Customer advance payments

A customer advance is money a customer pays you before you invoice them — a deposit on a project, a prepayment on an order, or money paid in excess of an invoice that the customer wants kept on account. Until you apply it to an invoice or return it, the advance is a liability: it is the customer's money, not revenue.

Customer advances replace the older Retainers feature. Existing retainers remain as historical records (see Legacy retainers below); new deposits should be recorded as customer advances.

Where to find it

• Sidebar: Payments → Customer Advances (supplier prepayments are under Payments → Supplier Advances).
• URL: /advance-payments/customer; a single advance at /advance-payments/customer/{id}.
• Advances are created from the payment form: New Payment on the Customer Advances page, or Payments → Make Payment.

Availability: Advance Payments requires SolaCount Premium, Advanced or Enterprise, the feature enabled for your organization, and a ready workspace. If it is not available you see "Advance Payments requires SolaCount Premium, Advanced or Enterprise, feature enablement and a ready workspace. Approval Workflow is optional and is not required for Premium Advance Payments." Your chart of accounts also needs an active, postable Customer Advances liability account (default code 2501); otherwise "Customer advance control account is not configured."

How an advance works

The advance list shows each advance's Number, Customer, Currency, Funded, Applied, returned amount, Available Advance and Status (draft until funded, active while it has a balance, exhausted when fully used).

Record a customer advance

1. Go to Payments → Customer Advances and click New Payment (top-right). The payment form opens as a customer receipt with Record as advance pre-selected.
2. Choose the Customer, payment date, the bank or cash account it was paid into, the method, amount and currency.
3. Under Payment purpose, choose:
   • Record as advance — the whole amount becomes an advance. "No invoice or bill is required. The posted amount will remain available as an advance."
   • Apply part; retain advance — pay some open invoices now and keep the rest as an advance.
   • Apply to documents — a normal payment; it must be fully allocated to invoices ("Document payments must be fully allocated. Choose advance or mixed to preserve an available balance.").
4. If your organization uses SolaProjects divisions, you can classify the advance to a project division.
5. Save and post the payment. You see "Payment saved and posted successfully." The advance appears under Customer Advances with its Available Advance.

If approvals are configured for advance payments, funding waits for a current approval; the approval panel shows on the advance page.

Apply an advance to an invoice

1. Open the advance from Payments → Customer Advances.
2. In Apply Advance, choose the invoice. Only the same customer's posted invoices that are not paid, draft or void are listed.
3. Enter the Amount and Date, and click Apply.

You see "Advance applied successfully." The invoice's Balance Due drops and its status updates (Partially Paid / Paid). The application is recorded on the invoice as a settlement payment, so it appears in the invoice's Payments table.

Rules:

• Customer advances apply only to invoices ("Customer advances apply only to invoices.").
• The invoice must belong to the same customer and organization, use the same currency as the advance ("Advance and document currencies must match."), and be posted ("Only an eligible posted document can receive an advance.").
• The amount cannot exceed the advance's available balance ("Amount exceeds the available advance balance.") or the invoice balance ("Advance application exceeds the document balance.").
• The date must be in an open period. Advances imported as opening balances can only be applied after the migration cutover date.
• Because an applied advance counts as a payment on the invoice, the invoice cannot be voided or unposted until you reverse the application.

Refund an advance

1. Open the advance and go to Refund Advance.
2. Choose the bank or cash account (it must be an active, postable cash or bank account — "Select an active organization cash/bank account."), the amount and the date.
3. Tick I confirm this advance transaction. and submit.

You see "Advance funds return recorded." A disbursement payment is created and the available balance drops.

Reverse an application or refund

In Advance history, click Reverse on an application or refund, give the date and a reason, and confirm. SolaCount posts the opposite journal entry and restores the balances ("Advance application reversed."). A refund can only be reversed once. The reversal date must be in an open period and cannot be earlier than the application or refund it reverses ("The reversal date cannot precede the advance application." / "…the advance return.").

