, any changes that you have made to the apply amounts for the current payment are discarded. If you make changes but then want to revert to the original reconciliation as determined by the Apply command, click the <Undo Changes> button.
A separate reconciliation table is displayed for each account, starting with the account that was active when the Apply command was issued or, if a block was marked, the first account in the block. You can use the <Previous Account> or <Next Account> buttons to skip the reconciliation for the account that is currently displayed, in which case any changes that you have made to the reconciliation are discarded.
To reconcile the current payment for the current account, click the <Apply> button. If there are any other payments for the account, the oldest remaining payment will become the current payment.
To reconcile other accounts, use the <Previous Account> and <Next Account> buttons to move through the accounts on the account table.
When you are done reconciling accounts, click the <Dismiss> button to end the Apply command.

Running the Apply Command from the Bank Deposits Journal

The Apply command can be run from the Bank Deposits journal to reconcile checks received from customers with the invoices that are being paid on a check-by-check basis.

To run Apply from the Bank Deposits journal:

Activate the deposit transaction that contains the check to be reconciled with the invoice(s) being paid in the corresponding customer account. Activate the check to be reconciled in the deposit transaction detail (e.g. the list of checks in the bottom pane that make up the deposit).
Issue the command Tools>Apply and fill in the prompt (see Running the Apply Command on the Accounts Receivable Account Table).
Click the <Continue> button to proceed with the reconciliation.
If Confirm/edit payments option is set to yes, a table showing the reconciliation that will be done is displayed.
The payment to be applied is listed at the bottom of the table. If required, you can change the apply amount. (NOTE: If a non-zero apply amount generates a remainder, a boomerang transaction is automatically added to the customer account.) If you make changes but then want to revert to the original reconciliation as determined by the Apply command, click the <Undo Changes> button.
To reconcile the check with the invoice(s) being paid in the corresponding customer account, click the <Apply> button.
Click the <Dismiss> button to end the Apply command.

Additional Information

A boomerang transaction has no net effect on the account balance. The negative item generated by the boomerang transaction is closed to adjust the opening balance to zero. The positive item remains open. It is the outstanding amount remaining on the invoice, and it will be closed when the next payment is applied. This approach ensures that aged accounts receivable reports are accurate.

To check if the reconcile balance of an account is zero, activate the account ledger and issue the View>Closed command. The final running balance on the closed view of the account should be zero.