Payment Entry differences

I have a supplier with two outstanding invoices in a foreign currency.

Credit Note 1: $ -1,710.87
Invoice 2: $ 4,527.666
Outstanding balance: $2,816.796

Now when I paid these two invoices, I was charged by the bank for $2,818.42, which is $1.624 more than the outstanding balance.

I entered the payment, selected the two invoices and made sure, that the allocated amounts correspond to the amounts listed in accounts payables. I recorded the difference as an exchange difference.

After saving and submitting the entry, the supplier now has still an outstanding amount, and the general ledger shows a different amount charged to my bank account.

Maybe I am doing something wrong, but why does ERPNext change the amount that I have entered as the paid amount? How can I get the outstanding balance on the supplier to zero and record the exchange difference? Does anybody else have the same problem?

In the documentation, it shows a button “Write off difference amount”. I don’t have that button. Though, I guess that’s a different issue.

ERPNext v13.13.0 (version-13)

Payables Report

Payment Entry before save

Payables Report after payment

General Ledger entries

The write-off amount is again allocated to Invoice 2, and the amount charged to the bank account is lower than what was actually debited.

If your supplier currency is USD so the creditor account also should be with the same currency
After that, you can make payments with different currencies without any issues

In this case, the suppliers currency is EUR, while my accounting currency is HKD.

As per my explanation, I did end up with differences which don’t make sense to me, so I wonder what I have been doing wrong to avoid ending up with the differences. The creditor doesn’t balance out, although I do have paid everything in the invoiced currency, and my bank account won’t balance out as well.

If I’m understanding your situation, ERPNext is behaving correctly. Properly speaking, this $1.624 is not part of the payment to your supplier. It’s a charge by your bank, and your supplier is not involved in that part of the transaction.

Rather than the Taxes and Charges section, you want to mark the $1.624 in “Deductions and Losses”. There, you can specify the account, which would presumably be “Bank Fees” or something like that.

The difference comes from the different exchange rates.

I tried to add the $1.624 to the “Advance Taxes and Charges” section, as shown in the above screen shot. Yet, the actual debit to the bank account is not what I have entered in the field “Paid Amount (HKD)”, and although the foreign currency amount is fully paid, Accounts Payables still shows a balance.

So what did I do wrong?

I may not be fully understanding your scenario, but in general:

  • Paid Amount (HKD): this should match the bank debit
  • Allocated (HKD) (in payment reference table): these should equal the adjustment you want made to the open invoices (i.e., probably the whole outstanding amount, like you’ve done here).
  • Deductions and Losses: this should be whatever you need to do to balance out the payment so the difference amount is $0 (i.e., $1.624, which can be marked for whatever account you want, Bank Fees, Currency Exchange Adjustments, etc.)

I’m not very familiar with the best accounting practices for credit notes, so others may have thoughts about that, but what you’re doing here seems to make sense. In general, though, you don’t want to use “Taxes and Charges” unless you’re actually giving that $1.624 to your supplier. In this case, you’re not.

That was exactly what I was trying to do.

I do understand that the Taxes and Charges should normally be left alone, but with foreign suppliers, it is logical to have exchange differences that will come up. So by adding a line there with the difference between the open amount in local currency on the payable account, and the amount debited by the bank, it should balance the transaction.

But for some reason the amount debited from the bank (in ERPNext) is different to the amount I entered as “Paid Amount (HKD)”, and the supplier afterwards still shows the difference as an open balance.

Yes, but you’re doing it in the wrong place. Don’t do it in “Taxes or Charges”, do it in “Deductions or Loss”, immediately below.

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Ohh, I see. Let me try that.

Just cancelled my previous record and tried again. Now it worked as intended. It’s a bit confusing as the Deductions or Loss part was closed, while the Taxes and Charges was open.

Awesome, thank you very much.