Payment Reconciliation

November 5, 2025

Overview

The Payment Reconciliation feature in DIGITZ ERP allows users to settle payments made to suppliers — such as Advance Payments (against Purchase Orders) or On Account Payments — with their corresponding Purchase Invoices once supplier bills are received.
This feature ensures that advance or unallocated supplier payments are properly adjusted, keeping the supplier ledger and Accounts Payable up-to-date and accurate.

Purpose

To simplify the process of matching unallocated supplier payments or advances with their respective Purchase Invoices, ensuring that all payments are correctly accounted for and reflected in the company’s payables.
It provides a clear and controlled way to link prior payments with actual supplier bills, reducing manual tracking and reconciliation errors.

How It Works

When supplier payments are recorded On Account or against Purchase Orders, they initially remain as advance balances in the supplier ledger.
Once Purchase Invoices are submitted, these payments can be allocated using the Payment Reconciliation screen.
The system automatically lists all unadjusted payments and open Purchase Invoices for the selected supplier.
Users can perform manual allocations or use the Auto Allocate button to let the system automatically match payments with invoices based on date and balance.
Upon submission, DIGITZ ERP transfers the reconciled amounts from the Supplier Advance Account or On Account balance to the Accounts Payable account, reducing the supplier’s outstanding balance.

This ensures that all supplier payments are properly matched to invoices, maintaining clean and accurate ledgers.

Auto Allocate Feature

The Auto Allocate button simplifies reconciliation by automatically linking available payments with corresponding invoices.
It intelligently distributes advance amounts to the oldest unpaid invoices first, ensuring systematic and chronological allocation.

How It Works:

Select the Supplier in the Payment Reconciliation form.
Click Auto Allocate.
The system automatically matches eligible advance or On Account payments with open Purchase Invoices based on balance and posting date.
Users can review or manually adjust allocations before submission.

This automation greatly reduces manual effort in large-volume reconciliation scenarios.

Steps to Perform Payment Reconciliation

Go to Accounts → Payment Reconciliation → New.
Select the Supplier whose payments and invoices need reconciliation.
The system lists all unallocated supplier payments and open Purchase Invoices.
Click Auto Allocate for automatic matching, or manually select payments and invoices to reconcile.
Verify the allocation details and amounts.
Save and Submit the reconciliation document.

Once submitted, the system updates the supplier ledger, reducing outstanding payables and marking the related advances as adjusted.

Posting Behaviour

On submission, the system performs a ledger adjustment between:
- Supplier Advance Account / On Account balance → Accounts Payable Account
The supplier’s outstanding amount is reduced by the reconciled total.
No Cash or Bank entries occur in this process — as it is purely an accounting adjustment within liability accounts.

Integration

The Payment Reconciliation feature integrates seamlessly with:

Payment Entry – Fetches unadjusted supplier advances and On Account payments.
Purchase Invoice – Displays open invoices eligible for reconciliation.
Supplier Ledger – Reflects adjusted and remaining balances instantly after submission.
Accounting Reports – Updates Accounts Payable, Advance Accounts, and Supplier Statements for accurate financial reporting.

Conclusion

The Payment Reconciliation feature in DIGITZ ERP provides a streamlined and reliable way to match supplier advances or On Account payments with their corresponding Purchase Invoices.
With features like Auto Allocate, it reduces manual workload, ensures precise payable adjustments, and maintains complete accuracy and transparency across supplier accounts and financial ledgers.