Two views of the same debt
The customer's account is a running balance: everything you billed, less everything received or returned. Each invoice also has its own Due amount and Status.
| View | How it counts |
|---|---|
| Balance (the customer list, customer ledger and outstanding summary) | All debits less all credits. It does not care which invoice a receipt was for |
| Due amount and Status of an invoice (the Sales Invoice list) | The invoice total, less the receipts that name that invoice, less its returns |
| Customer ageing, Due status on the customer, and the credit check's "oldest unpaid bill" | All money received is applied to the oldest bills first, whichever invoice it was for |
So a customer can owe 10,000 in total, yet the invoice list shows a recent invoice Unpaid because the money that came in was entered as an advance, while the ageing report says the old bills are settled and the recent one is open. Neither is wrong: they answer different questions.
What each action does to an invoice
| Action | The invoice's Due amount | The customer's balance |
|---|---|---|
| Receipt Against voucher naming the invoice | Falls by the amount (and any TDS) | Falls |
| Receipt made together with the invoice (cash sale, Pay bill) | Falls: it names the invoice | Falls |
| Advance or Customer receipt (no invoice named) | Unchanged | Falls |
| Receipt on a sales order | Unchanged until the invoice is made from the order, then falls | Falls |
| Sales return naming the invoice | Falls by the returned amount | Falls |
| Cancel of the invoice | The invoice is cancelled (see its status below) | Falls by the whole invoice. Receipts already made stay, as credit |
| A cash sale to the cash ledger itself | Always 0 | Unchanged (the cash ledger is not a customer) |
The invoice Status
| Status | When |
|---|---|
| Unpaid | Nothing has been received against it or returned: the due amount equals the net amount |
| Partial | Part paid |
| Paid | Due amount is 0 and there is no return; a cash sale with nothing due is also Paid |
| Paid With Return | Paid, and part of it was returned |
| Partial Return | Part of it was returned and money is still due |
| Returned | A full return |
| Reversed | The invoice was cancelled while an amount was still due. A cancelled invoice that had been fully paid (any cash sale) keeps showing Paid (Cancel an invoice) |
Matching an advance to an invoice
An advance has not cleared any invoice by itself. Your accountant matches it to the invoice; until then the invoice list keeps showing the invoice as owing, while the ageing report already treats the money as paid. Do not make a second receipt for money already taken unless the cash really came in again: it would count twice.