For anyone still looking. I decided that any outstanding credit balance on a receivable account will be reclassed as a payable for reporting purposes. This entry will be reverted in the next period

Managing advance payments in Odoo is crucial when businesses need to pay suppliers or receive payments from customers before the actual delivery of goods or services. Odoo provides built-in support for handling advance payments efficiently through both Sales and Purchase workflows.

For Customer Advance Payment:

1. Create a Sales Order for the customer.
2. Confirm the order and click on Create Invoice.
3. Choose Down Payment (percentage or fixed amount) as the invoice option.
4. This creates an advance invoice, which can be validated and paid by the customer.
5. When the final invoice is generated later, Odoo will automatically reconcile the advance payment with the remaining amount.

For Vendor Advance Payment:

1. Create a Purchase Order and confirm it.
2. Manually create a Vendor Bill with the advance amount.
3. Validate and register the payment against that bill.
4. Later, when the actual bill is received for the full amount, the advance can be reconciled against the final invoice using the Payment Matching option.

Use your Customer Deposits (liability) account on the Invoice.

After paying the Invoice you will have a bank debit and a current liability credit.

You then, via a manual Journal Entry, reclass the liability to an AR credit when the time comes so it can be used to pay down one or more Invoices.

Your accountant is absolutely right; when you register payment in advance to a vendor, it will CR the bank and DB the A/P, which is wrong for reporting. The real entry should be bank CR and advances to supplier DR. It's very pathetic that Odoo simply can't properly handle the advances cases.

Hi Tony,

I think this is quite complicated out of the box. You might need manual journal entries for this to happen.

Some third-party modules are handling this, not sure if that will work for you.

Hi Tony,

I hope you are doing well.

In Odoo accounting, you can handle by this way..

1. Create the Advance Payment:
   • Create a new journal entry to record the advance payment received from the customer.
   • Debit the bank or cash account to reflect the increase in cash.
   • Credit a liability account (e.g., Deferred Income) to represent the advance payment received.
2. Create the Invoice:
   • When you create an invoice for the customer, include the products or services being provided. 
3. Allocate the Advance Payment from the Deferred Income account:
   • Apply the advance payment received to the invoice to allocate the amount from the liability account.
   • In the invoice, add a new line and select the Deferred Income account and allocate the amount in minus.
   • Odoo will automatically create a journal entry for the invoice
     

By the way, could you please try this option and let us know how it works, particularly in terms of how the Amount Due is calculated?

Thanks.