Due and Advance, explained with real numbers

Every supplier account comes down to one number. It's either a Due, money you still owe them, or an Advance, money you've paid ahead that they're holding for you. Sometimes it's zero and you're settled.

The idea is simple. Where people get tangled is in the middle of a job, when deliveries, part payments and the odd refund are all mixed together. So instead of definitions, here is one supplier account from start to finish.

The rule

Balance = everything you paid − everything they supplied

A negative balance is a Due. A positive one is an Advance. That's the whole system; the rest is just following entries through it.

A month with one supplier

Say you're renovating a kitchen and buying from a local yard.

On October 19 you owe the yard $498. Not "about five hundred", exactly $498, and you can point to the five lines that make it.

Paying more than the Due

On October 21 you pay $1,000, because it's a round number and you know more drywall is coming.

The $498 Due is cleared and the extra $502 is now an Advance. Nothing is wrong here. The yard is holding $502 of your money, and the next delivery will draw on it.

This is the moment worth getting right, because it's easy to forget the extra on paper. A week later someone asks "did we pay for that last drywall?" and nobody remembers that it was paid for in advance.

The next delivery uses the Advance

You don't pay anything for this delivery. $480 comes out of the $502 Advance and $22 is left.

When a supplier gives money back

Sometimes the job ends with an Advance still sitting there. Here it's $22, but on a bigger job it can be a few thousand. If the supplier hands it back, that isn't income and it isn't a cost; it just undoes part of what you paid.

Recording it as money back keeps your total cost right. Recording it as "income" would make the job look cheaper than it was, and recording nothing would leave a $22 Advance that doesn't exist.

Paid on the spot

Not every purchase goes on account. You buy $35 of screws at the counter and pay there and then. That counts on both sides: it's supplied and paid at once, so the balance doesn't move. It still belongs in the job's total cost, and it still belongs in that supplier's history.

Paying for work

A different case: you pay a tiler $900 to tile the bathroom, and the tiles were already on site. There's no delivery to match this payment against. If you record it as an ordinary payment, the tiler shows a $900 Advance forever.

Record it as a payment for the work. It goes into the job's total cost directly and doesn't touch Due or Advance.

Reading a whole job at a glance

Add every supplier together and the job has three numbers worth watching:

• Total cost: everything supplied plus anything you paid for directly.
• Due: what you still owe, supplier by supplier.
• Advance: what you've paid ahead and haven't used yet.

A job with a large Advance is cash you've tied up with suppliers. A job with a large Due is a bill coming. Both are fine, as long as you know.

How Finlivo Business handles it

In Finlivo Business every supplier page shows the balance at the top, as Due or Advance, and every entry below it with the running balance. When you add a payment, a line under the amount tells you what it will do before you save it:

• "Pays Mike's $498 Due · $502 extra becomes Advance."
• "Uses $480 of Mike's $502 Advance · $22 Advance left."

Payment for work and Got money back are their own entries, so those two special cases don't bend the balance. Any supplier's statement goes out as a PDF or Excel file in a couple of taps.

The words matter less than the habit. Write every delivery and every payment, and the balance takes care of itself.