A customer's position is built from five kinds of document: invoices (they owe you), payments, credit notes, refunds and advances (you owe them or they have paid). This page explains, in one place, how each of them changes what the customer owes, which number is shown where, and why two reports can legitimately show different figures for the same customer on the same day. Read it when a balance "looks wrong" before you correct anything.
It is a guide to how the pieces fit. The step-by-step pages for each document are Invoices, Payments, Credit notes, Refund receipts and Customer advance payments.
Where to find it
There is no menu item of its own; the numbers appear on:
| Place | URL | What it shows |
|---|---|---|
| An invoice's page | /ar/invoices/{id} |
Paid, Credits Applied and Balance Due for that invoice |
| A credit note's page | /ar/credit-notes/{id} |
Remaining credit, Allocations, Refund history |
| The customer's profile | /customers/{id} |
The summary cards and the receivable ledger |
| Reports → Customer Statement | /reports/customer-statement |
Every posted movement for one customer, with a running balance |
| Reports → Receivables: Customer Balance Summary, Open Invoices, AR Aging Summary | /reports/… |
Balances for all customers at a date |
The building blocks
| Document | Posted journal (base currency) | Changes the invoice's balance? | Changes the customer's receivable? |
|---|---|---|---|
| Invoice | Dr Accounts Receivable, Cr Revenue and Output VAT | It is the balance | Increases it |
| Customer payment (allocated) | Dr Bank, Cr Accounts Receivable | Yes, lowers the invoices it is allocated to | Decreases it |
| Credit note | Dr Revenue and Output VAT, Cr Accounts Receivable | No — only when you apply it | Decreases it as soon as it is posted |
| Applying a credit note | No new base-currency journal | Yes, lowers the invoice it is applied to | No further change (already counted when posted) |
| Refund receipt | Dr Accounts Receivable, Cr Bank | No | Increases it again (the credit is paid out). The credit note's remaining credit and status (for example Refunded) update as soon as the refund is posted, and go back (for example to Unapplied) as soon as it is voided |
| Customer advance (funding) | Dr Bank, Cr Customer Advances (a liability) | No | No — it is a separate liability |
| Applying an advance | Dr Customer Advances, Cr Accounts Receivable | Yes, like a payment | Decreases it |
| Sales receipt (cash sale) | Dr Bank, Cr Revenue and Output VAT | Not applicable | No — never creates a receivable |
Drafts have no accounting effect at all. A Void or cancelled invoice or credit note is left out of the customer statement, the aging reports and opening balances, so a document that was cancelled never keeps a customer in debt.
How an invoice's balance is worked out
An invoice's Balance Due is:
invoice total − posted payment allocations − applied credit notes − applied advances (recorded as settlement payments)
Only posted items count, and only up to the report or statement date. A draft payment, a draft credit note or an unapplied credit note does not lower any invoice. This is also what drives the Overdue status: an invoice is overdue when it is past its due date and still has more than 0.01 left after payments and applied credit.
The Open Invoices report shows the pieces separately: Total, Paid, Credits Applied and Balance Due. An invoice that is fully settled by an applied credit note therefore leaves the report even though no payment was received.
Rules when you allocate
The same rules apply wherever money or credit is matched to an invoice:
- The customer, the organization and the currency must match. A credit note or advance in one currency cannot be applied to an invoice in another ("Select a posted invoice in the same organization and currency as this credit.", "Advance and document currencies must match.").
- The document must be posted and not draft, void or cancelled.
- The amount cannot exceed what the invoice still owes ("Allocation exceeds the outstanding document balance.") or what the credit still has ("Amount exceeds available credit.").
- A credit application's date must be in an open accounting period and cannot be earlier than the credit note's date or the invoice's date. The reversal of an advance application or advance refund cannot be dated earlier than the entry it reverses.
- If the invoice has changed since you saved a customer payment draft, the draft is not silently adjusted — see Reopening a payment draft.
- Credit that has been used is protected: you cannot void a credit note that is applied (Unapply first) or that has a linked refund (void or delete the refund first), and you cannot void an invoice that has payments, credit or an advance applied.
When two people act on the same credit at once (for example one applies it while another refunds it), SolaCount locks the credit note first and then the other document, in the same order every time, and re-checks the remaining amount. The second person gets "Amount exceeds available credit." rather than an over-used credit.
Credit refunds and advances are different things
| Credit note + refund | Advance + refund | |
|---|---|---|
| Why it exists | You owe the customer because you reduced a sale | The customer paid before you invoiced, or paid too much |
| Where the money sits | Reduces the receivable (Accounts Receivable goes below zero for that customer) | In the Customer Advances liability account, outside the receivable |
| Statement | Shown as a credit, then the refund as a charge | Shown separately: Customer advances held (liability) |
| Paid back with | Refund Receipts | Refund Advance on the advance |
| VAT | The credit note reverses the original VAT | No VAT is posted on receipt of an advance; VAT is on the invoice |
Which figure to trust where
| Where | What it counts | Includes drafts? |
|---|---|---|
| Customer list and profile cards (Total invoiced, Total Paid, Total Credits, Total Refunded, Document balance) | A working summary of documents: invoices and credit notes except void, including drafts; paid = posted payments allocated to the customer's invoices; refunded = posted credit refunds | Yes |
| Customer Statement | Posted invoices, credit notes, receipts and refunds in a date range, with an opening balance | No |
| Customer Balance Summary | The posted receivables ledger in base currency at a date | No |
| Open Invoices, AR Aging | Invoice by invoice: total less payments and applied credit at the date | No |
The profile is labelled "Customer document pipeline (includes drafts)" on the list and "Document balance (includes drafts; not posted receivables)" on the card for exactly this reason. The profile's Document balance is invoiced minus paid minus credits plus refunded. For posted receivables use the statement or Customer Balance Summary. See Customer statements and sales reports.
