Invoice Allocation
When an invoice is paid by means of a debtor receipt or trust-to-debtors transfer transaction, funds must be allocated in order to determine:
- Which invoice(s) have been paid; and
- How much sales tax (GST) the business must declare
This is particularly important when partial payments are made, or when interest has been charged on the matter.
ContactsLaw allocates funds automatically by default, however this can be adjusted by the user.
Automatic Allocation
When allocating funds automatically, ContactsLaw uses the following rules:
- Allocate funds to unpaid interest, starting with the oldest invoice on the matter. Sales tax does not apply to interest.
- Allocate remaining funds to the principal amount, starting with the oldest invoice on the matter. Sales tax is calculated pro-rata based on the amount allocated to each invoice.