Sometimes in business, you may receive a payment in advance from a customer, or you may have to pay an advance to your vendors before you place an order. As soon as you receive the payment in the bank, create a bank statement and reconcile it, as it is a payment in advance from the customer; don’t select the counterpart at reconciliation.
When you have a partner linked to the entry without a counterpart, you will get the VALIDATE button instead of the RECONCILE button. Click on the VALIDATE button to process those entries; that will be considered as an advance from the customer or to the vendors.
After issuing invoices to customers, you can match this prepayment with invoices through Manual payment and invoice matching tab in Accounting module.
You can also use this function in case you process payments via Payments in Sales/Purchases tab.
After reconciliation, system will generate matching numbers for reconciled transactions, which help you keep tracks of all receivable and payable transactions with payments.
