Customer Payments, Payment Modes & Fund Transfers
1. Overview
Bylon ERP provides an integrated process for recording customer payments, managing different payment methods, and transferring funds between the company's financial accounts.
This guide explains the complete process from:
Customer Payment → Payment Mode → Accounting Entry → Cash/Bank Collection → Fund Transfer
The process is particularly important when a business receives physical cash and later deposits that cash into a bank account.
2. Understanding the Three Key Components
The process involves three main areas of Bylon ERP:
1. Payment Modes
Defines how money is received or paid, such as:
- Cash
- Bank
- M-Pesa
- Cheque
- Other payment methods
2. Bank Accounts
Defines the company's actual banking accounts.
Examples:
- KCB Bank – Operating Account
- Equity Bank – Main Account
- Co-operative Bank – Collection Account
3. Transfers
Records the movement of money between the company's own financial accounts.
Examples:
- Cash → Bank
- Bank A → Bank B
- Collection Account → Operating Account
3. Payment Mode Setup
Before recording customer payments, the appropriate Payment Modes should be configured.
Navigate to:
Customers → Payment Modes
Select:
Add New Payment Mode
The screen will display Add New Payment Mode & Accounting Mapping.
4. Creating a Payment Mode
4.1 Payment Mode Name
Enter the name of the payment method.
Examples:
- Cash
- KCB Bank
- Equity Bank
- M-Pesa
- Cheque
For physical cash collections, use:
Cash
4.2 Bank Accounts / Description
Enter the relevant bank account information or description associated with the payment mode.
This field can also be configured to display banking information on invoice PDFs where applicable.
4.3 Active
Select:
Active
This makes the Payment Mode available for use in transactions.
If a Payment Mode is no longer required, it can be deactivated rather than deleted, helping preserve historical transaction records.
4.4 Invoice PDF Option
The option:
Show Bank Accounts / Description on Invoice PDF
can be selected where the business wants the configured banking information or description to appear on invoice PDFs.
This is useful where invoices contain payment instructions for customers.
4.5 Selected by Default on Invoice
The option:
Selected by default on invoice
can be enabled when a particular payment mode should automatically be selected when creating an invoice.
Use this carefully where a business has a preferred/default payment method.
4.6 Invoices Only
Enable:
Invoices Only
when the Payment Mode should only be available for invoice-related transactions.
4.7 Expenses Only
Enable:
Expenses Only
when the Payment Mode should only be used for expense/vendor-related transactions.
4.8 Branch
Select the applicable branch.
Options may include:
All Branches
or a specific branch.
This is important for businesses operating multiple branches because payment methods may differ between branches.
For example:
| Branch | Payment Mode |
|---|---|
| Nairobi Branch | KCB Bank |
| Mombasa Branch | Equity Bank |
| Kisumu Branch | Co-operative Bank |
5. Accounting Mapping
The Payment Mode Mapping (Accounting) section determines how Bylon ERP posts accounting entries when the Payment Mode is used.
The screen provides accounting mappings for:
Customer Invoice Payment
- Credit Account
- Debit Account
Expense / Vendor Payment
- Credit Account
- Debit Account
Cash Refund / Customer Refund
- Credit Account
- Debit Account
The appropriate Chart of Accounts ledgers should be selected for each applicable transaction type.
6. Understanding Debit and Credit Mapping
The accounting mapping tells Bylon ERP which ledgers should be affected when a transaction is posted.
For example, when a customer pays an invoice using cash:
Cash increases → Debit Cash
Customer receivable decreases → Credit Customer/Receivable
Therefore, the accounting effect is:
| Account | Debit | Credit |
|---|---|---|
| Cash | KES 100,000 | — |
| Customer Receivable | — | KES 100,000 |
The exact ledger used depends on the accounting structure configured in the organization.
Important: Payment Mode accounting mappings should be configured by an authorized finance/accounting administrator.
7. Creating a Bank Account
Navigate to:
Financial Management → Banking → Bank Accounts
Create the company's bank account.
For example:
KCB Bank – Operating Account
Enter the required bank account details and save.
8. Automatic Chart of Accounts Integration
When a Bank Account is created in Bylon ERP, the corresponding bank account is automatically translated/associated with a Chart of Accounts Ledger.
