reseller

is added when reseller has a customer specific business

Process to follow in case a Customer / Sub-Reseller Payment Charges Back or Bounces back

If your Customer/Sub-Reseller made a Payment which bounced back, or Charged back, you may need to follow some steps to reflect this in their Account. These steps only need to be followed if you have Credited the Customer/Sub-Reseller with these funds.

On an immediate basis, you will need to Add the following Debit Notes to their Account:

  1. Add a Debit Note to their Account for the initial funds credited to their Account. See details

    For instance, when the funds were received, a Receipt of the following type may have been created -

    Receipt ID: 1

    Amount: USD 100 (INR 5000)

    The above example assumes that your Selling Currency is USD and your Accounting Currency is INR.

    In this case you would add the following Debit Note to the Customer/Sub-Reseller Account -

    Debit Note ID: 1

    Description: Debit Note raised to reflect Chargeback of PayPal Transaction (Ref: Receipt ID 1)

    Amount: USD 100 (INR 5000)

    In the above example we have maintained the same Amounts as in the Receipt. It is important that the Debit Note consist of the same amount in Selling Currency as the Original Receipt. This is because you have credited that much spending capacity to the Customer/Sub-Reseller which you need to revoke. For the sake of ensuring no Forex Gain/Loss in this transaction, it is always better to ensure that both the Selling Currency Amount and the Accounting Currency Amount are the same.

    Of course if your Selling Currency is the same as your Accounting Currency you will not face this issue.

  2. Add a Debit Note to their Account to reflect any charges that you wish to levy for the Chargeback/Bounceback processing. See details

    For instance, you may wish to create the following Debit Note -

    Debit Note ID: 2

    Description: Debit Note raised to reflect Charges for Chargeback Processing of PayPal Transaction (Ref: Receipt ID 1)

    Amount: USD 5 (INR 300)

    In the above example, you may note that a Debit Note has been raised to the tune of USD 5 (INR 300). There are a few important things to note out here -

    • Firstly, it is you who decides the amount of charges you wish to levy your Customer/Sub-Reseller for this particular Chargeback/Bounceback. You may choose to not levy the same at all.

    • Secondly, the rate at which you choose to levy the Debit Note for the charges may be the current rate. The earlier Debit Note may have been passed by you at the earlier rate in order to ensure that your Accounting is perfect, however the current charges related Debit Note could be passed at current or different rate from the previous Debit Note. Again this is your prerogative.

  3. When you are raising the above Debit Notes, it will offer you the option to set these as Greedy. A Greedy Debit Note gets automatically settled,

    • if there are Funds available in your Customer/Sub-Reseller's Debit Account, or

    • when your Customer/Sub-Reseller adds Funds in his Debit Account, or

    • at the time your Customer/Sub-Reseller starts paying for another Invoice/Debit Note, he is prompted to also pay for any Greedy Invoice or Debit Note.

  4. You may need to follow up with your Customer/Sub-Reseller in order to recover this Payment for these Debit Notes from them. It may be a good idea to Lock/Suspend their Orders or Suspend their access, if required, for collection.

  5. If eventually you realise that this amount is irrecoverable you may have to write it off to Bad Debts.

Refund Requests of your Customers and Resellers

Your Sub-Resellers and Customers can request a Refund from within their Control Panel from the billing section. For instance, if one of your customers has a current available balance of USD 100, he can choose to request a refund of upto USD 100 from it. This will appropriately reduce his available balance and send you a notification to process that Refund.

When any of your Customer/Sub-Reseller requests for a Refund, the system automatically creates and Balances a Debit Note to signify the same. This Debit Note is calculated based on the available Receipts / Credit Notes with that Customer. This Debit Note is sent to you via email and allows you to determine the amount of Refund you need to give to your Customer. Let us understand how this Debit Note is calculated.

Lets say a Sub-Reseller of yours has the following Receipts (your Selling Currency is USD and Accounting Currency is INR.)

Receipt ID: 1

Receipt Amount: USD 50 (INR 2450)

Pending Amount: USD 0 (INR 0)

Conversion Rate: 49

Receipt ID: 2

Receipt Amount: USD 75 (INR 3675)

Pending Amount: USD 50 (INR 2450)

Conversion Rate: 49

Receipt ID: 3

Receipt Amount: USD 75 (INR 3600)

Pending Amount: USD 75 (INR 3600)

Conversion Rate: 48

Receipt ID: 4

Receipt Amount: USD 100 (INR 5000)

Pending Amount: USD 100 (INR 5000)

Conversion Rate: 50

As you can see from the above list, the current balance of this Sub-Reseller is USD 225. This is spread across Receipts 2,3 and 4. Now let us suppose this Reseller requests for a refund of USD 200. The system will process this request as follows:

  1. Fetch all Receipts of the Sub-Reseller required to refund USD 200 (in this case Receipts 2,3 and 4).

  2. Use the Pending Balance of these Receipts to refund USD 200 (in this case USD 50 from Receipt 2, USD 75 from Receipt 3, and USD 75 from Receipt ID 4).

  3. Calculate the Accounting Currency Amount for the Debit Note by checking the utilisation of each Receipt (INR 2450 from Receipt 2, INR 3600 from Receipt 3, and INR 3750 from Receipt 4 => INR 9800).

  4. Generate a Debit Note of the amount of refund - USD 200 (INR 9800).

  5. Balance the Debit Note against the Receipts to give the following final status of the transactions -

    Receipt ID: 1

    Receipt Amount: USD 50 (INR 2450)

    Pending Amount: USD 0 (INR 0)

    Conversion Rate: 49

    Receipt ID: 2

    Receipt Amount: USD 75 (INR 3675)

    Pending Amount: USD 0 (INR 0)

    Conversion Rate: 49

    Receipt ID: 3

    Receipt Amount: USD 75 (INR 3600)

    Pending Amount: USD 0 (INR 0)

    Conversion Rate: 48

    Receipt ID: 4

    Receipt Amount: USD 100 (INR 5000)

    Pending Amount: USD 25 (INR 1250)

    Conversion Rate: 50

    Debit Note ID: 1

    Debit Amount: USD 200 (INR 9800)

    Pending Amount: USD 0 (INR 0)

  6. The system sends an email to your Billing Email Address to process the above refund.

  7. The System also deducts USD 200 (refund amount) from the Total Receipts figure for this Sub-Reseller.

Note

In the above example, we have taken a set of Receipts. The process would be the same if the Sub-Reseller had a combination of Credit Notes or Receipts. In the end both Receipts and Credit Notes are exactly similar.

