diff --git a/erpnext/accounts/doctype/payment_entry/payment_entry.json b/erpnext/accounts/doctype/payment_entry/payment_entry.json
index e27a1f79b8e..3eef9814ae3 100644
--- a/erpnext/accounts/doctype/payment_entry/payment_entry.json
+++ b/erpnext/accounts/doctype/payment_entry/payment_entry.json
@@ -20,6 +20,7 @@
   "party",
   "party_name",
   "book_advance_payments_in_separate_party_account",
+  "reconcile_on_advance_payment_date",
   "column_break_11",
   "bank_account",
   "party_bank_account",
@@ -766,6 +767,15 @@
    "label": "In Words",
    "print_hide": 1,
    "read_only": 1
+  },
+  {
+   "default": "0",
+   "fetch_from": "company.reconcile_on_advance_payment_date",
+   "fieldname": "reconcile_on_advance_payment_date",
+   "fieldtype": "Check",
+   "hidden": 1,
+   "label": "Reconcile on Advance Payment Date",
+   "read_only": 1
   }
  ],
  "index_web_pages_for_search": 1,
@@ -779,7 +789,7 @@
    "table_fieldname": "payment_entries"
   }
  ],
- "modified": "2024-04-11 11:25:07.366347",
+ "modified": "2024-05-16 11:50:19.394918",
  "modified_by": "Administrator",
  "module": "Accounts",
  "name": "Payment Entry",
diff --git a/erpnext/accounts/doctype/payment_entry/payment_entry.py b/erpnext/accounts/doctype/payment_entry/payment_entry.py
index 8daa13d6165..4e05afa6be9 100644
--- a/erpnext/accounts/doctype/payment_entry/payment_entry.py
+++ b/erpnext/accounts/doctype/payment_entry/payment_entry.py
@@ -1344,13 +1344,16 @@ class PaymentEntry(AccountsController):
 			"voucher_detail_no": invoice.name,
 		}
 
-		date_field = "posting_date"
-		if invoice.reference_doctype in ["Sales Order", "Purchase Order"]:
-			date_field = "transaction_date"
-		posting_date = frappe.db.get_value(invoice.reference_doctype, invoice.reference_name, date_field)
-
-		if getdate(posting_date) < getdate(self.posting_date):
+		if self.reconcile_on_advance_payment_date:
 			posting_date = self.posting_date
+		else:
+			date_field = "posting_date"
+			if invoice.reference_doctype in ["Sales Order", "Purchase Order"]:
+				date_field = "transaction_date"
+			posting_date = frappe.db.get_value(invoice.reference_doctype, invoice.reference_name, date_field)
+
+			if getdate(posting_date) < getdate(self.posting_date):
+				posting_date = self.posting_date
 
 		dr_or_cr, account = self.get_dr_and_account_for_advances(invoice)
 		args_dict["account"] = account
diff --git a/erpnext/setup/doctype/company/company.json b/erpnext/setup/doctype/company/company.json
index 8c5a34ef804..af25fb49b47 100644
--- a/erpnext/setup/doctype/company/company.json
+++ b/erpnext/setup/doctype/company/company.json
@@ -67,6 +67,7 @@
   "default_finance_book",
   "advance_payments_section",
   "book_advance_payments_in_separate_party_account",
+  "reconcile_on_advance_payment_date",
   "column_break_fwcf",
   "default_advance_received_account",
   "default_advance_paid_account",
@@ -763,6 +764,13 @@
    "fieldtype": "Tab Break",
    "label": "Dashboard",
    "show_dashboard": 1
+  },
+  {
+   "default": "0",
+   "depends_on": "eval: doc.book_advance_payments_in_separate_party_account",
+   "fieldname": "reconcile_on_advance_payment_date",
+   "fieldtype": "Check",
+   "label": "Reconcile on Advance Payment Date"
   }
  ],
  "icon": "fa fa-building",
@@ -770,7 +778,7 @@
  "image_field": "company_logo",
  "is_tree": 1,
  "links": [],
- "modified": "2024-04-23 12:38:33.173938",
+ "modified": "2024-05-16 11:52:13.067003",
  "modified_by": "Administrator",
  "module": "Setup",
  "name": "Company",
diff --git a/erpnext/setup/doctype/company/company.py b/erpnext/setup/doctype/company/company.py
index f2d9bb74b92..44800dd5c3e 100644
--- a/erpnext/setup/doctype/company/company.py
+++ b/erpnext/setup/doctype/company/company.py
@@ -85,6 +85,7 @@ class Company(NestedSet):
 		parent_company: DF.Link | None
 		payment_terms: DF.Link | None
 		phone_no: DF.Data | None
+		reconcile_on_advance_payment_date: DF.Check
 		registration_details: DF.Code | None
 		rgt: DF.Int
 		round_off_account: DF.Link | None