The ledger is classified under:
Chart of Accounts → Current Assets
For example:
Bank Account
KCB Bank – Operating Account
becomes an accounting ledger under:
Current Assets
This means users do not need to manually create a separate accounting ledger every time a banking account is created, subject to the organization's configured accounting structure.
9. Customer Payment Process
Once Payment Modes and accounting mappings have been configured, users can record customer payments.
Navigate to:
SalesHub AI → Payments
Select:
Add Payment
The system opens the Add Customer Remittance window.
10. Add Customer Remittance
Complete the following fields.
Customer
Select the customer making the payment.
Example:
ABC Limited
Payment Mode
Select the method through which the customer has made payment.
Examples:
- Cash
- KCB Bank
- Equity Bank
- M-Pesa
- Cheque
The Payment Mode selected should reflect the actual method used by the customer.
Currency
Select the currency in which the payment was received.
Example:
KES – KES
For organizations operating with multiple currencies, select the appropriate currency.
Branch
Select the branch receiving or processing the payment.
This is particularly important in a multi-branch organization.
Amount Received
Enter the actual amount received.
Example:
KES 100,000
Date
Enter the date on which the payment was received.
Transaction ID
Enter the relevant transaction/reference number where applicable.
Examples:
- M-Pesa transaction reference
- Bank transaction reference
- Cheque number
- Deposit reference
For physical cash, a transaction ID may not be available, but an internal reference can be included where appropriate.
Notes
Enter additional information about the payment.
Examples:
Payment for Invoice INV-000125.
or:
Cash collection received from customer.
11. Invoice Allocation
After selecting the customer, Bylon ERP displays the customer's outstanding invoices.
The user can allocate the payment against the relevant invoice or invoices.
For example:
| Invoice | Balance Due | Amount Paid |
|---|---|---|
| INV-000125 | KES 100,000 | KES 100,000 |
The payment should be allocated correctly before saving.
The system requires the allocated amount to match the amount received.
12. SMS Notification
The payment screen also provides:
Send SMS Notification (auto)
When enabled, the customer can receive an automatic payment confirmation/thank-you SMS.
This can provide the customer with immediate confirmation that the payment has been recorded.
13. Completing the Customer Payment
After completing the payment information and invoice allocation:
- Verify the customer.
- Verify the Payment Mode.
- Verify the currency.
- Verify the branch.
- Confirm the amount received.
- Confirm the invoice allocation.
- Enter the transaction reference where applicable.
- Add notes where necessary.
- Enable SMS notification if required.
- Select Apply.
The customer payment is now recorded in Bylon ERP.
14. Example: Customer Pays Cash
Assume:
Customer: ABC Limited
Invoice: INV-000125
Invoice Amount: KES 100,000
Payment: KES 100,000
Payment Mode: Cash
The user records:
SalesHub AI → Payments → Add Payment
Then:
Customer: ABC Limited
Payment Mode: Cash
Currency: KES
Branch: Nairobi
Amount Received: KES 100,000
The payment is allocated to:
INV-000125
and saved.
15. Accounting Effect of Customer Cash Payment
Once the payment is recorded, the accounting effect is generally:
| Account | Debit | Credit |
|---|---|---|
| Cash | KES 100,000 | — |
| Customer Receivable | — | KES 100,000 |
The customer's outstanding balance is reduced and the company's cash balance increases.
16. Monitoring Collections
Bylon ERP provides comprehensive reporting on collections based on the Payment Mode.
Management can use these reports to determine:
- How much cash was collected.
- How much was collected through banks.
- How much was collected through M-Pesa.
- Collections by branch.
- Collections by user.
- Collections by customer.
- Collections by date.
- Collections by payment method.
These reports can be accessed through:
Bylon Insight Central
This is particularly useful for monitoring physical cash collections before they are banked.
17. What Happens When Physical Cash Is Banked?
Recording a customer payment and banking the physical cash are two different transactions.
For example:
Customer Payment
Customer pays:
KES 100,000 Cash
The payment is recorded through:
SalesHub AI → Payments
The company's Cash account increases.
Later, the company takes the physical KES 100,000 to the bank.
This creates a second transaction:
Cash → Bank
This should be recorded using:
Financial Management → Transfer
18. Recording a Cash-to-Bank Transfer
Navigate to:
Financial Management → Transfer
The transfer screen allows the user to move funds from one financial account to another.