The above steps are taken by the system. Your billing department now needs to process the refund and send it back to the Sub-Reseller. Your billing department must take the following aspects into account:

  • The way the system creates the Debit Note ensures that you never lose money in a refund transaction. The Accounting currency amount (INR 9800 in the above case) is calculated exactly based on the Accounting currency amount that was received at the time of the Receipt. Therefore your billing department must refund the exact Accounting Amount to the Sub-Reseller.

  • You may choose to further deduct charges for processing this refund before sending the same.

Subtract Funds from your Customers / Sub-Resellers Account

The system allows you to Subtract funds from your Customers/Sub-Resellers Account. You may wish to do this incase you want to reduce the available balance of your Customer/Sub-Reseller. There are
2 types of transactions you may use to Subtract funds from your Customers/Sub-Resellers Account - Invoices and Debit Notes. You are advised to read up the
Invoices section and Debit Notes section before you read this section.

Additional Information

Invoices

Debit Notes

First you need to decide whether you are going to use an Invoice or Debit Note for this purpose. The decision making criteria is quite simple -

  • If you wish to subtract funds from your Customer/Sub-Reseller for a specific Order in the system, then you have to use an Invoice.

  • If you wish to subtract Funds for any other reason other than an Order in the system, you should use a Debit Note.

Another important thing to note here is that by simply adding an Invoice or Debit Note the funds of your Customer/Sub-Reseller will not reduce. The Invoice or Debit Note will need to be
balanced (paid for) in order to reduce the Funds (unless it is a Greedy Invoice or Debit Note). This is explained below.

Follow the steps below to Subtract Funds from a Customers/Sub-Resellers Account:

  1. Login to your Reseller Control Panel. See details

  2. In the Menu, point to Customers / Sub-Resellers -> Billing and click Add Debit Note/Add Invoice.

  3. For a Debit Note, provide the Email Address of the Customer/Sub-Reseller, from whose Debit Account Balance you wish to subtract funds from. In case of an Invoice, you will
    have to provide the Order Id of the Order for which you wish to add an Invoice.

  4. The next page for verification purposes will show you the details of the Customer/Sub-Reseller for which you are Adding an Invoice/Debit Note. Incase of an Invoice you will also see the Order
    details.

  5. Fill in the amount you want to Debit to this Customer/Sub-Reseller. This is the main field that will be used to add funds to the Customer/Sub-Reseller. The remaining fields are chiefly information
    fields. In case your Selling Currency and Accounting Currency are different, you will have to enter both the values along with a Conversion rate. If you have chosen
    to allow the System to maintain your Conversion Rate, this box will be pre-filled for you. You may choose to modify the conversion rate incase you require it to be different. The important aspect to note
    is that we actually perform a calculation by multiplying the Selling Currency Amount with the Conversion rate and comparing with the Accounting Currency Amount to ensure that you make no mistakes
    in the entry. If these 3 values do not match we will not allow the transaction.

    Note

    Upto 2 decimal places are permitted for any of these fields except the Currency Conversion field (this would appear only if your Selling Currency differs from your Accounting Currency), which can
    handle upto 5 decimal places.

  6. A Debit Note may be raised for your Sub-Reseller or Customer for the following reasons:

    • Miscellaneous Sale: To recover payment for any sales that you have made to a particular Sub-Reseller or Customer that does not have any associated Order in the system.
      If the Order exists in the system, then you could simply raise an Invoice for your Sub-Reseller or Customer.

      Additional Information

      Raising an Invoice

      For example, if you want to recover payment for Web Designing Services from a particular Customer for the domain name some-name.com, you could raise a Debit Note under type
      Miscellaneous Sale.

    • Miscellaneous Charges: To recover payment for any charge that you want to levy on a particular Sub-Reseller or Customer that does not constitute a Sale.

      For example, if you want to charge your Customer Sales Tax for some sale, you could do this by raising a Debit Note for this Customer under the type Miscellaneous Charges.

    • Refund: To process a manual Refund for a Sub-Reseller or Customer, you could raise a Debit Note under this transaction type and settling the same against their
      Current Debit Account Balance. Once done, you will have to physically send across this Refunded amount to them.

      However, you should ideally ask your Sub-Reseller or Customer to request for a refund from their own Control Panel from the My Billing ->
      Withdraw Funds.

    • Chargeback: To record a Chargeback that you may have received for any online or offline payment.

      For example, if a particular Sub-Reseller's Check bounced, you could add a Debit Note for the same with this type.

  7. Mention an appropriate Description for the Invoice/Debit Note that will make identifying the reason for this charge ample clear to both yourself and your Sub-Reseller/Customer.

    Note

    In case of a manually raised Invoice/Debit Note, the description of the Invoice/Debit Note may be modified at a later stage as mentioned below:

    1. Login to your Reseller Control Panel. See details

    2. In the Menu, point to Customers / Sub-Resellers -> Billing and click List Transactions.

    3. Click the Description link of the Invoice/Debit Note to view the Invoice/Debit Note Details page.

    4. Click the Modify Description button.

    5. Modify the content in the Description field and click Modify to submit the change.

  8. In case of an Invoice, you may specify the following additional fields:

    Order Suspension Date: This signifies the date on which the Order will be suspended if the Invoice is not paid.

    Order Deletion Date: This signifies the date on which the Order will be deleted if the Invoice is not paid.

  9. You may select the Date when this Invoice/Debit Note should be raised.

  10. Mention appropriate Payment Reminder Days (after the Transaction Date) to let the system automatically send Payment Reminders to your Customers/Sub-Resellers for
    due payments. If you do not wish the system to remind your Customers/Sub-Resellers about pending payments, leave this box as blank.

  11. A Transaction Key is a per transaction unique set of characters or numbers or any word that would easily allow you to differentiate every instance of a manually raised Invoice
    or Debit Note. This key ensures that you do not add the same transaction twice into the system.

    Note

    If you enter the same Transaction Key in multiple transactions, then you will receive an error message. You need to do the following when you encounter this error:

    1. Depending upon whether you are subtracting funds from your Customer or Sub-Reseller, you need to point to the Customers / Sub-Resellers menu and click
      Search.

