This article explains how the system records payments, charges, and payment applications, and why differences may sometimes appear between the Account Aging report and the Balance Sheet.

 

Payment Process – Simple Overview

When a homeowner makes a payment, the system records the transaction in stages.

 

Step 1 – Payment is Posted

When a payment is posted but not yet applied to a charge, the system records:

Debit AR Clearing
 Credit Prepaid

At this point:

  • The homeowner account shows a credit balance
  • The Balance Sheet shows the amount in the Prepaid GL account

 

Step 2 – Deposit is Created

When the deposit is generated, the system records:

Debit Bank
 Credit AR Clearing

This moves the payment from the temporary clearing account to the bank account.

 

Step 3 – Charge is Posted

When a charge is posted to the homeowner account:

Debit Accounts Receivable
 Credit Revenue

If the charge is unpaid, the balance appears in Accounts Receivable.

 

What Happens Before Payment Application

Before the payment is applied:

  • The charge is in Accounts Receivable
  • The payment is in Prepaid

These balances remain separate until the payment is applied.

Example:

Charge: $1,500.00
Payment: $900.00

Accounts Receivable (AR)   = $1,500.00
 Prepaid                    = $900.00



When the Payment is Applied

When the payment is applied to the charge, the system records:

Debit Prepaid
Credit Accounts Receivable

After application:

  • Accounts Receivable decreases
  • Prepaid decreases
  • The homeowner balance updates
  • Reports and the Balance Sheet align



Why Reports May Show Different Balances

If a payment has not yet been applied, reports may show balances differently depending on how the report is run.

This happens because the GL does not combine charges and payments until the payment is applied.

 

Aging Report Views



Open Balance View

Open Balance shows charges and payments separately, exactly as they appear in the GL.

Example:

AR (Charges)      $1,500.00
 Prepaid (Payment) $900.00

GL shows the same balances:

Accounts Receivable    $1,500.00
 Prepaid Assessments    $900.00

In this view, the report matches the GL.



Account Balance View

Account Balance shows the net homeowner balance.

Example:

Charge      $1,500.00
Payment $900.00
----------------------
 Net Balance   $600.00 AR


However, the GL still shows the balances separately:

Accounts Receivable    $1,500.00
 Prepaid Assessments      $900.00

This difference exists until the payment is applied.

 

After Payment Application

When the payment is applied, the system records:

Debit Prepaid
 Credit Accounts Receivable


At this point, the amount is moved within the GL. All open credit balances are applied, and the balances will match the net homeowner balance.

After that, both the reports (Account Balance or Open Balance) and the GL show the same result.



Reports That Show Unapplied Payments

These reports help identify payments or credits that have not yet been applied:

  • Account Aging Report
  • Account Aging Detail by Open Balance
  • Payment Not Processed Report
  • Transaction List Report

Automatic Payment Application

To enable automatic payment application:

Navigate to:

Association → Manage Association → Edit → AR Tab > Enable: Auto Apply Payment

Once enabled:

  • the system automatically applies payments
  • the process runs overnight
  • no manual action is required


Manual Payment Application

If needed, payments can be applied manually:

Accounting → AR → Manual Payment Application

From this page you can apply:

  • Payments
  • Assessment Credits (Assessment – Dues-CRDT)

Recommendation

We recommend enabling automatic payment application so the system applies all payments using the same application date.

This helps reduce timing differences that may occur when payments are applied manually using different dates.