In this guide 6 sections
Payments sit against the dealer. Nobody knows which order was settled. Track each part payment, advance cheque and return against its order, give every dealer a credit limit, and age the balance by order date. Overdue money then shows itself. Start with five dealers.
Why the ledger says one thing and the dealer says another
Most furniture makers keep one running balance per dealer, and every cheque that arrives is knocked off the oldest invoice, whatever the dealer meant it to pay. Three months later a bill is disputed. Nobody can say which order was paid.
The fix is not a fancier ledger but a link between each receipt and the order it settles, visible to sales and accounts alike.
Contractors add a second layer. They buy for a project, pay in stages, and return pieces after the site measurement changes and a wardrobe no longer fits its bay.
Record part payments against the order
Every order should carry an advance, a pre-dispatch payment and a balance due after delivery, and each receipt must name the order, the mode and the date.
When a dealer settles two orders with one transfer, split it into two lines on screen so each order shows its own part payment and its remaining balance. A short note helps. A line reading advance for the school bench order explains itself a year later, when the person who took the call has left.
- Order number and dealer name on each receipt
- Advance, running and final payment lines
- Mode: transfer, cheque or cash
- Split lines when one payment covers several orders
Treat advance cheques as their own status
A post-dated cheque is not cash. Keep a register with the cheque number, bank, presentation date and supporting order, and mark each as held, presented, cleared or bounced. Review it every Monday.
A bounce reopens that balance. It should also block new dispatch to the dealer, because without that rule the goods keep leaving while the debt grows and the warehouse never hears about it.
Only the accounts head can lift it.
Handle returns and credit limits before they distort balances
Returns need a credit note that points to the original invoice line and carries a reason code such as transit damage, wrong finish or size error. Without the code you cannot see which products breed disputes, which finishes get rejected on arrival or which transporter keeps damaging corners.
Set a credit limit per dealer plus a limit on days outstanding, and let any new order that crosses either one wait for approval from the accounts head.
Contractors usually need a project-level limit as well, since a single contractor may run three sites at the same time with three different payment schedules.
- Credit note tied to the invoice line
- Return reason code
- Limit by amount and by age
- Approval step for orders over the limit
Make overdue balances visible every week
Age the balance by order date, not invoice date, in bands such as current, past due and long overdue, with the oldest open order listed first. Sales should see it too.
A salesperson who sees the overdue figure before taking a new order can ask for the cheque first, and that conversation is easier than chasing it after dispatch. Try it this week.
Pick your five largest dealers, then match every receipt to an order by hand, noting each advance, each bounced cheque and each credit note on the way.
Dealer balance review sheet
Each open order gets one line. Columns hold dealer, order number, order date, advance received, cheque status, returns credited, balance due, credit limit and age band, giving accounts every figure for the weekly call. The final column names the follow-up owner. A promised date sits beside it.
Open a blank worksheet to printQuestions owners ask
Should part payments be matched to invoices or orders?
Match them to orders first, then to invoices as they are raised, which keeps an advance visible long before any invoice exists for the goods.
How do we handle a dealer who pays a round sum each month?
Accept it, but allocate it on screen to specific orders and note the dealer’s instruction, because unallocated money hides the oldest overdue items and starts arguments later.
Can a bounced cheque stop dispatch automatically?
Yes, when the software puts the dealer on hold the moment a cheque is marked bounced, and one named person, usually the accounts head, may lift it.