    2. Mention the Customer/Sub-Reseller's Email Address (as the case maybe) and click the Search button.

    3. Click the Customer/Sub-Reseller Name link to view their details.

    4. Click the List Transactions button to review if these funds have already been debited to your Customer/Sub-Reseller. You may also perform an advanced search by
      clicking the Advanced Search
      button on the top of this page.

    5. Now,

      • if these funds have been already subtracted from your Customer/Sub-Reseller's Debit Account Balance, then you should not proceed subtracting these funds again.

      • if you can not locate a transaction of the same amount and date as the one you are subtracting at present, then this Transaction must be unique but the Transaction Key you are
        mentioning has already been associated to a previous transaction.

        In this case, you should press your Web Browser's Back button and continue this transaction with another Transaction Key.

  12. You may choose to make both Invoices as well as Debit Notes Greedy. A Greedy Invoice/Debit Note gets automatically settled,

    1. if there are Funds available in your Customer/Sub-Reseller's Debit Account, or

    2. when your Customer/Sub-Reseller adds Funds in his Debit Account, or

    3. at the time your Customer/Sub-Reseller starts paying for another Invoice/Debit Note, he is prompted to also pay for any Greedy Invoice or Debit Note.

    Any Invoice/Debit Note which has been raised as a Greedy one, would get displayed in the List of Transactions with "(Greedy)" being displayed in the Transaction Type.

  13. In case of a Debit Note you may choose to deduct this amount from the Total Receipts figure for that Customer/Sub-Reseller.

  14. Once you finish filling the details and move onwards you will be displayed a Confirmation page with all Customer details and Transaction details for one final confirmation before adding the
    Invoice/Debit Note.

  15. Clicking Confirm Transaction will result in the addition of the Invoice/Debit Note.

    Note
    • If you chose to make an Invoice/Debit Note Greedy, then (as explained before) it would get settled depending upon whether the Customer/Sub-Reseller has funds in their Debit Account.

    • If you did not choose to make the Invoice/Debit Note Greedy, then you would need to settle the Invoice/Debit Note to deduct this amount from your Customer/Sub-Reseller's account.
      This is done by Paying for the Invoice/Debit Note.

Once an Invoice/Debit Note is added our system will automatically take care of reminders and other Payment Collection features.

Note

If you have received a Chargeback or wish to Refund a particular Receipt/Credit Note, then you may raise a Debit Note from this Receipt/Credit Note itself. This is how you may do this:

  1. Login to your Reseller Control Panel. See details

  2. Search for the Receipt/Credit Note for which you have received a Chargeback or wish to Refund, from the Customers / Sub-Resellers -> Billing ->
    Search Transactions.

  3. Click the Description link of the Receipt/Credit Note to view its details.

  4. Select either Chargeback or Refund in the dropdown on the top of the page and click the Go button.

  5. You will be taken to the Subtract Funds page, where the system would prefill the Amount, Debit Note Type, Description from the details available in the Receipt/Credit Note. We recommend that
    you modify the Description to indicate to your Customer/Sub-Reseller the purpose of subtracting Funds from his/her account.

  6. Fill in all the relevant values as per the instructions provided above and click the Submit button.

Add Funds to your Customers/Sub-Resellers Account

The system allows you to add funds to your Customers/Sub-Resellers Account. This is a very useful feature and you should take time to explore it and use it. Adding funds for a particular Customer/Sub-Reseller allows that Customer/Sub-Reseller to directly Execute Orders and Pay for Invoices from their Control Panel until the funds last in their Account. There are two types of Transactions you can use to Add Funds to your Customers/Sub-Resellers account - Receipts & Credit Notes. You are advised to read up Receipts & Credit Notes section before you read this section.

Additional Information

Receipts & Credit Notes

Typically it is good practice to feed in EVERY Payment Received from your Customer/Sub-Reseller using this Add Funds option. In order to Execute any Order placed by your Customers, it is good practice to first Add Funds to that Customer Account and then pay for the Invoice raised for that particular Order.

Follow the steps below to Add Funds to a Customers/Sub-Resellers Account:

  1. Login to your Reseller Control Panel. See details

  2. In the Menu, point to Customers / Sub-Resellers -> Billing and click Add Funds.

  3. Provide the Email Address of the Customer/Sub-Reseller you want to Add Funds for.

  4. Verify on the next page that you indeed are adding funds for the Correct Customer/Sub-Reseller. Additionally on this page we also display the last 3 Add Funds transactions you have done for this Customer/Sub-Reseller, in order for
    you to verify that you are not Adding Funds for the same transaction twice.

  5. Fill in the amount you want to Credit to this Customer/Sub-Reseller. This is the main field that will be used to add funds to the Customer/Sub-Reseller. The remaining fields are chiefly information fields. In case your Selling Currency and Accounting currency are different, you will have to enter both the values along with a Conversion rate. If you have chosen to allow the System to maintain your Conversion Rate, this box will be pre-filled for you. You can choose to modify the conversion rate incase you require it to be different. The important aspect to note is that we actually perform a calculation by multiplying the Selling Currency Amount with the Conversion rate and comparing with the Accounting Currency Amount to ensure that you make no mistakes in the entry. If these 3 values do not match we will not allow the transaction.

    Note

    Only upto 3 decimal places are permitted for any of these fields.

  6. If you have received the money from your Customer/Sub-Reseller then you should choose to add this amount as a Receipt; otherwise choose Credit Note.

    A Credit Note may be raised for any of the following reasons:

    • Miscellaneous Credit

    • Chargeback Reversal - Raise a Credit Note under this type when you have received payments from your Customer/Sub-Reseller as a Reversal for any previous Chargeback (transaction dispute) done by him.

  7. Mention an appropriate Description for the Receipt/Credit Note that will make identifying this fund's source, amount, date, etc. clear to both yourself and your Customer/Sub-Reseller.

    Note

    In case of a manually raised Receipt/Credit Note, the description of the Receipt/Credit Note can be modified at a later stage as mentioned below -

    1. Login to your Reseller Control Panel. See details

    2. In the Menu, point to Customers / Sub-Resellers -> Billing -> List Transactions.

    3. Click the description link of the Receipt/Credit Note to view the Receipt/Credit Note Details page.

    4. Click the Modify Description button.

    5. Modify the content in the Description field and click Modify to submit the change.

  8. A Transaction Key is a per transaction unique set of characters or numbers or any word that would easily allow you to differentiate every instance of a manually raised Receipt or Credit Note. This key ensures that you do not add the same transaction twice into the system.

