We deal with many big retailers and many invoices get paid on a single remittance. The big retailers often take blanket debit memo deductions off the check (rebates, Advertising, Shipping pick-ups etc.). While they don’t pertain to any specific invoice. In the customer’s estimation the invoice is paid. We don’t want to send them a statement showing the invoice as open. But on the same token we need to make sure the credit memo is approved in the proper channels.
How can we close the invoice so that it doesn’t show on the aging yet keep the credit memo under review. How we did this in the old system is a negative cash transaction leaving an “open” item in the books with a debit memo.
Welcome to DUG!!! You can create a credit memo but do not apply against the invoices .
Amol,
Thanks you for the welcome and the reply. I wish it were that easy… By your instruction It would mean that I create a credit memo leave it in the pending approval stage or… Leave it open. Therefore the invoice would be left open on the aging. Here is what we do now. We close the invoice and leave the open item on the A/R Aging. Reason we close the invoice, because on a customer statement they will show invoices that they believe to have paid. We want to be in agreement with their Aging. I agree with your thinking leaving the invoice open and settling the dispute. But if you have customers with lots of invoices that wastes a lot of time dealing with disputes.
Hi Brendan,
in total the received payment doesn’t fit the invoices, but you accept it as paid. You could post the rest as payment tolerance. The interesting part is how to distribute the deductions proportionally (or case-by-case) to the invoices. If you don’t want a case-by-case assignment, you could add a function “Distribute the Payment Tolerance” in the Customer - Apply Entries form/page. You could even combine it with a “payment tolerance to accept” field on the applied entries to handle the occasional special case.
Creating a balancing credit memo would also be possible, but that is shown on the statement / aging. From a controlling POV, I would expect that someday someone wants statistics on this, so I would distribute it to the invoices.
Another real-world issue is actually finding all parts of an application, especially when you also deduct from a monthly prepayment. This can be solved by implementing an “application group” number whis is written into the detailed entries at posting time. It is easier to collect the applying entries for reporting than walking through the transaction nos.
with best regards
Jens
Jens,
Your suggestion seems quite feasible. As for payment tolerance that could be a viable solution. We have made mods for our EDI transactions from our big customers but I do hope we can manually perform the task correctly and that there is continuity.
Thank you very much,
Brendan
For big customers like BB&B, that deduct what they want when they want and before approval such as promotional $$, advertising $$, TPR$$, etc.
I will create two journal entries.
- a Credit “CR(check#)A” Description= “Credit advance to close check” - amount & applied to proper g/l account.
2)an Invoice “CR(check#)B” Description= “Credit advance to close check-awaiting approval” - amount & applied to same g/l account as above.
So in essence I’ve added zero since they balance each one out.
I use the credit in my payment so the check and invoices are closed.
the invoice remains until the approval goes thru. and when it does I apply the credit to the invoice.
Each biz has their own way. I found it easy for me to keep track of what deductions need review, approval or additional paperwork.