Settling an Invoice Through an Income

You can collect an invoice’s value from a client by issuing an Income instead of adding a payment directly on the invoice. Once the income’s value is distributed onto the invoice, its remaining amount decreases and its status changes to partially paid or fully paid depending on the distributed amount, exactly as if it had been settled through a payment.

The difference is that an income records the amount first as a credit balance for the client, and you then direct it to whichever invoice you want, which suits receiving an amount without allocating it to a specific invoice, or a single amount that covers more than one invoice.

Before You Begin

Make sure to disable the “Auto-Pay Invoices Using Client Credit“ setting in the Sales Settings. If this setting is enabled, the system distributes the client’s balance onto their due invoices as soon as it’s available, leaving you no undistributed balance to direct to a specific invoice.

Steps to Settle an Invoice with an Income

1. Click on “Sales” from the sidebar menu, then click on “Sales Settings.”
2. Click on the “Invoice Settings” card.
3. Scroll to the Payments & Credits section and disable the “Auto-Pay Invoices Using Client Credit” setting, then save the settings.
4. Issue an Income for the amount received from the client, and select the treasury the amount was deposited into.
5. Select the client’s sub-account in the income’s sub-account field, since this selection is what links the amount to the client themselves. If you select a different account, the amount will be recorded in an account that doesn’t belong to the client, and no balance will appear for them to distribute onto their invoices.
6. Save the income. The client’s credit balance then increases by the amount, meaning the client now has an amount with you that hasn’t been allocated to any invoice yet, which allows you to distribute it in the next step.
7. Click on “Clients” from the sidebar menu, then open the client’s file and scroll up the screen to the credit balance, where you’ll find the balance available for distribution.
8. Click the distribute button, and from the screen, select the invoice you want to settle from the client’s due invoices.
9. Enter the amount you want to distribute onto the invoice, then Save.

The Distribution's Impact on the Invoice

• The invoice’s remaining amount decreases by the value of the portion distributed onto it.
• The invoice’s status changes to fully paid if the distribution covers its entire value, or partially paid if it covers part of it.
• The distribution appears within the invoice’s payments as a payment from the client’s credit balance, allowing you to know the source of the settlement when reviewing it later.
• The client’s credit balance decreases by the same value, so the distributed amount can’t be used again.
• The amount’s effect on the treasury remains linked to the income itself, not the distribution, since the collection took place when the income was issued.

How the System Works

• The income isn’t linked to an invoice when issued; rather, it records the amount as a credit balance for the client, and the link to the invoice is established at the time of distribution.
• A single income can be distributed across more than one invoice, by specifying an amount for each invoice.
• Part of the balance can be left undistributed to be used for settling future invoices.
• If the balance is less than the invoice’s value, the invoice remains partially paid until additional balance is distributed onto it or a payment is added to it.
• When the automatic settlement setting is enabled, the system handles this distribution on your behalf on the due invoices, which suits those who want automatic rather than manual settlement.

Important Notes

• If no balance appears for the client after saving the income, review the account selected in the income, as it’s most likely not the client’s sub-account.
• If you issued the income while the automatic settlement setting is still enabled, review the invoice before manually distributing it, as the system may have already settled it.
• Don’t combine a distributed income with a payment on the invoice for the same amount, to avoid a duplicate settlement appearing and disrupting the treasury balance.