What is Advance Payment?
An Advance Payment in ERPNext records money paid to a supplier or received from a customer before the invoice is raised, held in a temporary advance account.
Recording an Advance
Create a Payment Entry with the advance account (e.g., Advance from Customers or Advance to Suppliers). The amount sits in the balance sheet until the invoice is raised. ERPNext then lets you allocate the advance when creating or paying the invoice.
Adjusting Advances Against Invoices
When creating a Sales or Purchase Invoice, ERPNext shows a list of outstanding advances for that party. Select the advance to deduct it from the invoice total. This posts the correct net receivable or payable automatically.
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