A partial payment is when a customer pays less than the full amount of an invoice. The remaining balance stays as accounts receivable until fully paid.
Partial payments occur when a customer pays only part of what they owe. Common reasons include cash flow constraints, disputes over part of the invoice, staged payment arrangements or errors. From a bookkeeping perspective, a partial payment reduces accounts receivable by the amount paid but leaves the remaining balance outstanding. In Xero, partial payments are recorded by applying the bank payment to the invoice for the amount received, leaving the balance as still owing. This is different from a short payment (where the customer deliberately pays less, perhaps deducting a discount) or an overpayment (where they pay more than owed). Proper handling ensures your receivables balance accurately reflects what is still owed. SortBooks matches partial payments from bank feeds to the correct invoices in Xero, calculating the remaining balance and flagging invoices with partial payments for follow-up.
SortBooks automates the bookkeeping processes related to partial payment by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing partial payment, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
An invoice is a document sent to a customer requesting payment for goods or services provided. It includes details of the transaction, payment terms and the amount due.
Bank reconciliation is the process of matching your accounting records to your bank statement to ensure they agree. It identifies discrepancies, errors and missing transactions.
Cash flow is the movement of money in and out of your business. Positive cash flow means more money coming in than going out. It is often considered more important than profit for business survival.
Payment terms specify when payment is expected from a customer. Common terms include payment on receipt, net 7, net 14 and net 30 (meaning payment due within that many days).
SortBooks handles all the complexity automatically. Just connect Xero and let AI manage your books.