Complete the following fields.
Transfer From
Select the account from which the money is being transferred.
For physical cash banking:
Cash
Transfer To
Select the bank account receiving the money.
Example:
KCB Bank – Operating Account
Amount
Enter the amount deposited into the bank.
Example:
KES 100,000
Description
Enter a clear description of the transfer.
Recommended example:
Cash collections banked – KCB Operating Account – 28/08/2026
Where applicable, include the bank deposit slip/reference number.
Example:
Cash collections banked – KCB – Deposit Slip No. 458721
19. Accounting Entry for Cash Banking
When the transfer is completed, Bylon ERP automatically creates the accounting entries.
Example:
Transfer From: Cash
Transfer To: KCB Bank – Operating Account
Amount: KES 100,000
The system posts:
| Account | Debit | Credit |
|---|---|---|
| KCB Bank – Operating Account | KES 100,000 | — |
| Cash | — | KES 100,000 |
Accounting Rule
Transfer To = Debit
Transfer From = Credit
Therefore:
Bank increases
and
Cash decreases
20. Why the Cash-to-Bank Transfer Is Not Income
This is an important accounting concept.
The business has already received the KES 100,000 from the customer.
When the money is subsequently deposited into the bank, the company has not earned another KES 100,000.
The money has simply moved from one asset account to another.
Therefore:
Cash ↓ KES 100,000
Bank ↑ KES 100,000
The company's total assets remain unchanged as a result of the transfer.
21. Complete Physical Cash Banking Workflow
The complete Bylon ERP process is:
Stage 1 — Customer Payment
Customer pays invoice.
↓
Stage 2 — Record Payment
SalesHub AI → Payments → Add Payment
↓
Stage 3 — Select Payment Mode
Cash
↓
Stage 4 — Allocate Payment
Allocate payment against the customer's invoice.
↓
Stage 5 — Payment Recorded
Cash balance increases.
↓
Stage 6 — Physical Banking
Cash is physically taken to the bank.
↓
Stage 7 — Record Transfer
Financial Management → Transfer
↓
Stage 8 — Select Accounts
Transfer From: Cash
Transfer To: Bank Account
↓
Stage 9 — Submit Transfer
Bylon automatically posts:
Debit Bank
Credit Cash
22. Transferring Money Between Bank Accounts
The Transfer feature is also used when money is moved from one company bank account to another.
Example
The company transfers:
KES 500,000
from:
Equity Bank – Main Account
to:
KCB Bank – Operating Account
Navigate to:
Financial Management → Transfer
Enter:
| Field | Value |
|---|---|
| Transfer From | Equity Bank – Main Account |
| Transfer To | KCB Bank – Operating Account |
| Amount | KES 500,000 |
| Description | Internal transfer to KCB Operating Account |
Bylon ERP posts:
| Account | Debit | Credit |
|---|---|---|
| KCB Bank – Operating Account | KES 500,000 | — |
| Equity Bank – Main Account | — | KES 500,000 |
23. Transfer vs Customer Payment
Users must understand the difference between Payment and Transfer.
| Activity | Bylon ERP Process |
|---|---|
| Customer pays invoice | SalesHub AI → Payments |
| Customer pays cash | Payment Mode → Cash |
| Customer pays via bank | Payment Mode → Relevant Bank |
| Customer pays via M-Pesa | Payment Mode → M-Pesa |
| Physical cash is banked | Financial Management → Transfer |
| Bank A sends money to Bank B | Financial Management → Transfer |
| Money moves between company financial accounts | Financial Management → Transfer |
Simple Rule
Use Customer Payment when recording money received from a customer.
Use Transfer when moving money between your own financial accounts.
24. Example: Complete Transaction From Customer to Bank
Consider the following scenario.
Customer: ABC Limited
Invoice: INV-000125
Invoice Amount: KES 250,000
Payment: KES 250,000
Payment Method: Physical Cash
Bank: KCB Bank
Step 1 — Customer Pays
ABC Limited gives the business KES 250,000 in cash.
Step 2 — Record Payment
Go to:
SalesHub AI → Payments → Add Payment
Select:
Payment Mode: Cash
Enter:
Amount Received: KES 250,000
Allocate the amount to INV-000125.
