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Settlements

Accounting Support

JustOn can offset non-related invoices and credits of an account via settlements – an operation also known as clearing.

Think of a marketplace scenario: You sell products that are delivered by a participating organization. On the one hand, as you receive the customer's money, you have to pay out the vendor. To this end, you create a credit. On the other hand, you charge the vendor a commission for your brokerage, issuing an invoice. Now you can offset the invoice against the credit, thus settling the invoice and reducing the credit amount.

General Settlement Concepts

Generally, JustOn settles an open invoice against a new credit, and an open credit against a new invoice (also referred to as the settlement target).

Be aware of the following specifics:

  • JustOn settles the complete open amount of the invoice or credit, following this rule:

    settled amount = min(abs(credit amount), abs(open invoice amount))
    
  • The payment due dates of the invoice or credit are irrelevant for the settlement.

  • If you work with business entities, the business entity specified for both the invoice and the credit must match for the settlement to take place.
  • Using an optional settlement assignment key on both invoices and credits narrows down the set of invoices and credits available for automatic settlements. Only invoices and credits with the same key can be settled with each other automatically.

    Users can still select any invoices and credits for manual settlements, irrespective of defined settlement assignment keys.

    Enabling Settlement Assignment Key

The settlement itself is implemented by balances on the open invoice and on the new (target) invoice.

New invoice balance

Field Value
Type Settlement
Amount <settlement amount>
Related Invoice <settled invoice ID>

Settled invoice balance

Field Value
Type Clearing
Amount -1 * <settlement amount>
Related Invoice <new invoice ID>

The settled amount does not exceed the balance of the target invoice to avoid an overpayment.

Current Balance Target Balance Settled Amount Notes
-100 150 -100 full settlement of a credit against an invoice
-100 75 -75 partial settlement of a credit against an invoice
-100 -20 - no settlement possible
-100 0 - no settlement possible
0 20 - no settlement possible
100 -150 100 full settlement of an invoice against a credit
100 -75 75 partial settlement of an invoice against a credit
100 20 - no settlement possible
100 0 - no settlement possible
0 -20 - no settlement possible

There are two approaches for settling invoices or credits:

  • Automatic settlement

    If set up accordingly, JustOn can settle open invoices or credits automatically with an invoice batch finalization.

  • Manual settlement

    Users can settle single invoices or credits manually.

Automatic Settlement

The invoice finalization batch process involves the Settle invoices step. So if configured accordingly, JustOn can settle open invoices or credits automatically with new draft invoices or credits when executing a batch finalization.

Doing so creates the balance of the type Settlement on the new (target) invoice. The open invoice to be settled gets the corresponding balance of the type Clearing, and at the same time, it is set Paid (in case of invoices) or Settled (in case of credits).

settlement_auto
Automatically settling an invoice against a credit

Enabling Automatic Settlement

Manual Settlement

Users can settle individual open invoices or credits manually with other (draft or open) invoices or credits.

JustOn creates the balance of the type Settlement on the new (target) invoice immediately when completing the settlement operation, irrespective of the invoice status (Draft or Open). When the target invoice is finalized (set Open), the open invoice to be settled gets the corresponding balance of the type Clearing, and at the same time, it is set Paid (in case of invoices) or Settled (in case of credits). If the target invoice is already Open itself, the open invoice to be settled is assigned the Clearing balance and set Paid or Settled immediately when completing the settlement operation.

Be aware that invoices that are settled against a draft invoice cannot be settled against another draft invoice. Delete the settlement balance first.

settlement
Manually settling an invoice against a credit

Managing Settlements