Understanding Payment Statuses & Outstanding Accounts
Welcome back, dear doers. In this video, we'll explore customer and vendor payments as well as the outstanding receipts and outstanding payments accounts. In Odoo, we have multiple statuses to help us keep track of our payments.
First, an invoice or bill is not paid. This one is pretty self-explanatory. Next, if part of the invoice or bill has been paid, but it isn't fully paid, the status will be partially paid. Once the full payment has been registered, the status becomes in payment and finally after it goes through bank reconciliation where the payment is reconciled with a bank transaction, the status finally becomes paid.
The outstanding payments and outstanding receipts accounts can be used as temporary holding accounts for the time between when a payment is registered in Odoo and the bank reconciliation process where the payment is reconciled with a bank transaction. This way when the payment is registered in Odoo, it hits the outstanding account which is then balanced once the payment and the bank transaction are reconciled with each other.
That sounds like a lot of steps. Is all of that necessary?
It may sound like a lot, but this process allows greater visibility into your accounting. Let's say that you want to know how much money you can expect to be coming into your bank account soon from payments that your customers have sent but haven't reached your bank yet. As long as you've been registering these payments in Odoo and you're up to date on reconciling everything that has already reached your bank, the balance of the outstanding receipts account will show you just that.
Note that using the outstanding payments and outstanding receipts accounts is optional. But if these fields are left blank, ODO will not create journal entries when we register payments.
Configuring Payment Methods & Outstanding Accounts
Let's take a look at all this in our Bloom database. The first thing we'll do is we'll take a look at our bank journals configuration. To do this, we can go to Accounting, Configuration, and Journals and select our bank journal. In the incoming payments and outgoing payments tabs, we have each of our payment methods and the option to set outstanding accounts. If this isn't displayed by default, you can choose to display it using the additional options menu here.
We've set up two different manual payment methods, each with a different behavior. The first one uses a separate outstanding account which means that it will act as that temporary holding account so that we can keep track of all the payments that we've registered but not yet reconciled with a bank transaction. The second one doesn't have any outstanding account. So this won't create any journal entries.
Registering Batch Payments for Multiple Invoices
Next, let's take a look at the different ways to match a payment to an invoice or a bill. We'll open our invoices by going to customers invoices. And we can see we have our invoices with different payment statuses. Most of them are paid and then we have a couple that are in payment because they haven't been reconciled with bank transactions yet. We also have one that is partially paid and we have some that are not paid.
If we want to register full payments for multiple bills or invoices at once, we can just select them and click pay.
What does the group payment options do?
So the group payments option will create only one payment per partner instead of one per individual bill or invoice. Now once we confirm this, Odoo will take us to the list view of the payments that we've just created. And we can view them here and we can always find them later by going either to payments directly or back to our invoices, opening one of the invoices that we've just paid. And down here is this information icon where we can actually see the link to the payment that we've just registered. Here we have the ability to unreconcile the two if we registered the payment on the wrong invoice or bill. And if we click on view, we'll see the payment that we've just created with smart buttons back to the invoice and to the payments journal entry.
Paying a Single Invoice Directly
If we want to register payments one at a time instead of in mass, we have two separate options. First, we can do it directly from the invoice or bill. So, if we open this invoice for Maria, we can click on the pay button, we can edit any of this information. And in this case, I'll use the payment method without an outstanding account. And we'll use that to demonstrate how there will be no journal entry created. So, when we create payment, we can see the payment status of this invoice is updated to end payment. But if we scroll down, we see there's no information icon with the payment journal entry details since the payment did not create a journal entry. We can still access the payment itself via the smart button right here.
What's the benefits of registering a payment directly on the invoice?
So the benefit to this method is that this payment is automatically matched with this invoice. And the next option, we'll see how we can register payments and then later match them with the corresponding invoice or bill.
Manual Payments and Matching Credits
This second option is to register a payment manually through the customers or vendors menu depending on if it's an incoming or outgoing payment that we want to register. Now, when we do this, we just need to set a partner and an amount. So, we'll say that this is for Lush for €925.65. And then we'll add the invoice reference to stay organized. And we can confirm.
Now, when we go back to an invoice from that customer, such as this one, we can see that we have this banner at the top telling us that we have outstanding credits that we can allocate to this invoice. And at the bottom, it will even show us a list of our outstanding credits for this customer. And we can select which one we want to allocate to this invoice.
Alternatively, instead of matching the payment to the bill from the bill itself or the invoice, we can go to Accounting, Reconcile. And here we have a list of journal items from invoices, bills, and payments. By default, they're grouped first by the account, and then by partner. And here, what we want to do is match the journal item of the payment with the journal item of the invoice or bill. So we can look at the journal items that hit our customers account, specifically ones that are coming from Lush Horizons. And here we can either use this auto-reconcile feature or we can just manually select the two journal items and click reconcile.
Distinguishing Payment vs. Bank Reconciliation
So there's two important things to note here. One, since we're reconciling journal items, this only works when the payment has created a journal entry. So, you'll have to set an outstanding account on the payment method that you use. And two, this menu is for payment reconciliation. It's just the connection between the bill or invoice and the registered payment. Bank reconciliation is a separate process where we match the bank transactions with these payments. And it's the bank reconciliation that changes the payment status from in payment to paid.
Skipping Bank Reconciliation for Direct Payments
What if I don't want to reconcile my payments with my bank transactions later on?
So, I'd always recommend reconciling your bank transactions for full transparency, but there may be some cases like on a cash journal for example where you might not record transactions and you might want to skip the bank reconciliation process entirely. In that case, what we can do is we can go to that cash journal and we'll go into the incoming payments tab and find the outstanding receipts account field. And what we'll do is we'll set the journal's cash account itself as the outstanding receipts account. And we'll do the same for the outstanding payments account in the outgoing payments tab.
Now we can go to our remaining invoice that is just partially paid. And when we register a payment for this invoice, we'll register it in the cash journal and using the payment method that we just modified. And we can see that the invoice's payment status is now paid, not in payment. And if we go to the payment that we just made in the cash journal and then to its journal entry, we can see that it directly hit the cash account itself instead of going to another outstanding payments account. So you won't need to reconcile this payment.
Summary of Concepts
So to review, we first explored the different payment statuses, not paid, partially paid, in payment, and paid. Then we looked at the different options for registering payments and matching them or reconciling with their invoice. That's registering the payment on the invoice directly or manually creating a payment which can then be matched with the invoice either on the invoice directly or through the journal items reconciliation view. And finally, we broke down the three options for our outstanding accounts. We can leave them blank to create no journal entries at all when we register a payment. We can set an outstanding account that we'll use to hold that balance of the payments that we've registered in Odoo but we haven't reconciled with a bank transaction yet. Or we can set the main account of the bank journal or cash journal in our example to still create a journal entry when we register the payment but by going straight to the main account of the journal. We won't have to reconcile the payment with a bank or a cash transaction. So the status will go straight to paid. That's all for this video. Be sure to check out our other documentation and our other videos for more information. This has been your Pal. I'll see you in the next one.
