How to set an Expense Payment Source

Preferred payment sources can trump the normal expense fulfilment order. Expense Payment Source is an advanced option on the Expenses screens that you can use to specify a preferred account from which to fund a given expense. Payment sources are merely an option designed to give you greater control, when needed, to specify how an expense will be paid. Otherwise, the software's default expense fulfilment logic, as outlined here will be used. The Expense Payment Source will be the first or possibly the only account the software will go to fulfil the expense.

An expense payment sources can be either:

- A Preferred Source, meaning that the software will draw funds from the preferred account first before using the usual expense fulfilment procedure outlined above;

- The Only Allowed Source, meaning that the software will fulfil the expense only using funds from the specified account. If insufficient funds are available in this account, a shortfall will occur.

If you want to circumvent the usual ownership-based expense fulfilment logic, fulfilling an expense from a particular account, follow the instructions below:

1. Go to the relevant Expenses screen.

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2. Select the relevant Expense from the Ledger.

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3. Expand Advanced Settings > Expense Payment Source.

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4. Click the Add button and a list of available accounts will appear. Select the account you want the software to fulfil the expense from.

5. Click Add again and select another account from the list if you want the software to be able to use more than one account to fulfil this expense. 

The account(s) shown in the box will become the first stop for funds to fulfil this expense before the software starts stepping through the normal expense fulfilment logic.

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6. Click OK once the list is complete, then click Update.

 

Tip: If setting a preferred payment source, use the “Only Allow Preferred Source to Pay Expense” option very sparingly, if at all. When ticked, this setting can create artificial shortfalls if the preferred source is inadequately funded to pay the linked expense. These artificial shortfalls can prevent the software’s need analysers from returning results.

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When might you tick the “Only Allow…”option?  In most cases, we recommend only using this setting in a what-if scenario. For example, suppose your clients are saving for their children’s university fees and you want to run a test to determine if they are saving enough to a particular account. Even if the account is set as a preferred payment source, income and other assets sources will be used if the account does not have the funds to meet the linked expense. However, by ticking the “Only Allow Preferred Source to Pay Expense” option, you could in this scenario test the account for adequate funding. Again, we recommend using this setting sparingly and normally only in scenarios.

Debt payoffs

A preferred payment source can also be specified for debt payoffs, if needed. Debt payoffs can be scheduled on the Debt screen > expand Advanced Settings > click Payoff > select a payoff event. You then have the option to select a payoff source, if necessary. Otherwise, the payoff will be made from income and possibly liquidated assets, if needed.

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