A payment that covers only a portion of the total amount due on an invoice, leaving a remaining balance to be paid later.
Partial Payment occurs when a customer pays less than the full invoice amount. This is common in B2B transactions, milestone-based projects, instalment arrangements, and when customers face cash flow constraints. Proper accounting requires tracking the original invoice amount, each partial payment received, and the outstanding balance. The invoice status moves from 'Unpaid' to 'Partially Paid' and finally 'Paid' when the full amount is received. ERP systems must allocate partial payments to specific invoices to maintain accurate aging reports.
Invoice #1234 for ₹1,00,000 (30-day terms). Customer pays ₹40,000 on Day 15 and ₹35,000 on Day 28. Outstanding: ₹25,000. In accounting: Dr. Bank ₹40,000 and ₹35,000 (on receipt dates), Cr. Accounts Receivable ₹75,000 total. Remaining AR balance: ₹25,000. Invoice status: Partially Paid (75% received).
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Best practice: Allocate to the oldest invoice first (FIFO method) unless the customer specifies otherwise. This keeps aging reports accurate and prevents older invoices from appearing overdue. Some systems allow customers to specify which invoice a payment applies to via payment reference or remittance advice.
Under Indian GST (on accrual basis), full GST is charged and reported when the invoice is issued, regardless of payment received. However, under Section 16(2), the buyer can claim ITC only after making payment to the supplier within 180 days of the invoice date. If not paid within 180 days, the buyer must reverse the ITC claimed.
Money owed to a business by its customers for goods or services delivered but not yet paid for.
A commercial document issued by a seller to a buyer, detailing the products or services provided, quantities, prices, and payment terms.
A written acknowledgment confirming that payment has been received for goods or services, serving as proof of the transaction for both buyer and seller.
A report that categorizes accounts receivable or payable by the length of time invoices have been outstanding, typically in 30-day buckets.
The average number of days it takes a company to collect payment after a sale has been made.
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