Payment Entry
Overview
The Payment Entry in DIGITZ ERP is a financial document used to record payments made to suppliers or other parties through various modes such as Cash, Bank Transfer, or Cheque.
It represents the outflow of funds from the company and ensures that all supplier payments are accurately reflected in the accounting ledgers.
The Payment Entry supports multiple payment types — including Supplier Payments (against Invoices), Advance Payments (against Purchase Orders), and On Account Payments — providing full control and traceability over every outgoing transaction.
Purpose
To manage and record all outgoing supplier payments, whether settled against specific invoices, made as advances, or issued on account.
This ensures that supplier accounts remain accurate, payables are updated automatically, and all financial movements are correctly posted to ledgers.
How It Works
A Payment Entry is created whenever the company makes a payment to a supplier.
The system automatically determines the payment mode and corresponding Cash or Bank Account and posts the necessary debit and credit entries upon submission.
DIGITZ ERP supports three primary use cases for supplier payments:
- Supplier Payment – Payments made against Purchase Invoices or Debit Notes.
- Payment Entry for Advance (against Purchase Order) – Advance payment made to a supplier before goods or services are received.
- On Account Payment – Payment made without allocating to any invoice or order, usually for future adjustment.
Key Fields
- Payment Type – Defines the transaction as Supplier Payment, Advance Payment, or On Account Payment.
- Supplier – The supplier to whom the payment is made.
- Posting Date – The date on which the payment is recorded.
- Payment Mode – Mode of payment such as Cash, Bank Transfer, or Cheque.
- Paid From Account – The account from which the funds are disbursed.
- Amount Paid – The total amount being paid to the supplier.
- Reference Type / Reference Name – The linked document, such as Purchase Invoice or Purchase Order.
- Project / Cost Center – Optional field for allocating the payment to a project or business division.
- Remarks – Additional notes for reference or audit purposes.
Supplier Payment
The Supplier Payment option is used to record payments made against one or more Purchase Invoices or Debit Notes.
It ensures that each supplier invoice is properly settled and reflected in the Accounts Payable ledger.
Purpose:
To settle supplier liabilities efficiently and maintain accurate payable balances.
How It Works:
- When a supplier is selected, DIGITZ ERP automatically displays all open Purchase Invoices and Debit Notes.
- The user can allocate the payment fully or partially against the listed documents.
- Upon submission, the system debits the supplier’s account and credits the Cash or Bank Account, updating both ledgers instantly.
- The payment automatically reduces the outstanding amount in the supplier ledger and updates the Payables Report.
Payment Entry for Advance (against Purchase Order)
The Payment Entry for Advance allows recording of advance payments made to suppliers before receiving goods or services.
These advances are linked directly to Purchase Orders and can later be adjusted when the corresponding Purchase Invoice is created.
Purpose:
To record and track supplier advances with full traceability to their corresponding purchase orders.
How It Works:
- Select the Supplier and the related Purchase Order.
- Enter the payment details such as Payment Mode, Amount, and Posting Date.
- On submission, the system debits the Supplier Advance Account and credits the Cash/Bank Account.
- When the Purchase Invoice is later generated, DIGITZ ERP allows the advance to be adjusted automatically against the payable amount.
This ensures that supplier advances are properly accounted for and do not remain unadjusted.
On Account Payment
An On Account Payment is used when an amount is paid to a supplier without any linked Purchase Order or Invoice — typically in anticipation of future bills or as a security deposit.
Purpose:
To record general supplier payments that are not yet linked to specific transactions but will be adjusted later.
How It Works:
- The payment is made and recorded without linking to any invoice or order.
- The system credits the Cash/Bank Account and debits the Supplier Account, holding the balance as an unadjusted credit.
- Later, when the relevant Purchase Invoice is posted, this amount can be settled using the Payment Reconciliation feature.
Workflow
- Navigate to Accounts → Payment Entry → New.
- Choose the Supplier and set the Payment Type.
- Select the Payment Mode and Paid From Account.
- Enter the Amount and Posting Date.
- If paying against Invoices or Purchase Orders, select them for allocation.
- Save and Submit the entry.
- The system automatically posts the required debit and credit entries to the respective ledgers.
Posting Behaviour
- Supplier Payment (against Invoice):
- Debit: Supplier (Accounts Payable)
- Credit: Cash/Bank Account
- Advance Payment (against Purchase Order):
- Debit: Supplier Advance Account
- Credit: Cash/Bank Account
- On Account Payment:
- Debit: Supplier (Advance/Control Account)
- Credit: Cash/Bank Account
All postings are processed under the Perpetual Accounting method, ensuring immediate updates in both supplier and financial ledgers.
Integration
The Payment Entry integrates seamlessly with:
- Purchase Invoice – For direct settlement of supplier payables.
- Purchase Order – For recording advance payments.
- Supplier Ledger – Reflects payments and remaining balances in real time.
- Bank Reconciliation Module – Matches recorded payments with actual bank transactions.
- Accounting Reports – Appears in Cash Book, Bank Book, Trial Balance, and Accounts Payable Reports.
Conclusion
The Payment Entry in DIGITZ ERP provides a complete framework for recording and managing supplier payments — whether made against invoices, as advances, or on account.
By integrating with Purchase Orders, Purchase Invoices, and ledgers, it ensures accurate payable tracking, controlled cash flow, and reliable financial reporting.
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