Hi, I’m working with a contact who is trying to manage his retail electronics store using ERPNext. Their Customers opt for various finance options and EMI schemes from banks. At the moment I don’t see a Party which we can map this external financier with. How about adding a Party Type Finance Provider or Credit Provider (I anticipate this would be useful for Patient Insurance in Healthcare domain) of type Receivable to map such an entity?
But again I’m still to figure out what the Sales Invoice status should be. Also, i suppose the Invoice GL entry should credit the sales account and debit the Customer with amount paid and the rest to the Credit Party. Debit / Credit Notes should help in someway? I’m not sure if I missed something which is already there to deal with this use case.
any thoughts appreciated!
I think you should consider how the money flow and transactions happen with the third party financial institution. Do they pay in full or pay as per the EMI received by the end users?
AFAIK, there isn’t anything in the accounting module to handle this use case.
You are right about the GL entries. The customer receivable should be knocked out with the sales, but there should also be some accounting entries to handle the third party credit provider (which again should be as per the terms with that provider).
Thanks Manas! Regarding the money flow - periodically or in full - that can happen via payment entry as usual, but against the Financing Party. The requirement is that after booking the Customer with total amount the financed amount should be transferred against the Financing Party.
Anyways, IMO a new Party Type should be good enough for now. We should then be able to hook and create the GL entry to transfer the receivable from Customer to the Finance Party, if that’s the right way this case should be dealt with in accounts. We can get this built if you guys think this would be generic enough and useful for others.
Adding the ability to create custom Party Types would be the ideal approach, but I guess that would be a bit work at the moment. Please suggest.
Even if the customer opts for an EMI, the seller will receive the full amount from Bank.
So payment entry should happen for full amount and invoice should be marked as ‘Paid’.
The EMI transaction happens between the bank and the customer and there is nothing to be tracked in ERP.
Can you explain why we need financier party type.
Yes Basawaraj, Invoice status could be updated but the Financier doesn’t pay the company yet. The financier might only make the bank payment in a couple of days or so. The receivable amount less the downpayment paid by Customer should get reflected in the books against the financier party type?
In SELCO lot of customers went for a loan from the bank when they purchased solar systems.
But we never created a ledger for the financier.
Generally, the customer would deposit the down payment in the bank account and the bank sent us the full amount.
The invoice was in ‘Unpaid’ status until the money was received from the bank.
Maybe Liyakat can help you.
okay, will sync with him.
You point is valid. We would get full money. But in tranches - first as down payment and then balance from EMI Loan provider.
@akurungadam, why do say this? Maybe what you referring is not the standard type of EMI based transactions. Please give more information.
The case I’m referring to is where the store collects the downpayment. The balance amount is transferred to bank by the financier at a later time. There are multiple financiers and it kind of gets a bit tedious in adjusting the payments against invoices.
BTW, why i’m particularly interested in this is because Patient Health Insurance claims are cleared by providers in a similar fashion.