What does this section cover?

What is an Allocation Principle ?

Allocations are used to allocate credit financial transactions against invoices, in order to settle any outstanding amount. In CRM.COM 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 selected.

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

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

Allocations are not available for the users to view

Allocating a Financial Transaction

In CRM.COM allocations are automatic and they are performed 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 principle. If the selected Principle is FIFO & Against Item then the user will have to define the Intended invoices or Intended bills on creating the payment. For more information on creating payments and setting intended invoices visit Managing Financial Transactions. If no Intended invoices are defined then the system will be applied FIFO. If the selected Principle is FIFO then the user won't need to define any invoices

How does FIFO Allocation Principle work?

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

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

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

  • The oldest invoice is identified by comparing the due date.

• The oldest credit transaction is allocated against the oldest invoice. 

• Allocations are performed against item only when an invoice cancellation is posted

  • In the case of an invoice cancellation the invoice cancellation is always allocated against the referred invoice and the allocation type is set to Against Item

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

• In the case of cancelling a payment which was already allocated against an invoice, then the payment which is cancelled is de-allocated and the invoice is allocated again based on the same principle

• The de-allocation is done by creating an allocation record with negative amount and allocation type de-allocation. 

• The de-allocated record keeps a reference to the allocation record that de-allocated it. 

The system always keeps information on the type of allocation that has been performed 

How does FIFO and Against Item Principle work?

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

• Allocations are always performed against item when the credit financial transaction is referring to one or more specific invoices. 

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

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

  • Else the whole amount of the credit financial transaction is allocated against that invoice, setting the allocation type to Against Item

• Allocations are performed always FIFO (first in first out) if the credit financial transaction is not referring to specific invoices.

• Allocations are always performed against item when an invoice cancellation is posted

  • In the case of an invoice cancellation the invoice cancellation is always allocated against the referred invoice and the allocation type is set to Against Item

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

• in the case of cancelling a payment which was already allocated against an invoice, then the payment which is cancelled is de-allocated and the invoice is allocated again based on the same principle

• The de-allocation is done by creating an allocation record with negative amount and allocation type de-allocation. The de-allocated record keeps a reference to the allocation record that de-allocated it.