Partial Payments Using Accounting Priority

To book holding amounts based on a priority, each holding distribution code must be assigned an Accounting Priority. When a partial payment is posted, only part of the holding amount will be transferred to the payable amount (proportional to the amount of receivables reduced by the payment). When the holding amount consists of various holding distribution codes with different accounting priorities, the amount to transfer is allocated as follows:

• Holding distribution codes associated with the oldest debt are settled first
• Within the same debt age, holding distribution codes with a higher accounting priority are booked first. If more than one distribution code shares the same priority, the settlement is distributed among them in proportion to the holding account balance

The above logic is handled by the payment segment FT creation algorithm C1-FTGL-PSAC. As an example of how these rules apply, let's assume an implementation practices cash accounting; i.e. revenue, taxes and other third party liabilities are not recognized until payment is received. Also assume the following distribution codes have been configured:

Assume a customer has an outstanding third party charge with an arrears date of 2/Jan/2009:

A bill is created for a customer and the result of the bill's financial transactions (an LPC adjustment in the amount of 10 and a bill segment in the amount of 127) include the following FT GL lines (both financial transactions have an arrears date of 15/Jan/2009):

No payment is received prior to the next bill. The result of the next bill's financial transaction (a bill segment in the amount of 100) includes the following FT GL lines (this financial transaction has an arrears date of 16/Feb/2009):

The following shows the result if a customer makes a payment on 20/Feb/2009. At payment time we'll build a table of holding amounts by accounting priority and debt age as follows: