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Handling open credit on customer accounts when transitioning to ERPNext

Hi, I’m not understanding the correct way to enter existing overpayments from customers when transitioning to ERPNext.
I have entered my opening balance sheet numbers and used the opening invoice creation tool to enter my outstanding purchase and sales invoices. But I have some customers in my old system with credit in their account due to pre payment or overpayment. I’m not able to figure out how to record these payments in ERPNext so they can be credited towards future invoices for those customers without double booking into accounts.
Can anyone help me understand?

Hi @rromandy

Have you looked at this.

https://docs.erpnext.com/docs/v13/user/videos/learn/opening-account-balances

I had thought that I found my answer in that video. But now I’m second guessing myself.
The transaction in my old system was a prepayment which credited Accounts Receivable and debited my bank account.
When I copied over my balance sheet accounts in opening accounts entry I feel like I should have reduced the balance in my bank account by the value of the prepayments and then made the pre-payment payment entries for my customers in ERPNext in order to bring the correct balance into ERPNext while reflecting the existing pre-payments in ERPNext.
I don’t think this situation is addressed in the video at all, and I’m not finding any documentation about handling existing prepayments while transitioning to ERPNext.
If any one has any thoughts on how to properly bring pre-payments into a new instance of ERPNext I would like to hear them. Thank you.

I am definitely not an accountant, but I’m not really understanding why you would want to reduce the balance on your bank account below what appears on your statement.

By the account standard I have to follow, a system change should happen at a specific moment (usually midnight), with all transactions before documented in the old system and all transactions after documented in the new system. If I’m understanding you correctly, the approach you’re describing would blur that boundary for partial/pre- payments.

Can you clarify why you think doing it this way is better or necessary?

Hi @rromandy

Why would you reduce the balance in the bank account ?

When you do the JV as explained in the video. Your Debtors account for the specific customer will be in Credit. So when you generate a new invoice for the customer it will be Debit… not sure where the confusion is ???

The bank account opening entry will already have the pre-payment amount included

Simply credit the creditors account with the value of the prepayments. You may also want to check the “Is advance” box in the Journal Entry line for the creditor.

This will automatically recognise the prepayment and make it available to be used against subsequent invoices.

Regards

Thank you all for your help and suggestions. I’m sorry for my confusion, I’m a brand new user, with no experience with accounting or ERP systems. I’m a programmer and am trying to set up scripts and procedures for automating my companies transfer to ERPnext at the beginning of 2022. @olamide_shodunke thank you in particular, your answer was exactly what I was looking for. I didn’t know I was able to make a Journal Entry against a specific party.