    Note

    If you enter the same Transaction Key in multiple transactions, then you will receive an error message. You need to do the following when you encounter this error:

    1. Depending upon whether you are adding funds for your Customer or Sub-Reseller, you need to point to either Customers or Sub-Resellers Menu and click Search.

    2. Mention the Customer/Sub-Reseller's Email Address (as the case maybe) and click the Search button.

    3. Click the Customer/Sub-Reseller Name link to view the Customer/Sub-Reseller details.

    4. Click the List Transactions button to review if these funds have already been credited to your Customer/Sub-Reseller. You may also perform an advanced search by clicking the Advanced Search
      utton on the top of this page.

    5. Now,

      • if these funds have been already added to your Customer/Sub-Reseller's Debit Account Balance, then you should not proceed adding these funds again.

      • if you can not locate a transaction of the same amount and date as the one you are adding at present, then this Add Funds Transaction must be unique but the Transaction Key you are mentioning has already been associated to a previous transaction.

        In this case, you should press your Web Browser's Back button and continue this Add Funds transaction with another Transaction Key.

  9. You can choose to Add this amount to the Total Receipts figure for that Customer/Sub-Reseller.

  10. Once you finish filling the details and move onwards you will be displayed a Confirmation page with all Customer details and Transaction details for one final confirmation before adding the Funds to the Customer/Sub-Reseller Account.

  11. Clicking Confirm Transaction will result in the Funds being added to the Customer/Sub-Reseller Account.

  12. Upon finishing an Add Funds transaction, you will see a list of Pending Invoices/Debit Notes of your Customer/Sub-Reseller. You can pay off any Pending Invoices and Debit Notes from this list using the funds in that Customer/Sub-Reseller Account

Add Funds can be used to add a credit of advance funds in your Customers/Sub-Resellers account. It can additionally be used to execute any particular Order placed by your Customers. For any Order placed by your Customer an Invoice is generated in the System. You will have your own method of collecting Payment for this Invoice from your Customer. Typically the Customer may send you a cheque or some offline Payment. In Order to execute the Order it is good practice to feed in this Payment as a Receipt in the Customer account and then subsequently pay the Invoice. You can, of course, choose to Execute w/o Payment.

Additional Information

Invoices

Currency issues, Conversion Rate, Selling Currency and Accounting Currency explained

Managing multiple currencies is probably the most complicated portion of the Billing system provided to you, and at the same time, one of the most powerful and unparalleled features of our system. The system allows you to differentiate between the currency (Selling Currency) you want your Customers/Sub-Resellers to view, and your Accounting Currency and seamlessly maintains conversion and Forex issues for these currencies without
any manual processes from your side.

The basic theme stems from the fact that your Sales and Accounting may have to happen in different currencies. For instance if your office is in India, while your sales are global, you may wish to display all your Selling Prices and Billing in an Internationally recognized currency such as US Dollar (USD) to your Customers/Sub-Resellers. Meanwhile however, you are legally required to maintain your books of accounts in Indian Rupees (INR). The system resolves this issue by showing USD values to your Customers/Sub-Resellers and maintaining dual currency values for you. At this stage it is important to clarify that if your market is restricted to India, then your Accounting Currency and Selling Currency will be the same. In this case you will not require to understand the implications of having multiple currencies.

As you now already know, the system has two currencies that it maintains for you -

Selling Currency: This is the currency in which all your Selling Prices will be specified and displayed. Your Customers and Sub-Resellers will only see this currency with respect to their dealings with you.

Accounting Currency: This represents the currency in which you maintain your books of accounts in your Country.

Initial Currency Selection

It is important they you select the Selling Currency and Accounting Currency carefully at the time of signing-up as a Reseller. If the need arises, you may modify the Selling and/or Accounting Currency as long as there are no transactions
performed within your Reseller Account.

Currency Conversion

When you choose a particular Selling Currency, you will then specify all your Selling Prices to your Customers and Sub-Resellers in that Selling Currency. All transactions will therefore be added with those amounts. In order to maintain
along with the Selling Currency amount an Accounting Currency amount too (in case the Selling Currency and Accounting Currency are different), the amount needs to be converted from the Selling Currency to the Accounting Currency. This conversion is done by the system dynamically for every transaction that is automatically added, using a conversion rate specified by you, or the system conversion rate (which is updated daily from a reliable Forex resource). For every manually added transaction, you have the ability to specify both the amounts. Lets understand this with examples:

  • For every Invoice, Receipt, Debit Note and Credit Note that the system automatically generates, it converts the Selling Currency amount to the Accounting Currency amount using a conversion rate. We will discuss how it obtains this Conversion rate later. For instance, if the system raises an Invoice for an Order of USD 100 placed by your Customer, and your Accounting Currency is INR, and the conversion rate from USD to INR is 50, then the system will enter the transaction with the USD value as USD 100 and the INR value as INR 5000.

  • For every Invoice, Receipt, Debit Note and Credit Note that you enter manually for your Customer/Sub-Reseller, you have the ability to specify both the Selling Currency amount and the Accounting Currency amount.

Currency Conversion Rate

At any point in time the system needs a Conversion rate between your Selling Currency and Accounting Currency. This rate can either be specified by you, or automatically maintained by the system itself. We download daily currency
exchange rates between EVERY currency in the world. These rates are downloaded from a recognized Forex resource. If you choose to let the system maintain the Conversion rate it, will automatically do so on your behalf and update this rate
on a daily basis. If you choose to maintain the Conversion rate yourselves, you will need to update the Conversion rate yourself. You can select your Conversion rate preference from the Finance settings view.

Ideally let the system maintain the Conversion rate on your behalf. Note that despite the fact that the system maintains an automated rate, you still have the flexibility of using a custom rate for any transaction that you manually enter. For example, if you set the Conversion rate to be automatically updated by the system, each time you Add an Invoice/Debit Note/Receipt/Credit Note manually, you will have the ability to specify your own Conversion rate for THAT transaction. The system will however use its own Conversion rate for any transactions that are automatically added.

Forex Difference

If you have a separate Accounting Currency and Selling Currency, it leads to Foreign exchange differences in the booking of an Invoice and Receipt. The system automatically calculates this difference on your behalf and records the same.

