I haven't read all the replies so this may be repetitive.

What you have here is not an accounting problem, it's a finance problem. How much control do you have over the line item ledger? To me, the way you say they're handling it is single-entry hell. From the accounting side, you would book the invoice amount into income matching the balance due and setup an entry (credit methinks) into receivables to be balanced by future activity or an entry into a suspense account, again to be balanced later.

On the macro level, I think you are handling it correctly. Discuss the issue with the accountant for the client and see what satisfies his or her ledger system. That gives you a leg up on convincing the business managers.

>While converting a system for a client, I'm running into problems with the way they approach things. One is simply the age-old "we've always done it that way" problem. Something more specific is their desire to have an overpayment on an invoice make the invoice balance go negative, effectively making it an open credit that can later be applied against another invoice. So you have a situation where it's an invoice one day, a credit the next. One day you're getting a payment against it and the next you're using it as a payment to pay something else. To me, this is the wrong way to go about it. I have the system never letting a balance fall below zero and generating a credit invoice for the overpayment amount. Then the credit invoice can be used later to apply against another invoice. This causes some issues for them, though I'm going to address them. Anyone have any thoughts on these two appoaches?
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>Russell Campbell