Partial payment

A partial payment occurs when a customer pays less than the full invoice amount — for example, paying £600 against a £1,000 invoice — or when you pay a supplier in instalments. The invoice is not discharged; the remaining £400 stays live as an open balance in aged debtors or aged creditors until it is settled or written off.

Recording in Xero

In Xero you record a partial payment by applying the bank line to the invoice and entering only the amount received. Xero posts the cash, reduces the invoice balance, and leaves the residual amount outstanding. The invoice remains in an open state, visible in aged debtors and on the contact’s account. This is the correct behaviour — the alternative, matching the full bank line to the invoice and ignoring the shortfall, would overstate income and close a debt that has not actually been paid.

Partial payments create a common reconciliation trap: if a bank rule or JAX auto-matches the incoming line to the invoice at face value, the £400 shortfall disappears without trace. The invoice shows as paid, the bank clears, and the error only surfaces when the customer pays the remainder and there is no open invoice to receive it against. Reviewing aged debtors at month-end is the standard control that catches this before it compounds.