How to handle investor-funded supplier payments in ERPNext v15?

ERPNext Accounting
, , , ,
1

Business Scenario:

We are working with a company that imports goods from multiple suppliers based in China. However, the company does not directly pay the suppliers. Instead, there are one or more investors who handle the actual payments to these suppliers.

Here’s how the process works:

  1. The company creates Purchase Invoices (PIs) against Chinese suppliers.
  2. The company transfers the total payable amount (including a 2% commission) to the investor.
  3. The investor then uses that amount to pay the suppliers directly.

Requirements in ERPNext v15:

We want to properly manage and track this flow inside ERPNext. Specifically:

  • Track how much money is given to each investor.
  • Link the investor’s payment to one or more Purchase Invoices.
  • When the investor makes payment to the supplier:
    • The linked Purchase Invoice should be marked as Paid, if fully settled.
    • Or marked as Partly Paid, if only partial amount is paid.
  • We need a way to see the relationship between:
    • Investor → Paid Amount → Linked Purchase Invoice(s) → Status (Paid / Unpaid / Partly Paid)

Question:

What is the best way to implement this flow in ERPNext v15?

  • Can we achieve this using the standard Payment Entry Doctype?
2

It is the standard transfer of payables transaction. Which introduces another supplier. Possibly you can use the Payment Entry but you need to check. Surely you can do it with a Journal Entry between 2 suppliers.

3

Hello,
Thank you @Tufan_Kaynak2 for your helpful response earlier :pray:. I appreciate it. I followed your suggestion regarding handling a payable transfer between two suppliers using Journal Entry.

Let me explain what I did:

:small_blue_diamond: Business Flow:

  • Our company purchases goods from suppliers in China.
  • However, we do not pay the suppliers directly.
  • Instead, we give the payment amount to an Investor, and the investor pays the suppliers on our behalf.

:small_blue_diamond: What I did in ERPNext:

:receipt: Journal Entry #1 – Company pays the Investor

Account Party Type Party Debit (₹) Credit (₹)
Accounts Payable - Investor Supplier XYZ Investor ₹100,000
Bank - Company ₹100,000

:white_check_mark: This records that the company has paid ₹1,00,000 to the investor.

:receipt: Journal Entry #2 – Investor pays the Supplier on behalf of the company

Account Party Type Party Debit (₹) Credit (₹)
Accounts Payable - Supplier Supplier China Supplier A ₹100,000
Accounts Payable - Investor Supplier XYZ Investor ₹100,000

In the “References” section, I have linked the Purchase Invoice (PI-0001) that was issued to the supplier.

:question:Problem:

Even after submitting this second Journal Entry, the Purchase Invoice is still marked as “Unpaid”.
It doesn’t change to “Paid” or “Partly Paid”, even though the full amount is adjusted and the reference is linked.

:pray: My Question:

Am I missing something?
Is there any extra step or different method required to ensure that the Purchase Invoice status gets updated properly?

I would really appreciate any guidance or best practices to make this work smoothly in ERPNext.

Thanks again for your time and support!

4

You need to create payment Journal Entry from the Purchase Invoice using the Create button above and select Payment. Or you need to select the Purchase Invoice reference in the Journal Entry line details. Or you can make Payment Reconciliation to allocate the payments to relevant Invoices. Do you know how to use the module at all?