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Allocate payments to invoices

Apply Credit is the dedicated screen for matching money a customer has already paid — or credit they hold from advances and credit notes — to the invoices they owe. A FIFO auto-allocate helper does the heavy lifting — applying the payment against the oldest open invoices first — and you can adjust the result before saving. The same flow exists on the purchasing side for supplier payments.

Before you start​

  • Record the customer payment first. See Record customer payments.
  • The Apply Credit screens require the payment-allocation permission; the supplier side is part of the Purchase area and follows its plan feature.

Allocate a customer payment with FIFO auto-allocate​

  1. Go to Sales > Apply Credit.
  2. Select the customer payment you want to allocate.
  3. Run the FIFO auto-allocate helper — it automatically applies the payment against the oldest open invoices first.
  4. Review the result and adjust it if the payment should go to different invoices.
  5. Save the allocation.

The old Payment Allocation screen under Purchase was retired: its address now redirects to the Apply Credit pages, and both sides use one allocate permission.

Apply credit on supplier payments​

  1. Go to Purchase > Apply Credit.
  2. Select the supplier payment and apply it against open purchase invoices the same way — FIFO helper, review, adjust, save.

Check a payment's allocation state​

Every payment carries an allocation state, so unallocated money is easy to spot:

StateMeaning
Awaiting allocationNone of the payment has been matched to invoices yet
Fully allocatedThe whole payment has been applied
OverpaidThe customer paid more than the invoices it was applied to

Keep an eye on payments that are awaiting allocation or overpaid — allocating them promptly keeps the aging report accurate. See Track outstanding and aging.

Fix an incorrect allocation​

  1. Go to Sales > Customer Collections and open the payment.
  2. Use Reverse allocations to undo the incorrect allocation.
  3. Allocate the payment again — manually or with the FIFO auto-allocate helper.

Tips​

  • FIFO auto-allocate is ideal for customers who simply pay off their oldest balance — one click, review, save.
  • Override the helper's result when a customer specifies which invoices a payment is for.
  • Credit notes can also be applied to open invoices to reduce what a customer owes. See Credit notes.