Overview

Payment reconciliation is a critical process in any accounting system, ensuring that payments are accurately matched with their corresponding invoices. In iVendNext, this process is streamlined through both manual and semi-automated reconciliation tools. This article will guide you through the steps of matching payments with invoices using iVendNext’s Payment Reconciliation feature, helping you understand how to effectively manage your accounts receivable and payable.

What is Payment Reconciliation?

Payment reconciliation is the process of linking payments received or made to their corresponding invoices. This ensures that all transactions are accurately recorded, and outstanding invoices are properly tracked. In iVendNext, payment reconciliation is particularly useful in complex scenarios, such as when customers make block payments or payments based on a schedule that isn’t directly linked to specific invoices.

Why is Payment Reconciliation Important?

1. Accuracy in Financial Records: Ensures that all payments are correctly allocated to the right invoices, reducing errors in financial reporting.

2. Improved Cash Flow Management: Helps in tracking outstanding invoices and understanding the financial health of the business.

3. Compliance: Maintains accurate records for audit purposes and ensures compliance with accounting standards.

How to Match Payments with Invoices in iVendNext

Step 1: Accessing Payment Reconciliation

To begin the payment reconciliation process, navigate to:

• Home > Accounting > Accounts Receivable > Payment Reconciliation

Step 2: Selecting Company and Party

1. Select a Company: Choose the company for which you want to reconcile payments.

2. Select a Party Type: Choose whether the party is a customer or supplier.

3. Select the Party: Choose the specific customer or supplier. The receivable/payable account will be automatically selected based on the party type.

Step 3: Selecting Bank/Cash Account

• Select the bank or cash account against which the payments need to be reconciled. This ensures that the system fetches the correct payment transactions for reconciliation.

Step 4: Filtering Records (Optional)

If you want to narrow down the records, you can apply filters such as:

• Date Range: Filter invoices and payments within a specific date range.

• Amount Range: Set minimum or maximum amounts for invoices and payment transactions.

Step 5: Fetching Unreconciled Entries

• Click on the Get Unreconciled Entries button. This will fetch all unlinked invoices and payment transactions for the selected party.

• The invoices and payments will be displayed in separate tables for easy reference.

Step 6: Allocating Payments to Invoices

1. Manual Allocation: Select specific invoices and payments to allocate manually. This is useful when you want to match specific payments to particular invoices.

2. Automatic Allocation: Click on the Allocate button without selecting any entries to allocate all payments and invoices automatically. The system will use the FIFO (First-In-First-Out) method by default.

Step 7: Reconciling Allocated Entries

• Once the allocation is complete, review the Allocated Amount to ensure it matches the intended reconciliation.

• Click on the Reconcile button to finalize the reconciliation. You will receive a confirmation message saying “Successfully Reconciled”.

What Happens After Payment Reconciliation?

1. Reconciliation Against Payment Entries

• If the invoices are reconciled against a payment entry, no journal entry is created. This is because payment entries are already linked to their respective transactions.

2. Reconciliation Against Credit/Debit Notes

• If the invoices are reconciled against a credit or debit note, a journal entry is automatically created. This is necessary because credit/debit notes do not have linked transactions. The journal entry reflects the adjustment of the credit/debit note against the specific invoice.

Best Practices for Payment Reconciliation

1. Regular Reconciliation: Perform payment reconciliation regularly to avoid a backlog of unmatched payments and invoices.

2. Use Filters Wisely: Apply filters to narrow down the records, especially when dealing with a large number of transactions.

3. Review Allocations: Always review the allocated amounts before finalizing the reconciliation to ensure accuracy.

4. Leverage Semi-Auto Reconciliation: For large volumes of transactions, use the Semi-Auto Payment Reconciliation feature to save time and reduce manual effort.

Conclusion

Payment reconciliation is a vital process in maintaining accurate financial records and ensuring smooth cash flow management. With iVendNext’s Payment Reconciliation tool, you can easily match payments with invoices, whether manually or through semi-automated processes. By following the steps outlined in this article, you can ensure that your accounts are up-to-date and accurate, helping you make informed financial decisions.