The funding payment of an advance cannot be reversed or deleted from the Payments area once it has funded an advance ("Use the advance refund or recovery service to reverse funded amounts.") — refund the advance instead.

Worked example (UAE, AED)

Al Noor Trading LLC pays a deposit of AED 10,000 by bank transfer for an office fit-out.

1. Fund the advance (payment purpose Record as advance):

2. Invoice the work. You post invoice INV-1042: AED 8,000 + 5% VAT 400 = AED 8,400 (Dr AR 8,400 / Cr Revenue 8,000 / Cr Output VAT 400).

3. Apply AED 8,400 of the advance to INV-1042:

The invoice is Paid. AED 1,600 remains available.

4. Refund the AED 1,600 balance:

The advance is now exhausted.

VAT on advances

SolaCount does not create a VAT tax point when an advance is received: no output VAT is posted on funding, and VAT is calculated on the invoice. Under UAE VAT rules, receiving an advance payment can itself create a tax point. If your tax advisor requires VAT to be accounted for on receipt, issue a tax invoice for the advance amount at the time you receive it (and settle it with the advance), rather than treating the advance as revenue.

Foreign-currency advances

An advance keeps the exchange rate it was funded at. When you apply it, SolaCount compares that carrying rate with the invoice's rate and posts the base-currency difference to your realized FX gain or loss account. Because the advance and the invoice must be in the same currency, the application journal itself is recorded in your base currency.

Example: a USD 1,000 advance was carried at AED 3,672.50. It is applied to a USD 1,000 invoice booked at AED 3,675.00.

If the realized gain/loss accounts are not configured (or are inactive, not postable, or not revenue/expense accounts) you see "The realized foreign-exchange gain/loss account is not configured."

Refunding a foreign-currency advance. The cash leaves at the exchange rate of the refund date; the advance liability is released at the amount it was originally carried at; the difference is a realized FX gain or loss, never revenue. Example: the same USD 1,000 advance (carried at AED 3,672.50) is refunded when the rate is 3.6730, so the bank pays AED 3,673.00.

The advance liability falls by exactly AED 3,672.50, which is what it was carried at.

Effect on A/R aging

• An unapplied advance does not reduce any invoice in A/R aging. It sits on the Customer Advances liability account.
• On the customer's Customer Statement the advance is never mixed into the receivable running balance. It is shown on its own line as Customer advances held (liability) (with an opening figure), and the note reads "Shown separately from the receivables running balance." Applying an advance appears on the statement as a payment, using its actual effect on Accounts Receivable.
• The Payments Received report counts cash actually received. Applying an advance to an invoice is not new cash, so that application is left out of the report; the funding of the advance is the cash receipt.
• Applying the advance reduces the invoice balance exactly like a payment, so the invoice leaves (or drops within) its aging bucket from the application date.
• Reversing an application puts the balance back into aging.

Reopening and drafts

A customer payment saved as a draft with Apply to documents can be reopened with Edit and keeps its allocations (see Payments). A payment whose purpose is Record as advance or Apply part; retain advance is not edited on the ordinary payment screen: "Use the advance workflow for advance funding; only draft document payments can be edited here." Post it, then manage it from Payments → Customer Advances.

Permissions

Legacy retainers

Organizations that used Retainers before advance payments keep their retainer records (deposits, allocations to invoices and refunds) as historical subledger records; their journals are not rewritten. Retainer pages are no longer in the sidebar. When a credit note is issued against an invoice that was partly settled from a retainer, the credit note form asks whether to Restore allocations (return the amount to the retainer) or Ignore allocations. For new deposits, use customer advances.

Tips

• Use Apply part; retain advance when a customer overpays an invoice and wants the rest kept on account.
• Record the advance in the same currency you will invoice in — cross-currency application is not allowed.
• Check the Customer Advances account balance against the advance list at month end; they should agree.

Related

• Payments · Invoices · Credit notes · Refund receipts · Customer credit and balances
• Multi-currency · Taxes and VAT · Workflow approvals