Short pay

In accounting, short pay means a customer payment for less than the invoices it settles, the customer having deducted the difference — a dispute, a credit not yet recorded, or an amount to write off. It needs a reason and a disposition; it never just disappears.

Also called Short payment.

Not a rule. Bookkeeping convention — not codified. US GAAP governs recognition, measurement and presentation, not bookkeeping mechanics. Sources

A real example, booked

A customer owes $8,000 on an invoice due October 15, 2026. It pays $7,800, with a remittance note deducting $200 for two damaged units. The company checks the delivery record, agrees, and issues a credit note for the difference.

Transaction · October 14, 2026
JE-1 14 Oct 2026 Manual posted
Apply the cash to the invoice.
Read-only
Journal entry JE-1, 2 lines
Account Dimensions Debit Credit
1000 Cash 7,800 US Dollar
1100 Accounts receivable 7,800 US Dollar
Totals 7,800 US Dollar 7,800 US Dollar
Balanced

Open on the invoice: $8,000
Received: $7,800
Short paid: $200

All 2 entries for a customer short payment, with the trial balance

Mistakes people make

What goes wrong in a real set of books, and what an accountant reviewing them catches.

Writing off every short pay to bad debt, which hides price concessions and damaged goods in credit losses.
Leaving the difference open with no reason, so collections keeps chasing a deduction the company already agreed.
Crediting the whole invoice when only part of the cash arrived.

The lesson that teaches this

From the free founder back-office course, taught on one company's books, with exercises to work it yourself.

ARCash application: matching payments to invoicesMatching Northwind's receipts to its invoices: a short pay, a lump sum with no remittance, and a card payment that arrives net of the processor's fee.9 min

Short pay, in use

Quoted from the 2 documents that use the word: what it does to an interface, in the spec's own words.

Every case is a first-class path: exact, partial, overpayment, lump-sum-to-many, short pay, no-invoice, duplicate, bank fee deducted in transit, FX settlement difference.
Receivables (AR) — 112. CashApplication
Exit gate: a lump-sum payment covering seven invoices with a short pay and a bank fee applies correctly, with every difference given an explicit disposition.
Roadmap — M5 — Receivables (AR)

For founders

The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.

Bad debt and write-offs: allowance vs direct methodHow to book a customer who won’t pay: the GAAP allowance under ASC 326, the direct write-off the IRS requires, and what to do if the money comes back.

What it is not called

Each of these means something else. Use one here and an accountant reading the product notices.

partial payment (a payment of part, with the rest still owed and not disputed)

Components that render this

These components name it in their spec, grouped and labeled exactly as the catalog shows them.

10Receivables (AR)

Family spec

CashApplicationThe highest-value screen in AR. Every case is a first-class path.

Components that render the terms it depends on

Few components name this concept outright, but it's built from terms they do name. These render credit.

10Receivables (AR)

3 of 3 builtFamily spec

Also in Receivables

Work with this concept

The calculators that compute it and the ledger payloads that carry it.

Journal entry for a customer short paymentDebit Cash for what arrived and credit Accounts receivable for the same amount. If the deduction is agreed, issue a credit note: debit Sales returns and allowances, credit Accounts receivable. If it is not, leave the difference open on the invoice, marked disputed.

Defined in Lexicon. This page is generated from that document, so the two can't disagree.

Account	Debit	Credit
1000 Cash	7,800 US Dollar
1100 Accounts receivable		7,800 US Dollar

Totals	7,800 US Dollar	7,800 US Dollar

A real example, booked

Mistakes people make

The lesson that teaches this

Short pay, in use

For founders

What it is not called

Components that render this

10Receivables (AR)

Components that render the terms it depends on

5Ledger & tables

6Statements

9Accounting core (GL)

10Receivables (AR)

Terms this one depends on

Also in Receivables

Work with this concept

A real example, booked

Mistakes people make

The lesson that teaches this

Short pay, in use

For founders

What it is not called

Components that render this

10Receivables (AR)

Components that render the terms it depends on

5Ledger & tables

6Statements

9Accounting core (GL)

10Receivables (AR)

Terms this one depends on

Also in Receivables

Work with this concept