Additional Information

Foreign Exchange differences

Payment Collection System and Parameters explained

The Reseller Control Panel comes built in with a customizable Payment Collection agent which you can use to ensure timely collection of Payments from your Customers and Sub-Resellers. It is important to understand the different financial instruments available within the Control Panel before we delve into a discussion of the Payment Collection module.

Your Customers and your Sub-Resellers in the course of their operations will owe you money for specific reasons. These reasons can be as follows:

  • They place an Order.

  • You enter a Debit Note in their account.

  • A payment made by them in the past charges back

  • You add an Invoice in their account

There are two types of transactions which you can use to collect money from your customers and Sub-Resellers. These are Invoices and Debit Notes. You have the ability to raise Invoices and Debit Notes yourself, as well as the system will occasionally raise them for you in specific circumstances. For instance when your Customer places an Order an Invoice for that Order is automatically raised by the system.

An Invoice and Debit note are quite different transactions. An Invoice is always related to an underlying Order, and may actually have some action of the Order dependant on the Invoice. For instance an Invoice for Renewal of an Order, has the action of renewal dependant on the Invoice. A Debit Note on the other hand is not related directly to any Order. Both of them share some common characteristics with respect to Payment Collection. An Invoice however has extra and more powerful Payment collection parameters.

Reminder Days

Let us first examine the single shared Payment Collection parameter that an Invoice and Debit Note have. Both an Invoice and a Debit Note have one field in common, namely the Reminder Days. This is a simple Payment Collection parameter which allows you to send a Payment Reminder to your Customers and Sub-Resellers for their Pending Payments. Every Invoice and Debit Note has a Reminder Days value. This includes Invoices and Debit Notes that we automatically generate as well as Invoices and Debit Notes which you feed in.

Reminder Days is basically the number of days the System waits before sending the next Payment Reminder for a particular Invoice/Debit Note, to your Customers. If for instance the Reminder Days value is set to 5 days for a particular Invoice of a Customer, then the Customer will receive a reminder to pay for that Invoice EVERY 5 days, until the Invoice is FULLY Paid. The Reminder days value is irrelevant after an Invoice or Debit Note is fully paid.

Default Reminder Days for Invoices

To begin with you can set a default Reminder Days value per Product, which will be used by the System when it automatically generates Invoices for that Product. This can be done from the Settings -> Finance & Billing -> Payment Collection Settings. If for instance you set the default Payment Reminder Days for Product A as 10 days, then for EVERY Invoice generated for an Order of Product A, will have a default Invoice Reminder days set to 10 days.

Default Reminder Days for Debit Notes

You cannot set a default Reminder days value for Debit Notes. This is a hard-coded value, set to 5 days, for ALL Debit Notes. Therefore any Debit Note that the system generates automatically will contain a Payment Reminder Days value of 5 days to begin with.

For any Invoice or Debit Note that you add manually you can specify the Reminder days during the creation of that Invoice or Debit Note. Simply point to Customers / Sub-Resellers -> Billing -> Add Invoice / Add Debit Note and you can specify the Reminder days for that Invoice/Debit Note while adding it.

Reminder days can be an extremely powerful feature, and it ensures that your Customers/Sub-Resellers are constantly reminded about any pending payments until they are cleared.

Note

The Payment Collection Reminder emails would be sent only after the request associated with the Invoice is completed, while the payment is still pending. If both the payment as well as the request are pending, then no notification will be sent regarding the pending payment.

Reminder days are also the only Payment collection feature available for a Debit Note. Remaining features in the Payment Collection system are only available for Invoices. Read on to find out about these.

Invoice Specific Payment Collection features

Apart from Reminder days there are three other fields that Invoices can have to facilitate Payment Collection. These fields are:

  • Request Cancellation Date

  • Order Suspension Date

  • Order Deletion Date

Note that these fields are available only if the Invoice is unpaid. They are not available for Paid Invoices since there is no Payment Collection pending for paid Invoices.

Request Cancellation Date: This field is available to any Fully unpaid Invoice which has a Pending Request associated with it. An Invoice associated with a Request can only be automatically generated. This field basically serves to cancel any Order or Request placed and then not paid for for several days. For instance if a dummy Customer comes to your website and Registers for a domain name. An Invoice is raised for this domain name. Now if the Customer does not pay for the domain name, within the Request Cancellation date then on the Request Cancellation date the Invoice and the Request for registration are both cancelled.

Note

The Request Cancellation Date is relevant for only that Invoice which meets the following criteria:

  1. It is system generated, and

  2. it has a pending request, and

  3. it is fully unpaid.

If the Invoice does not have a Pending Request, OR if the Pending Request (of the Invoice) is executed without payment (Execute w/o Payment), OR if the Invoice is partly paid, then the Request Cancellation Date ceases to exist.

Lets take an example to understand this better. Lets assume a Customer of yours - Customer A, has the following Invoice -

Invoice ID: 1

Invoice Description: Renewal of abcd.com for 1 years

Status of Renewal: Pending

Invoice Amount: USD 100

Pending Amount: USD 100

Invoice Date: 1st Jan, 2003

Request Cancellation Date: 10th Jan, 2003

The above Invoice would be created when Customer A requested for the renewal of abcd.com. After this the Customer would continue to get reminders to pay for this Invoice every "Reminder Days". The following situations can now occur -

  • Customer pays for the Invoice. In this case the Request Cancellation Date would cease to exist. The payment does not have to be a full payment. Even if the Customer pays only USD 10, against the Invoice amount of USD 100, even then the Request Cancellation date would cease to exist.

  • You execute the Request without a payment. You can do this using the Execute w/o Payment button from your Control Panel. This would also cancel the Request Cancellation Date

  • In case neither of the above occurs, the Invoice and the associated Request would be automatically cancelled by the system on 10th Jan, 2003

The logic for the above is that if an Invoice is partly paid, or if you Execute the Request, then the Invoice should not be automatically cancelled by the system, because both these actions mean that the Invoice should be paid for completely. If however an Invoice is simply created and not paid for or its underlying Request not executed for a long duration, the System performs a cleanup based on the Request Cancellation Date.

Since a Request Cancellation Date appears only for those Invoices which are System generated and have an associated Request, the Request Cancellation Date is automatically set by the System, based on your default preferences. These default preferences are specified per Product under Settings -> Finance & Billing -> Payment Collection Settings.

