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Payment Reconciliation

Payment Reconciliation links a submitted payment or credit with one or more outstanding invoices for the same Customer or Supplier. Use it when money has already been recorded in EnigmaERP but the correct invoice was not selected in the original transaction.

Reconciliation does not create another bank movement. It updates how the existing amount is allocated and recalculates the invoice outstanding balance.

Before you begin#

Confirm that the invoice and payment are submitted, belong to the same Company and party, use the same receivable or payable account, and still have an outstanding or unallocated amount.

For this example, Northstar Retail has an outstanding Sales Invoice of $1,796 and an unallocated Payment Entry of $525.

Reconcile a payment against an invoice#

1. Select the company and party#

Open Payment Reconciliation. Select the Company, Party Type, and Party. EnigmaERP fills the relevant Receivable / Payable Account when a default account is available.

Use the optional Filters section when you need to narrow a long list by invoice date, payment date, amount, bank or cash account, or result limit.

Select the company, customer, and receivable account in Payment Reconciliation

Click Get Unreconciled Entries.

2. Review the unreconciled entries#

EnigmaERP displays outstanding invoices on the left and unallocated payments or credits on the right. Check the document number, date, and amount before selecting anything.

Review outstanding invoices and unallocated payments

If no rows are selected, EnigmaERP can allocate entries in first-in, first-out order. Select rows when you need to control exactly which payment settles which invoice.

3. Select the invoice and payment#

Select the invoice that should receive the payment. Then select the matching Payment Entry or credit.

In this example, Payment Entry ACC-PAY-2026-00010 is matched with Sales Invoice ACC-SINV-2026-00009.

Select the invoice and payment to match

4. Create the allocation#

Click Allocate. EnigmaERP proposes an allocation based on the smaller of the invoice outstanding amount and the payment amount.

Use Allocate after selecting the invoice and payment

5. Review and reconcile#

Review every row under Allocated Entries. Confirm the Payment Entry, invoice, Allocated Amount, and Difference Amount. Edit a row if only part of the available payment should be applied.

Review the allocation and reconcile it

Click Reconcile only after the allocation is correct.

6. Verify the result#

Before reconciliation, Sales Invoice ACC-SINV-2026-00009 had an outstanding amount of $746. After the $525 payment was reconciled, the outstanding amount became $221.

Sales Invoice outstanding amount before payment reconciliation

Open Payment Entry ACC-PAY-2026-00010 and verify that the invoice appears under Payment References. The Total Allocated Amount is $525, while Unallocated Amount is $0.

Payment Entry reference and allocated amount after reconciliation

You can also open the Accounts Receivable report and confirm that it shows the reduced invoice balance.

Video demo#

Important fields and what they mean#

Field What it controls
Company Limits the tool to one legal entity and its accounts.
Party Type Chooses whether you are reconciling a Customer or Supplier.
Party Loads documents for the selected Customer or Supplier.
Receivable / Payable Account Limits results to documents posted to the same control account.
Default Advance Account Includes supported Payment Entries posted to the selected advance account.
Invoice and Payment filters Narrow results by date, amount, document name, bank account, or result limit.
Invoices Lists submitted documents with an outstanding balance.
Payments Lists submitted Payment Entries, Journal Entries, and supported credits with an amount available to allocate.
Allocated Amount Amount from the payment or credit that will be applied to the invoice.
Difference Amount Amount left unmatched in that allocation row.

What changes after reconciliation#

EnigmaERP adds or updates the payment reference, reduces the invoice outstanding amount, and reduces the payment unallocated amount. The original bank or cash posting remains unchanged because the money was already recorded when the payment was submitted.

Troubleshooting#

The invoice or payment is missing#

Check the Company, party, receivable or payable account, document status, currency, filters, and date range. A fully allocated payment or fully settled invoice is not an unreconciled entry.

The payment and invoice use different receivable or payable accounts#

The tool cannot match entries across different control accounts. Correct the account on the source document through the supported cancellation and amendment workflow, or use an appropriate accounting adjustment reviewed by your finance team.

Allocate uses the wrong invoice#

Select the exact invoice and payment before clicking Allocate. Leaving rows unselected allows FIFO allocation.

The allocation amount is too high#

Open the allocation row and reduce Allocated Amount. It cannot exceed the available payment amount or invoice outstanding amount.

A payment was reconciled incorrectly#

Use Unreconcile Payments to remove the incorrect link, verify the restored balances, and then reconcile the payment again.

Frequently asked questions#

When should I use Payment Reconciliation instead of Payment Entry?#

Use Payment Entry when recording the receipt or payment and you already know the invoices to settle. Use Payment Reconciliation when the payment or credit already exists but remains unallocated or was not linked to the right invoice.

Can one payment settle several invoices?#

EnigmaERP supports this. Select the payment and the required invoices, allocate the available amount across them, and review every allocation row before reconciling.

Can one invoice be settled by several payments?#

EnigmaERP supports this. Reconcile each available payment against the same invoice until its outstanding amount reaches zero.

Can I allocate only part of a payment?#

EnigmaERP supports this. Edit Allocated Amount before reconciling. The remaining amount stays unallocated and can be used later.

Does Payment Reconciliation change the bank balance?#

Payment Reconciliation does not change the bank balance. It changes the link between existing accounting entries and does not post the receipt or payment again.

Is this the same as Bank Reconciliation?#

These tools serve different purposes. Payment Reconciliation matches EnigmaERP payments and credits with EnigmaERP invoices. Bank Reconciliation matches EnigmaERP bank ledger entries with transactions shown by the bank.

Adapted for EnigmaERP from the ERPNext documentation, © Frappe Technologies Pvt. Ltd. Content licensed under CC-BY-SA 3.0. EnigmaERP is a product of Enigma and is not affiliated with or endorsed by Frappe Technologies Pvt. Ltd.