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Allocation

Principles

Allocations are used to allocate credit financial transactions against invoices, in order to settle any outstanding amount. In CRM.COM the outstanding Balance of accounts by assigning credit Financial Transactions against Invoices. Allocations are applied automatically by the system based on the allocation principle specified on the active Configuring Accounts Receivable Definitions There are two possible Allocation principles that are supported, however at any given point the system can only have one of the two selectedSystem following the Allocation Principle specified on the /wiki/spaces/WIP/pages/10010232.

Two possible Allocation Principles are supported by CRM.COM but only one can be selected by the System at a time.

• FIFO: First In First Out
  • Allocation will occur occurs at posting
  • All unallocated transactions will be are taken into consideration, regardless of which one is being posted
  • The oldest credit transaction is allocated against the oldest invoiceInvoice. 
  • The oldest credit transaction is identified by comparing the posting datePosting Date. 
  • The oldest invoice is Invoice is identified by comparing the due dateDue Date. 
  • The allocation type Allocation Type is set to FIFO
• FIFO & Against Item
  • Allocation will occur at posting
  • Allocations are always performed against item Against Item when the credit financial transaction is referring Financial Transaction refers to one or more specific invoices (Intended) Invoices). 

  • If the credit financial transaction is referring Financial Transaction refers to more than one invoicesInvoice, then the allocation Allocation is applied on those invoices Invoices using the FIFO principle. 
    For more information on Intended invoices Invoices visit Managing Financial Transactions

• • .

Allocating a Financial Transaction

In CRM.COM allocations are automatic and they Allocations are performed automatically during the Posting of a Financial Transaction . For more information on Posting visit Posting Draft Financial Transactions. The Allocation will be made based on the configured and according to the selected principle. If the selected Principle principle is FIFO & Against Item then the user will have , then it is necessary to define the Intended invoices or Intended bills on Invoices or Bills when creating the paymentPayment.

For more information on creating payments Payments and setting intended invoices visit Intended Invoices view Managing Financial Transactions. 

If no Intended invoices Invoices are defined, then the system System will be applied apply the FIFO principle.  If  If the selected Principle is FIFO then the user won't need , it is not necessary to define any invoicesInvoices.

How does the FIFO Allocation Principle work?

Allocations based on FIFO allocation principle are performed using the following the FIFO Principle follow these rules:

• Allocations are always performed always FIFO ( first in first out). 

  • The oldest credit transaction is oldest credit transaction is identified by comparing the posting datePosting Dates. 

  • The oldest invoice is Invoice is identified by comparing the due dateDue Dates.

  • The oldest credit transaction is allocated against the oldest

  invoice

  • Invoice. 

• Allocations are performed against item Against Item only when an invoice cancellation Invoice Cancellation is posted

  • In the case of an invoice cancellation Invoice Cancellation, the invoice cancellation transaction is always allocated against the referred invoice and the allocation type  selected Invoice and the Allocation Type is set to 'Against Item'

  • If there are other transactions which are already allocated against that invoicethe selected Invoice, then they are de-allocated and allocated again based on the same principle.

  In the case of cancelling a payment

  • using 'FIFO'

• If a Payment which was already allocated against an invoiceInvoice is cancelled, then the payment which is cancelled Payment is de-allocated and the invoice is allocated again based on Invoice is re-allocated following the same principle

• The de-allocation is done performed by creating an allocation Allocation record with negative amount and allocation type desetting the Allocation Type to 'De-allocation. '

• The de-allocated record keeps a reference to the allocation Allocation record that resulted in its de-allocated itAllocation. 

The system System always keeps information on the type of allocation a record of the Type of Allocation that has been performed performed.

How does FIFO and Against Item Principle work?

Allocations based on FIFO & Against Item allocation principle Allocation Principle are performed using the following rules:

• Allocations are always performed against item Against Item when the credit financial transaction is referring Financial Transaction refers to one or more specific invoicesInvoices. 

  • If the credit financial transaction Financial Transaction is referring to more than one invoicesInvoice, then the allocation Allocation is applied on those invoices Invoices using the FIFO principle

  • If the amount that should to be allocated to the Invoice is more than the unallocated amount of the invoice then
    • If there are other transactions which are already allocated against an invoice, using the Invoice using FIFO principle, then they are de-allocated and re-allocated again based on the same principle.'FIFO'
    • If the amount that should be allocated is still more than the unallocated amount of the invoice then 
      An Invoice, then an amount equal to the unallocated amount is allocated against that invoicethat Invoice, setting the allocation type to Against ItemThe the Allocation Type to 'Against Item' and the remaining amount of the credit financial transaction Financial Transaction is allocated using the FIFO principle
    Else the
    • .

  • Otherwise, "If the credit Financial Transaction amount is just enough to cover the invoice  then the whole amount of the credit financial transaction Financial Transaction is allocated against that invoicethe Invoice, setting the allocation type Allocation Type to 'Against Item'

• Allocations are always performed always FIFO (first in first out) on a FIFO basis if the credit financial transaction Financial Transaction is not referring to specific invoicesInvoices.

• Allocations are always performed against item on an Against Item basis when an invoice cancellation Invoice Cancellation is posted.

  • In the case of an invoice cancellation Invoice Cancellation, the invoice cancellation is always allocated against the referred invoice and the allocation type is set to Against ItemIf there are other transactions which are already allocated against that invoiceallocated against the referred Invoice and the Allocation Type is set to 'Against Item'

  • If other transactions were already allocated against the Invoice, then they are de-allocated and allocated again based on the same principle.

  in the case of cancelling a payment which was

  • 'FIFO'

• When cancelling a Payment already allocated against an invoiceInvoice, then the payment which is cancelled Payment is de-allocated and the invoice Invoice is allocated again based on the same principleThe de'FIFO'
• De-allocation is done performed by creating an allocation Allocation record with a negative amount and allocation type desetting the Allocation Type to 'De-allocation. '
• The de-allocated record keeps a reference to the allocation Allocation record that resulted in its de-allocated itAllocation.