Order Suspension Date/Order Deletion Date: These two fields are the most powerful Payment Collection parameters allowing you to suspend or Delete an Order of your Customer or Sub-Reseller automatically within a predefined time period if they have not paid for a particular Invoice. These fields are available for System Generated (with the exception of Domain
Registration Orders) as well as manually raised Invoices.

The purpose of these fields is quite explicit. Basically both these dates can be set to specific dates. When that date is reached and if the Invoice for which this date is set still continues to remain unpaid, the Order is then Suspended or Deleted as the case maybe. While these fields are powerful, use them with great care. A Suspended Order becomes immediately inactive. More importantly a Deleted Order cannot be recovered at all. Once an Order is deleted the process cannot be reversed. These fields are both optional, and their values depend on default settings you have made, as well as any specific modifications you make.

Lets take an example to understand these fields better. Lets assume a Customer of yours - Customer A, has the following Invoice -

Invoice ID: 1

Invoice Description: Invoice for Web Design of abcd.com

Invoice Amount: USD 100

Pending Amount: USD 100

Invoice Date: 1st Jan, 2003

Order Suspension Date: 10th Jan, 2003

Order Deletion Date: 30th Jan, 2003

The above Invoice could have been manually created by you. At the time of creation of the Invoice you set the Order Suspension Date, and Order Deletion Date. The following situations can now occur -

  • Customer pays for the Invoice in full. In this case the Order Suspension and Order Deletion Dates would cease to exist. The payment however MUST be a FULL Payment. As long as the Invoice is not FULLY Paid the Order Suspension and Deletion dates will continue to exist.

  • In case if the above does not occur, the Order will be Suspended automatically on 10th Jan and subsequently Deleted on 30th Jan

  • If after the Order is suspended the Customer pays for the Invoice in full then the Order will be reactivated

  • You can always Unsuspend an Order which is suspended, you can however never undelete an Order. Once an Order is deleted it cannot be recovered again

As you can see these parameters take the Payment Collection load off your back. The System sends several reminders to your Customers/Sub-Resellers, clearly mentioning that the Order would be suspended/deleted if it is not paid for, and if they do not pay despite those Reminders then the System will automatically Suspend/Delete those orders. Similar mails are sent to yourself informing you about the pending payments of your Customers/Sub-Resellers.

For every Invoice you create you can specify an Order Suspension/Deletion Date at the time of creation of the Invoice. Additionally the system itself sets Order Suspension and Order Deletion dates on System Generated Invoices based on your default preferences per Product. These default preferences are specified per Product under Settings -> Finance & Billing -> Payment Collection Settings.

Additional Information

Invoices

Discounting an Invoice explained in Detail

A Discount can be offered on any Invoice that has not been fully reversed (ie. that has not been cancelled and/or discounted). You can apply multiple discounts on an Invoice as long it has not been fully reversed.

The Discount button is visible only upon clicking an Invoice. The Discount button will not be visible for an Invoice which has already been fully reversed due to either a previous Discount or Bad Debts or Sales Reversal. This implies that

Maximum Discount possible = Invoice Amount - Reversals

Here, Reversals could be either due to Bad Debts or Discounts or Sales Reversals. Of course, since a Bad Debt Reversal and a Sales Reversal fully balances an Invoice, the question of applying any further Discount does
not arise.

Example 1

Suppose you have already executed the registration request of a domain name of your Customer X and have a Pending Invoice -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 100 (INR 5000)

Conversion Rate: 50

Then you decide to give a discount of USD 10 to X on the USD 100 Invoice -

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 10 (INR 500)

Conversion Rate: 50

The system would now balance this Credit Note against the Invoice resulting in the below status -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 90 (INR 4500)
Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Now after receiving the Discount, X pays for the Pending Invoice of USD 90 -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)
Conversion Rate: 50

Transaction ID: 3

Receipt Description: Payment received for domain registration (Transaction ID 1)

Receipt Amount: USD 90 (INR 4500)

Receipt Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

In this example, your Customer paid for an Invoice after you gave him a Discount.

Example 2

Say your Customer Y needs to pay for a USD 100 Invoice -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 100 (INR 5000)

Conversion Rate: 50

Now your Customer Y chooses to pay you the entire amount. This changes the status of the transaction to -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Transaction ID: 2

Receipt Description: Payment received for Transaction ID 1

Receipt Amount: USD 100 (INR 5000)

Receipt Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Pleased with the loyalty of this Customer, you choose to give him a 10% discount -

Transaction ID: 3

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 10 (INR 500)

Conversion Rate: 50

The above Credit Note may now be utilised by your Customer towards any other purchases.

Example 3

Suppose your Customer Z needs to pay for pay for a USD 100 Invoice -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 100 (INR 5000)

Conversion Rate: 50

On this Invoice amount, you choose to offer him a Discount of 10% -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 90 (INR 4500)

Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Then your Customer Z refuses to pay you the remaining amount, so you decide to Cancel the Pending Invoice amount as Bad Debts -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Transaction ID: 3

Credit Note Description: Bad Debts Credit on Transaction ID 1

Credit Note Amount: USD 90 (INR 4500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Example 4

Suppose your Customer L and has a Pending Invoice of USD 100 -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 100 (INR 5000)

Conversion Rate: 50

Then you decide to give a discount of USD 10 to L -

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 10 (INR 500)

Conversion Rate: 50

The system would now balance this Credit Note against the Invoice resulting in the below status -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 90 (INR 4500)
Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Now after receiving the Discount, L pays for the Pending Invoice of USD 90 -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)
Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Transaction ID: 3

Receipt Description: Payment received for domain registration (Transaction ID 1)

Receipt Amount: USD 90 (INR 4500)

Receipt Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Now you decide to give a further USD 25 discount to L -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)
Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 10 (INR 500)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Transaction ID: 3

Receipt Description: Payment received for domain registration (Transaction ID 1)

Receipt Amount: USD 90 (INR 4500)

Receipt Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Transaction ID: 4

Credit Note Description: Discount Credit on Transaction ID 1

Credit Note Amount: USD 25 (INR 1250)

Credit Note Pending Amount: USD 25 (INR 1250)

Conversion Rate: 50

Note

A Discount is always provided on the Invoice Amount and not on the amount after any Taxes. When you apply Discount to an Invoice, our system would automatically calculate the applicable tax and apply the same to the Discount Credit Note.