Why aging can be higher than the statement
An unapplied credit note lowers the customer's balance on the statement the day it is posted, but it only lowers an invoice, and therefore aging, once you apply it. If the statement says AED 3,450 and aging says AED 4,500, look for an unapplied credit note of AED 1,050 on the customer and apply it.
Worked example 1: a month with one customer (UAE, 5% VAT)
Al Noor Trading LLC, all in AED.
- 3 Oct — Invoice INV-1101: AED 10,000.00 + VAT 500.00 = 10,500.00.
- 12 Oct — Customer payment PAY-0210 of 6,000.00, allocated to INV-1101.
- 15 Oct — Credit note CN-00050 for a returned item: 1,000.00 + VAT 50.00 = 1,050.00, posted, not yet applied.
The journals are Dr AR 10,500 / Cr Revenue 10,000 / Cr Output VAT 500; Dr Bank 6,000 / Cr AR 6,000; Dr Revenue 1,000 / Dr Output VAT 50 / Cr AR 1,050.
On 15 October the figures are:
| Report | Figure | How |
|---|---|---|
| Invoice INV-1101 — Balance Due | 4,500.00 | 10,500 − 6,000. The credit is not applied yet. |
| AR Aging (as of 15 Oct) | 4,500.00 | Invoice-based |
| Customer Statement — closing balance | 3,450.00 | 10,500 charge − 6,000 payment − 1,050 credit |
| Customer Balance Summary | 3,450.00 | Receivables ledger |
| Profile Document balance | 3,450.00 | 10,500 − 6,000 − 1,050 + 0 refunded |
On 16 October you open CN-00050 and click Apply Credit to INV-1101 for 1,050.00. No journal is posted. INV-1101's Balance Due becomes 3,450.00, Credits Applied shows 1,050.00, and aging now agrees with the statement.
Worked example 2: an overpayment kept as an advance, then paid back
Gulf Star Trading owes INV-1120 of AED 5,250.00 (5,000.00 + VAT 250.00). They transfer AED 6,000.00. In Payments → Make Payment choose Apply part; retain advance, allocate 5,250.00 to the invoice, and keep 750.00.
| Account | Debit (AED) | Credit (AED) |
|---|---|---|
| Bank – Emirates NBD | 6,000.00 | |
| Accounts Receivable (Gulf Star Trading) | 5,250.00 | |
| Customer Advances (liability) | 750.00 |
INV-1120 is Paid. The customer's statement closes at 0.00 and shows Customer advances held (liability) 750.00 on a separate line. A week later they ask for the 750.00 back: Refund Advance posts Dr Customer Advances 750.00 / Cr Bank 750.00 and the advance is exhausted. Nothing touched Output VAT: the VAT was on the invoice, not on the extra money.
Worked example 3: refund against a partly applied credit
Credit note CN-00032 is AED 1,050.00. You apply AED 750.00 to INV-1060 and later refund AED 300.00 from Bank – Mashreq.
| Step | Journal (AED) | CN-00032 remaining |
|---|---|---|
| Post the credit note | Dr Revenue 1,000, Dr Output VAT 50, Cr AR 1,050 | 1,050.00 |
| Apply 750.00 to INV-1060 | none | 300.00 |
| Refund 300.00 | Dr AR 300, Cr Bank – Mashreq 300 | 0.00 |
Check at the end: the note shows nothing remaining; INV-1060's balance is 750.00 lower; the customer statement shows the credit (1,050.00 credit) and the refund (300.00 charge). If you void the refund the 300.00 returns to the credit note and a Refund reversal appears on the statement; to void the credit note you must first unapply the 750.00 and void the refund.
Tips and common problems
- Statement and aging disagree. Look for unapplied credit notes (see above) and for payments that are still drafts.
- Profile balance differs from the statement. The profile includes drafts. Post or delete the drafts, or use the statement.
- A customer shows a negative balance. They are in credit: usually an unapplied credit note that has not yet been applied or refunded. Use the customer-list filter Balance → In credit to find them.
- Credit "disappears" when you void an invoice. You cannot void an invoice with credit applied. Unapply first.
- A refund reduced nothing on the invoice. Correct — refunds pay out credit; they never settle invoices.
- Foreign-currency invoices. Credit and advances apply only in the same currency. Differences between the original and current base values are posted to the realized exchange gain or loss account when the credit is applied or refunded, not to revenue.