Save the payment.
Step 3 — Cash Is Held by the Business
The cash balance increases by:
KES 250,000
Step 4 — Cash Is Deposited
The business deposits KES 250,000 into KCB Bank.
Step 5 — Record Transfer
Go to:
Financial Management → Transfer
Enter:
Transfer From: Cash
Transfer To: KCB Bank
Amount: KES 250,000
Description: Cash collection banked – KCB – INV-000125
Step 6 — Accounting Entry
Bylon posts:
| Account | Debit | Credit |
|---|---|---|
| KCB Bank | 250,000 | — |
| Cash | — | 250,000 |
The customer's invoice has been paid, while the company's money has moved from physical cash into the bank.
25. Best Practices
1. Always record the original customer payment
Do not use a Transfer to record a customer paying an invoice.
Use:
SalesHub AI → Payments
2. Use the correct Payment Mode
Select the Payment Mode that represents how the customer actually paid.
For example:
Cash payment → Cash
M-Pesa payment → M-Pesa
Bank payment → Relevant Bank
3. Bank physical cash using Transfer
Once cash is physically deposited:
Cash → Bank
Use:
Financial Management → Transfer
4. Use meaningful descriptions
Avoid generic descriptions such as:
Bank transfer
Instead use:
Cash collections banked – KCB Operating Account – Deposit Slip 458721
5. Maintain accurate references
Where available, record:
- Bank transaction reference
- Deposit slip number
- Cheque number
- M-Pesa transaction ID
- Internal payment reference
This makes reconciliation and auditing easier.
6. Verify Payment Mode Mapping
Before using a Payment Mode, ensure its accounting mappings have been configured correctly.
Incorrect mappings can result in transactions being posted to the wrong ledgers.
26. Multi-Branch Considerations
For organizations operating multiple branches, Payment Modes can be configured for:
All Branches
or a specific branch.
Users should always select the correct branch when recording customer remittances.
This allows management to accurately report:
- Collections by branch
- Cash held by branch
- Bank collections by branch
- Transfers by branch
- Payment methods by branch
27. Audit Trail
The combination of Customer Payments and Transfers creates a clear financial audit trail.
For physical cash:
Customer Invoice
→ Customer Payment
→ Cash Collection
→ Cash Banking
→ Bank Account
This allows finance teams to trace the movement of funds from the original customer transaction through to the company's bank account.
28. Quick Reference
Configure
Customers → Payment Modes
↓
Create Payment Mode
↓
Configure Accounting Mapping
↓
Financial Management → Banking → Bank Accounts
↓
Create Bank Account
↓
Bank Account automatically integrates with the relevant Current Assets ledger.
Receive Customer Payment
SalesHub AI → Payments → Add Payment
↓
Select Customer
↓
Select Payment Mode
↓
Select Currency
↓
Select Branch
↓
Enter Amount
↓
Enter Transaction ID where applicable
↓
Allocate to Invoice
↓
Apply
Bank Physical Cash
Financial Management → Transfer
↓
Transfer From: Cash
↓
Transfer To: Bank Account
↓
Enter Amount
↓
Enter Description
↓
Submit
↓
Debit Bank
Credit Cash
29. Key Accounting Principles
Customer Payment
The customer's payment settles the customer's outstanding obligation.
Fund Transfer
A transfer moves money between the company's own financial accounts.
Cash Banking
When physical cash is deposited into a bank:
Debit Bank Account
Credit Cash Account
Bank-to-Bank Transfer
When money moves from one bank to another:
Debit Receiving Bank
Credit Sending Bank
Most Important Rule
A Transfer does not represent new income or a new expense. It represents the movement of existing funds between financial accounts.
Bylon ERP Process at a Glance
CUSTOMER PAYMENT
Customer → SalesHub AI → Payments → Payment Mode → Invoice Allocation
↓
COLLECTION
Cash / Bank / M-Pesa / Other Payment Method
↓
PHYSICAL CASH BANKING
Financial Management → Transfer
↓
FUND MOVEMENT
Transfer From → Transfer To
↓
AUTOMATIC ACCOUNTING
Debit Transfer To → Credit Transfer From
This provides Bylon ERP with a complete and auditable flow for customer collections, cash management, banking, and internal fund transfers.