For example, if the Invoice amount is USD 10 and the applicable Tax is 10%, then the total Invoice amount would be displayed as USD 11 (10 + 1  tax). If you wish to give a USD 5 discount on this Invoice, you need to specify the Discount amount as USD 5 itself. When the Discount Credit Note is raised, the total amount would appear as USD 5.50 (5 + 0.5 tax).

Cancellation of a Pending Invoice/Debit Note explained in Detail

In this answer we have provided an in-depth explanation of how the system works internally when an Invoice or Debit Note is cancelled. You can cancel a pending Debit Note from the List View or Details View of an Invoice or Debit Note.

In a true sense, there is really nothing like Cancellation of an Invoice or Debit Note. A transaction once entered cannot ever be deleted. The transaction can only be settled. Therefore even the Cancellation process in a nutshell simply creates a Credit Note of the same amount as the Invoice/Debit Note and settles it with the Invoice/Debit note in question. Lets understand this in greater detail.

Both an Invoice and a Debit Note consist of the following fields:

  • Invoice/Debit Note Amount: This is the amount of the Invoice or Debit Note.

  • Pending Amount: This is the amount of payment pending on this Invoice or Debit Note.

The above amounts will be stored in dual currency, incase your Selling Currency is different from your Accounting Currency.

Invoice/Debit Note Cancellation

Lets discuss in detail the process of cancellation of a single partly paid Invoice. This example covers every aspect we need to discuss about Invoice Cancellation. Debit Note Cancellation works in the exact same fashion.

Lets take a dummy Invoice for a Customer A with the following figures -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 25 (INR 1250)

Conversion Rate: 50

Note the following points about the above Invoice:

  • As you can see, the above Invoice is partly paid to the tune of USD 75 (since the Pending Amount is USD 25 while the Invoice Amount is USD 100).

  • Additionally the Selling Currency in this example is USD and the Accounting Currency is INR.

  • The conversion rate between both these currencies is taken as 50. This conversion rate is the conversion rate at which the Invoice was entered or created manually or by the System.

Now if you confirm the Cancellation of this Invoice the system will automatically create a Credit Note and balance it against the Invoice resulting in the below final status -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)
Conversion Rate: 50

Transaction ID: 2

Credit Note Description: Cancellation of Transaction ID 1

Credit Note Amount: USD 100 (INR 5000)

Credit Note Pending Amount: USD 75 (INR 3750)

Conversion Rate: 50

There are a few important points to note in the above transaction:

  • The Credit Note is added and balanced in a single step by the system. There is no way that the Credit note can be used by the Customer for balancing any other Invoice. The Credit Note is created with the purpose of cancelling the particular chosen Invoice.

  • When a partially paid Invoice is cancelled in this fashion, the amount of the invoice that is pending will be fully paid this way. And the System will return the amount originally available to the Customer's Debit account.

  • The transaction would work in exactly the same fashion if you had a Debit Note instead of an Invoice, or a Credit note instead of the Receipt.

  • Customers can cancel an Invoice from their interface as long as it has an associated Request. In this case both the Invoice and the Associated Request will get cancelled.

  • A cancelled Invoice will never show a Forex Gain/Loss since the Credit Note is raised at the exact same Conversion rate as the Invoice.

Cancelling an Invoice/Debit Note as Bad Debt

Let's take another example here:

Suppose your Customer Roy has the following Pending Invoice -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 20 (INR 1000)

Conversion Rate: 50

In the above example, you will notice the following:

  • The above Invoice is partly paid (since the Pending Amount is USD 20 while the Invoice Amount is USD 100).

  • the Selling Currency in this example is USD and the Accounting Currency is INR.

  • the conversion rate between both these currencies is taken as 50. This conversion rate is the conversion rate at which the Invoice was entered or created manually or by the System.

If your Customer Roy refuses to pay the pending USD 20 to you, you may settle/balance this transaction as a bad debt -

Transaction ID: 2

Credit Note Description: Bad Debts Credit on Transaction ID 1

Credit Note Amount: USD 20 (INR 1000)

Credit Note Pending Amount: USD 20 (INR 1000)

Conversion Rate: 50

The system will now balance this Credit Note against the Invoice resulting in the below final status -

Transaction ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 0 (INR 0)

Transaction ID: 2

Credit Note Description: Bad Debts Credit on Transaction ID 1

Credit Note Amount: USD 20 (INR 1000)

Credit Note Pending Amount: USD 0 (INR 0)

Conversion Rate: 50

Following are a few pointers:

  • The process of cancelling an Invoice/Debit Note as Bad Debt is exactly the same as a normal cancellation.

  • The Credit Note is added and balanced in a single step by the system. There is no way that the Credit note can be used by the Customer for balancing any other Invoice/Debit Note. The Credit Note is created with the purpose of cancelling the particular chosen Invoice/Debit Note.

  • When a partially paid Invoice/Debit Note is cancelled in this fashion, the amount of the Invoice/Debit Note that is pending will be fully paid this way. You will have to manually create a Credit Note if you decide that the amount that was
    originally paid should be returned back to the Customer's debit account.

    If, however, the entire Invoice was pending (i.e., out of the Invoice amount of USD 100 if the complete USD 100 was pending), then the Credit Note that would be created would be of the entire USD 100.

  • The transaction would work in exactly the same fashion if you had a Debit Note instead of an Invoice, or a Credit note instead of the Receipt.

  • Customers can cancel an Invoice from their interface as long as it has an associated Request. In this case both the Invoice and the Associated Request will get cancelled.

  • A cancelled Invoice will never show a Forex Gain/Loss since the Credit Note is raised at the exact same Conversion rate as the Invoice.

Balancing (Payment) of a Pending Invoice/Debit Note explained in Detail

In this article, we have tackled a detailed indepth explanation of how the system works internally when an Invoice or Debit Note is settled against a Receipt/Credit Note. Lets first understand the functionality provided in the Control Panel.

There are many places where you can choose to settle the Invoices/Debit notes of your Customers/Sub-Resellers:

  • From the List View or Details View of an Invoice or Debit Note

  • From the Details View of an Order for all Invoices associated with that Order

  • After performing an Add Funds transaction, the system gives you a list of Pending Invoices and Debit Notes

An Invoice and Debit note are quite different transactions. An Invoice is always related to an underlying Order, and may actually have some action of the Order dependant on the Invoice. For instance, an Invoice for Renewal of an Order has the action of renewal dependant on the Invoice. A Debit Note on the other hand is not related directly to any Order. The system itself does not recognise any link between a Debit Note and a specific Order. However, with respect to accounting effect, both of them reduce the balance of your Customer/Sub-Reseller when they are paid for. With respect to the process of settling them, they function exactly the same way. Let us examine this process of balancing of an Invoice or Debit Note.

