diff --git a/erpnext/accounts/doctype/payment_entry/payment_entry.py b/erpnext/accounts/doctype/payment_entry/payment_entry.py
index 5c2dc7747bb..d4e6199ab4d 100644
--- a/erpnext/accounts/doctype/payment_entry/payment_entry.py
+++ b/erpnext/accounts/doctype/payment_entry/payment_entry.py
@@ -48,6 +48,7 @@ from erpnext.accounts.utils import (
 	get_account_currency,
 	get_balance_on,
 	get_outstanding_invoices,
+	get_reconciliation_effect_date,
 )
 from erpnext.controllers.accounts_controller import (
 	AccountsController,
@@ -1492,23 +1493,7 @@ class PaymentEntry(AccountsController):
 		else:
 			# For backwards compatibility
 			# Supporting reposting on payment entries reconciled before select field introduction
-			reconciliation_takes_effect_on = frappe.get_cached_value(
-				"Company", self.company, "reconciliation_takes_effect_on"
-			)
-			if reconciliation_takes_effect_on == "Advance Payment Date":
-				posting_date = self.posting_date
-			elif reconciliation_takes_effect_on == "Oldest Of Invoice Or Advance":
-				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
-			elif reconciliation_takes_effect_on == "Reconciliation Date":
-				posting_date = nowdate()
+			posting_date = get_reconciliation_effect_date(invoice, self.company, self.posting_date)
 			frappe.db.set_value("Payment Entry Reference", invoice.name, "reconcile_effect_on", posting_date)
 
 		dr_or_cr, account = self.get_dr_and_account_for_advances(invoice)
diff --git a/erpnext/accounts/utils.py b/erpnext/accounts/utils.py
index 786bfd6f8b7..47ade441e46 100644
--- a/erpnext/accounts/utils.py
+++ b/erpnext/accounts/utils.py
@@ -713,23 +713,8 @@ def update_reference_in_payment_entry(
 	update_advance_paid = []
 
 	# Update Reconciliation effect date in reference
-	reconciliation_takes_effect_on = frappe.get_cached_value(
-		"Company", payment_entry.company, "reconciliation_takes_effect_on"
-	)
 	if payment_entry.book_advance_payments_in_separate_party_account:
-		if reconciliation_takes_effect_on == "Advance Payment Date":
-			reconcile_on = payment_entry.posting_date
-		elif reconciliation_takes_effect_on == "Oldest Of Invoice Or Advance":
-			date_field = "posting_date"
-			if d.against_voucher_type in ["Sales Order", "Purchase Order"]:
-				date_field = "transaction_date"
-			reconcile_on = frappe.db.get_value(d.against_voucher_type, d.against_voucher, date_field)
-
-			if getdate(reconcile_on) < getdate(payment_entry.posting_date):
-				reconcile_on = payment_entry.posting_date
-		elif reconciliation_takes_effect_on == "Reconciliation Date":
-			reconcile_on = nowdate()
-
+		reconcile_on = get_reconciliation_effect_date(d, payment_entry.company, payment_entry.posting_date)
 		reference_details.update({"reconcile_effect_on": reconcile_on})
 
 	if d.voucher_detail_no:
@@ -783,6 +768,28 @@ def update_reference_in_payment_entry(
 	return row, update_advance_paid
 
 
+def get_reconciliation_effect_date(reference, company, posting_date):
+	reconciliation_takes_effect_on = frappe.get_cached_value(
+		"Company", company, "reconciliation_takes_effect_on"
+	)
+
+	if reconciliation_takes_effect_on == "Advance Payment Date":
+		reconcile_on = posting_date
+	elif reconciliation_takes_effect_on == "Oldest Of Invoice Or Advance":
+		date_field = "posting_date"
+		if reference.against_voucher_type in ["Sales Order", "Purchase Order"]:
+			date_field = "transaction_date"
+		reconcile_on = frappe.db.get_value(
+			reference.against_voucher_type, reference.against_voucher, date_field
+		)
+		if getdate(reconcile_on) < getdate(posting_date):
+			reconcile_on = posting_date
+	elif reconciliation_takes_effect_on == "Reconciliation Date":
+		reconcile_on = nowdate()
+
+	return reconcile_on
+
+
 def cancel_exchange_gain_loss_journal(
 	parent_doc: dict | object, referenced_dt: str | None = None, referenced_dn: str | None = None
 ) -> None: