A payment adjustment records cash that left with a bill payment but does not settle the bill itself.
The Bill Payment Amount settles the bill.
The adjustment carries the extra amount to an account you select.
The total posted to your payment account matches the amount that actually moved in the bank.
Use an adjustment when:
You pay more than the bill balance in the same transfer.
You need the recorded cash to match your bank exactly without changing the amount applied to the bill.
Open the payment form: open the bill and click Record Payment.
Open Fees & Adjustments: click Fees & Adjustments beside Bill Payment Amount.
Open the Adjustments tab: the modal opens with Fees Charged and Adjustments tabs.
Enter the adjustment: fill in the fields, then click Save to return to Record Payment.
Post the payment: click Save on the Record Payment form.
Adjustment Amount: required. The amount paid on top of the Bill Payment Amount.
Adjustment Account: required. The account the adjustment posts to, selected from your Chart of Accounts.
Adjustment Description: optional. A short reference such as "Overpayment to supplier."
The summary panel in Fees & Adjustments shows how the cash total is built:
Gross Cash Spent.
Add Fees Charged.
Adjustment.
Net Cash Spent.
Net Cash Spent is the amount posted to your payment account. It should match the amount on your bank statement.
Before You Start
Before recording the overpayment, make sure the following is ready:
A clearing account exists in your Chart of Accounts to hold the excess cash, for example "AP On-Account Clearing," with the account type set to Current Liability.
Example: you paid ₱1,050 in one transfer against a ₱1,000 bill.
Record the payment: open the bill, click Record Payment, and enter ₱1,000 as the Bill Payment Amount. This is the amount that settles the bill, not the amount that left the bank.
Select the payment details: choose a payment method that moves money and select the payment account the funds left from.
Add the adjustment: click Fees & Adjustments, open the Adjustments tab, and enter ₱50 as the Adjustment Amount, your clearing account as the Adjustment Account, and "Overpayment to supplier" as the Adjustment Description.
Check the cash total: Net Cash Spent shows ₱1,050. Click Save, then save the payment.
Create the supplier credit note: open Supplier Credits and create a new credit note for the same supplier, using the same date as the payment.
Add one line: select your clearing account, enter ₱50, and leave the tax field empty so the line carries no tax profile.
Save and leave the credit open: do not apply the credit note to anything yet.
One bank line of ₱1,050 out, matching the transfer on your bank statement.
The bill fully settled.
An open credit of ₱50 on the supplier in aged payables.
Your clearing account at zero.
Note: A clearing account balance that is not zero means a credit note is missing or was raised for the wrong amount.
The payment with the adjustment posts:
A credit to your payment account for the full cash paid.
A debit to Accounts Payable for the Bill Payment Amount, which settles the bill.
A debit to your clearing account for the adjustment.
The supplier credit note posts:
A credit to your clearing account, which returns it to zero.
A debit to Accounts Payable, which creates the open credit on the supplier.
The adjustment records the cash and parks the excess in your clearing account. It does not create a position on the supplier.
The credit note is what moves the supplier position: it appears in aged payables and on the supplier statement, it can be applied to a future bill, and it can be matched to a refund.
A journal moves account balances but does none of these, so use a credit note instead.
Open the bill: open the bill you want to settle.
Choose the apply credit option: select the credit note raised for the overpayment.
Enter the amount to apply: a partial amount is allowed.
Save: the bill balance drops by the applied amount.
The credit note must be active and in the same currency as the bill.
Record it on the supplier credit note as a refund. Do not create a new bill or a journal for it.
Open the credit note: open the supplier credit note holding the overpayment.
Record the refund: select the payment account that received the money and the date it arrived.
Save: the refund appears in Cashflows as a supplier refund.
Yes. No action is needed. The open credit stays on the supplier in aged payables until you apply or refund it.
You can add an adjustment to an existing payment.
You can change an adjustment that is already recorded.
You cannot remove an adjustment. To remove it, delete the payment record and record the payment again.
Payment methods that move money, such as bank transfer and cash, accept an adjustment.
Payment methods that settle without money movement, such as Clearing Settlement, Debt Write Off, Inter-company, and Withholding Tax Certificate, do not accept an adjustment.
No. The credit note line carries no tax profile, so no tax is claimed or reversed, and the overpayment appears in no box of your VAT return.
Open the bill and check its payment list. The adjustment shows with the payment details there.
No. An excess of 0.01 records the same way as any larger amount.
Do not use a payment adjustment. Record the payment as a cash-out Direct Entry against your clearing account, then raise the supplier credit note for the same amount.