It is important to understand that by simply having an Invoice or Debit Note, it does not reduce the balance or available funds of your Sub-Resellers or Customers. You or you Sub-Reseller/Customer have to actually balance that Invoice or Debit Note (settle it) against some Receipt(s)/Credit Note(s) in order for it to reduce the available balance of your Customers/Sub-Resellers.

Balancing of an Invoice/Debit Note

When you or your Customer/Sub-Reseller chooses to pay for an Invoice or Debit Note, you/he/she are given the option use the existing Debit Account balance of the Customer or Sub/Reseller to pay for the Transaction. There is also an option to Add Funds to the Debit Account, or pay online depending on what options you have enabled for your Customers/Sub-Resellers. In effect, however, an Invoice or Debit note gets paid through some Receipt or Credit Note. The Receipt/Credit Note could have already been added from before, or added during the Invoice/Debit Note Payment process.

Both an Invoice and a Debit Note consist of the following fields:

  • Invoice/Debit Note Amount: This is the amount of the Invoice or Debit Note.

  • Pending Amount: This is the amount of payment pending on this Invoice or Debit Note.

The above amounts will be stored in dual currency, in case your Selling Currency is different from your Accounting Currency.

Lets journey through the payment process of an Invoice to understand what actually goes on during the Payment process. Upon confirming the balancing process, the System will attempt to balance this Invoice against existing Receipt(s)/Credit Note(s) or a New Receipt, depending on where the payment is attempted from.

Lets take a dummy Invoice for a Customer A with the following figures:

Invoice ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amount: USD 100 (INR 5000)

Conversion Rate: 50

Note the following points about the above Invoice:

  • As you can see, the above Invoice is fully unpaid (since the Pending Amount is equal to the Invoice Amount).

  • Additionally the Selling Currency in this example is USD and the Accounting Currency is INR.

  • The conversion rate between both is taken as 50. This conversion rate is the conversion rate at which the Invoice was entered or created manually or by the System.

Lets now Assume that the Customer A has the following Receipts in his account:

Receipt ID: 1

Receipt Amount: USD 50 (INR 2450)

Pending Amount: USD 0 (INR 0)

Conversion Rate: 49

Receipt ID: 2

Receipt Amount: USD 75 (INR 3675)

Pending Amount: USD 50 (INR 2450)

Conversion Rate: 49

Receipt ID: 3

Receipt Amount: USD 75 (INR 3600)

Pending Amount: USD 75 (INR 3600)

Conversion Rate: 48

As we can see above, there are 3 Receipts, each with a different pending amount. The important aspects to note are as follows:

  • Receipt ID 1 has no pending amount remaining. This means that this Receipt of USD 50 has been fully utilised against other previous transactions. Receipt ID 2 and 3 have some pending amount which can be utilised to balance this Invoice.

  • The conversion rate of the Receipts is different from the conversion Rate of the Invoice. This is obvious considering that the Receipts would have been fed in on a different day from the Invoice.

Now this is what the system will do. It will gather all Receipts which have some pending amount left in them. The system will then use these Receipts one after another to balance the Invoice until either the Invoice or the Receipts are completely balanced. The important aspect in this payment process is the forex difference calculation. Since the Invoice and Receipt are both fed in at different Conversion rates, it is obvious that there will be a Forex gain or loss with respect to this payment. The system automatically calculates this Forex Gain/Loss and stores it against the Invoice for you to account it appropriately. Here is how this works -

In the above case the system would first inspect Receipt ID 2. This Receipt has a pending amount of USD 50. Here we bring up an important point. When the system is balancing Invoices or Debit notes, it is actually balancing the Selling Currency Amount. What this basically means is if your Invoice is for USD 100, the system will attempt to balance Receipts worth USD 100 against this Invoice. By now you would have got a clue as to how the Forex diff would come into picture. In the process of balancing USD 100 from receipts, the INR amount used up from the Receipts would not be the same as the INR amount of the Invoice, since they are both fed in at different conversion rates. This leads to the Forex Diff. Lets see how this alculation works.

In the case above the System will use USD 50 from Receipt ID 2 and USD 50 from Receipt ID 3 in order to balance the USD 100 Invoice. In this process let us compute the INR amount of each Receipt that is used up.

Receipt ID: 2

USD Amount utilised: USD 50

INR Amount utilised: USD 50 x 49 (Conversion rate) => INR 2450

Receipt ID: 3

USD Amount utilised: USD 50

INR Amount utilised: USD 50 x 48 (Conversion rate) => INR 2400

Total USD Amount Utilised: USD 100

Total INR Amount Utilised: INR 4850

The above calculation shows the amounts utilised in both currencies to fulfill an Invoice of USD 100. The Invoice amount in INR as we know was INR 5000. Against that we have Receipts of INR 4850. The difference between these is the Forex Loss of (INR 150). Below we have the final status after the payment is completed:

Invoice ID: 1

Invoice Amount: USD 100 (INR 5000)

Pending Amout: USD 0 (INR 0)

Forex Loss: INR 150

Receipt ID: 2

Receipt Amount: USD 75 (INR 3675)

Pending Amount: USD 0 (INR 0)

Conversion Rate: 49

Receipt ID: 3

Receipt Amount: USD 75 (INR 3600)

Pending Amount: USD 25 (INR 1200)

Conversion Rate: 48

At the end of the transaction, the Invoice is fully balanced, Receipt ID 2 is fully utilised, Receipt ID 3 is partly utilised and there is a Forex Loss of INR 150.

There are a few important points to note in the above transaction:

  • The transaction would work in exactly the same fashion if you had a Debit Note instead of an Invoice, or a Credit note instead of the Receipt.

  • The Invoice in this case was fully balanced, while the last Receipt (Receipt ID 3) was partly utilised. The reverse condition could also take place, wherein the Receipts were not sufficient to cover the Invoice Pending Amount, and therefore the Invoice would remain partly paid, and the Receipts would be fully utilised.