Understanding GAU vs Payment Allocations

Quick Start

🎯 Confused about allocation types? Understand how GAU allocations drive invoicing while payment allocations handle payment application. GAU Allocations → Generate Invoices | Payment Allocations → Apply Payments to Invoices

What you'll accomplish: Master the fundamental difference between GAU allocations and payment allocations, understanding their roles in the complete billing and payment lifecycle in about 8 minutes.

🚀 Quickstart

GAU Allocations:

• Purpose: Define what and how much to invoice
• Timing: Created before invoicing on opportunities
• Result: Generate invoice records

Payment Allocations:

• Purpose: Apply payments to specific invoices
• Timing: Created when processing payments
• Result: Reduce invoice balances

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💡 Understanding the Financial Flow

Complete Process Overview:

1. Opportunity Created → Contains total amount owed
2. GAU Allocations Added → Break down opportunity by accounting categories
3. Invoices Generated → Based on GAU allocations
4. Payments Received → Money comes in from members
5. Payment Allocations Created → Apply payments to specific invoices

Two-Stage Process

The system uses a two-stage approach: first defining what to bill (GAU allocations), then tracking what was paid (payment allocations).

📘 GAU Allocations Explained

What is a GAU Allocation?

GAU (General Accounting Unit) Allocation records represent portions of an opportunity's total that you intend to invoice for specific accounting categories or designations.

Key Characteristics:

• Pre-invoicing - Created on opportunities before generating invoices
• Accounting breakdown - Divides total amount by GAU/fund
• Invoice driver - Each allocation can generate one or more invoices
• Financial categorization - Ensures proper accounting classification

GAU Allocation Fields Reference

📋 GAU Allocation Key Fields

Field	Purpose	Example
Opportunity	Parent opportunity being billed	"Smith Family Annual Dues"
GAU	Accounting unit/fund for this portion	"Membership Dues", "Building Fund"
Amount	Dollar amount for this GAU	$500.00
Billing Plan	Payment schedule for this allocation	"Annual", "Quarterly", "Monthly"
Description	Additional details about allocation	"Annual membership for 2025"

When GAU Allocations Are Used

• Opportunity setup - Breaking down total amounts by purpose
• Mass billing campaigns - Applying charge templates to members
• Custom billing - Manually configuring specific invoices
• Financial reporting - Categorizing revenue by fund/purpose

📘 Payment Allocations Explained

What is a Payment Allocation?

Payment Allocation records show how much of a payment is being applied to which specific invoice. One payment can be allocated across multiple invoices.

Key Characteristics:

• Post-payment - Created when processing payments
• Invoice application - Links payments to specific invoices
• Balance tracking - Updates invoice remaining balances
• Flexible distribution - Can split payments across multiple invoices

Payment Allocation Fields Reference

💳 Payment Allocation Key Fields

Field	Purpose	Example
Payment/Adjustment	Source payment or adjustment record	"Check #1234 - $750"
Invoice	Target invoice receiving payment	"Membership Dues Invoice"
Amount	Portion of payment for this invoice	$500.00
Transaction Type	Type of allocation	"Payment", "Credit", "Adjustment"

When Payment Allocations Are Used

• Payment processing - Applying member payments to invoices
• Partial payments - Splitting payments across multiple invoices
• Adjustments - Applying credits or write-offs to invoices
• Payment transfers - Moving payments between invoices

🔄 How They Work Together

Stage 1: Setting Up Billing (GAU Allocations)

Member Account
    ↓
Opportunity ($1,000 total)
    ↓
GAU Allocations:
    • Membership Dues: $600
    • Building Fund: $400
    ↓
Generate Invoices:
    • Invoice A: $600 (Membership)
    • Invoice B: $400 (Building)

Stage 2: Processing Payments (Payment Allocations)

Member Payment ($750 received)
    ↓
Payment Allocations:
    • $600 → Invoice A (Membership) [Paid in Full]
    • $150 → Invoice B (Building) [Partial Payment]
    ↓
Updated Balances:
    • Invoice A: $0 remaining
    • Invoice B: $250 remaining

📊 Key Differences Comparison

⚖️ GAU Allocation vs Payment Allocation

Aspect	GAU Allocation	Payment Allocation
Primary Purpose	Define what to invoice	Apply payments to invoices
Created When	Before invoicing (on opportunity)	After payment received
Drives	Invoice creation	Invoice balance updates
Represents	Amount to be billed	Amount being paid
Relationship	Opportunity → Invoice	Payment → Invoice
Timing	Planning/billing phase	Payment/collection phase

📖 Real-World Examples

Example 1: Multi-Fund Donation

Scenario: Member makes $1,000 donation split between funds

GAU Allocation Stage:

1. Create opportunity for $1,000
2. Add GAU allocations:
   • General Fund: $600
   • Building Fund: $400
3. Generate invoices:
   • Invoice A: $600 (General Fund)
   • Invoice B: $400 (Building Fund)

Payment Allocation Stage:

1. Member pays $1,000
2. Create payment allocations:
   • $600 → Invoice A
   • $400 → Invoice B
3. Both invoices paid in full

Example 2: Partial Payment Scenario

Scenario: Member has $800 invoice but pays only $500

Starting Point:

• Invoice: $800 (Membership Dues)

Payment Processing:

1. Record $500 payment
2. Create payment allocation:
   • $500 → Invoice
3. Updated invoice balance: $300 remaining

Example 3: Complex Payment Distribution

Scenario: Member has multiple invoices and makes one payment

Starting Point:

• Invoice A: $300 (Dues)
• Invoice B: $200 (Building Fund)
• Invoice C: $150 (Event Fee)

Payment Processing:

1. Member pays $400
2. Create payment allocations:
   • $300 → Invoice A (paid in full)
   • $100 → Invoice B (partial payment)
   • $0 → Invoice C (no payment)
3. Results:
   • Invoice A: $0 remaining
   • Invoice B: $100 remaining
   • Invoice C: $150 remaining

✅ How to Know You Understand

Success Indicators:

• ✅ You can explain when to use each allocation type
• ✅ You understand the billing → payment workflow
• ✅ You can trace money from opportunity to payment
• ✅ You know how allocations affect invoice balances

Quick Knowledge Check:

1. When are GAU allocations created? Before invoicing
2. What do payment allocations update? Invoice balances
3. Can one payment have multiple allocations? Yes
4. What drives invoice generation? GAU allocations

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💡 Best Practices

Allocation Best Practices

• 📋 Plan GAU Allocations First - Set up accounting categories before invoicing
• 🎯 Accurate Amounts - Ensure GAU allocations total opportunity amount
• 💳 Clear Payment Application - Document how payments are allocated
• 📊 Monitor Balances - Track invoice balances after payment allocations
• 🔍 Regular Reconciliation - Verify allocations match accounting records
• 📝 Document Complex Cases - Note unusual allocation patterns

Common Patterns:

• Simple billing - One GAU allocation per opportunity
• Fund accounting - Multiple GAU allocations for different funds
• Payment plans - GAU allocations with billing plans for installments
• Partial payments - Payment allocations across multiple invoices

Troubleshooting Tips:

• Missing invoices - Check GAU allocations on opportunity
• Incorrect balances - Review payment allocation amounts
• Allocation errors - Verify total amounts match expectations
• Complex scenarios - Break down into simple allocation steps

🔗 Related Actions

• Create a New Adjustment
• Record a Single Payment
• Split a Payment
• Transfer Payment Between Accounts