Deducting Bank Charges in a Payment Entry in ERPNext
When a customer wires a payment, the bank or payment gateway applies a transfer fee. This creates a difference between the amount the customer paid (equal to the invoice) and the amount actually credited to your bank account. In ERPNext, you can allocate that difference under the Payment Deductions or Loss section of the Payment Entry.
Use case
Here’s the scenario we’ll work through:
- Invoice amount / Customer paid = $4,810
- Bank actually received = $4,800
- Bank deducted charges = $10
The goal is a Payment Entry where the invoice is marked as fully Paid, while the bank charges are booked as a deduction.
Allocate Paid Amount
In the Paid Amount field, enter the actual amount realised in your bank account. Per the use case, that is $4,800 even though the invoice amount is $4,810.
Allocate Invoice Amount against Sales Invoice
When the Paid Amount is set lower than the invoice, the amount allocated against the Sales Invoice updates automatically in this case, it reduces. To make sure the Sales Invoice is fully paid by this entry, the Allocated Amount must equal the invoice value. So in the Payment Reference table, set the Allocated Amount to $4,810, so the invoice is marked as paid.
Allocating the Difference Amount in Deductions
Because the Paid Amount ($4,800) differs from the Allocated Amount ($4,810), a $10 difference remains unallocated to any ledger. For the debit and credit postings to match, this $10 needs an account. Since the difference is from bank charges, allocate it to the relevant account in the Deductions table.
TIP
If your debtor and bank currency differs from your company’s base currency, make sure the value in the deductions table is entered in the base currency of the company.
Final Posting
With this allocation in place:
- The invoice is marked as completely paid.
- The bank account reflects only the actual amount received, which eases reconciliation.
- Bank charges (or currency exchange gain/loss) are booked accurately through the Payment Deductions or Loss posting.
NOTE
The principle is simple: Paid Amount is what actually hit the bank, the Allocated Amount is what clears the invoice, and the Deductions entry bridges the gap. Booking the difference is what keeps the entry balanced and the invoice fully settled.
Related Topics
- Payment Entry
- Sales Invoice
- Bank Reconciliation Tool
- Exchange Gain / Loss
SUMMARY
When a bank transfer fee makes the received amount less than the invoice, ERPNext lets you book the difference as a deduction in the Payment Entry. Enter the actual amount received as the Paid Amount ($4,800), set the Allocated Amount against the Sales Invoice to the full invoice value ($4,810) so it’s marked paid, and allocate the remaining $10 difference to a bank-charges account in the Deductions table. The result: the invoice is fully paid, the bank account reflects only what was actually received (easing reconciliation), and the charges are booked accurately. If currencies differ from the base currency, enter the deduction in the company’s base currency.
