Advance as Liability / Asset in ERPNext: Booking Advances Separately
From version 15, ERPNext supports booking Customer advances under Liability and Supplier advances under Assets. This keeps advances out of your regular receivable/payable balances and in their own accounts. These advances are only allowed through a Payment Entry.
NOTE
Advance accounts are restricted to the company currency.
1. Prerequisites
To use this functionality, create these first:
- A Receivable-type account under Liability for the Customer, and a Payable-type account under Assets for the Supplier.
- Maintain the above accounts in Company → Accounts → Advance Payments section.
2. How to create advance payments under Liability / Assets
Once a Sales Order or Purchase Order is submitted, you’ll find an option to create a Payment against it. You can also create a new Payment Entry and select the values manually (such as the Party and payment account). Here are the steps for an advance against a Sales Order:
- Go to the Sales Order and click Make > Payment Entry.
- Set the required details and Save. On save, the system updates the ‘Paid To’ / ‘Paid From’ account with the advance account maintained in the Company master.
- Submit.
3. Allocating advance to invoices
Allocation works in the same way as for normal advance payments, you allocate the advance against the relevant invoice as usual (see the standard Advance Allocation documentation for the detailed steps).
Limitations
Currently, this type of advance booking is only supported for Customer and Supplier party types.
TIP
Set the advance accounts in the Company master before you start taking advances. With them in place, the Payment Entry fills in the correct ‘Paid To’/’Paid From’ account automatically, so advances land in the right Liability or Asset account every time, with no manual selection.
Related Topics
- Normal Advance Payment
- Payment Entry
- Sales Order
- Purchase Order
- Company
SUMMARY
From version 15, ERPNext can book Customer advances under Liability and Supplier advances under Assets, only through a Payment Entry and only in the company currency. First create a Receivable-type account under Liability (Customer) and a Payable-type account under Assets (Supplier), and maintain them in Company → Accounts → Advance Payments. Then create a Payment Entry from a Sales/Purchase Order (or manually) on save, the ‘Paid To’/’Paid From’ account is set to the advance account from the Company master and submit. Advances are allocated to invoices as normal. This is currently supported only for Customer and Supplier party types.
