Credit Note functionality

Notes: We are in the process of beginning a new type of business with some of our existing customers, and I wanted to get some more information about the Credit Note function in NAV. Currently, the credit note is issued only when physical product is returned in NAV or when we use the credit note to directly debit an account via journal entry.

Situation:

We would like to be able to invoice a customer for the full amount of a product and then issue them a credit note for the discounted price that they will actually pay. We need to be able to invoice them for the full amount of the product instead of the net amount (full price minus discount) because the shipping documents (invoice and packing slip) are considered public documents in many of the foreign countries where we sell. We do not want our customers to be able to see the private pricing of each individual customer in their country.

So, we would like to know if the credit note function can be adjusted to do (or if it already does) the following things:

Credit Note Requirements

  1. Allow line item discounts without requiring physical product to be shipped/received (i.e. allow a discount amount/credit per type of product on an invoice, not a generic resource G/L entry to sales)

  2. Allow the discount applied to each line to be tied to the original line item and invoice inside of Navision and Tableau

  3. Allow Tableau to see that the invoice and credit note are tied together and report the net amount per line item for gross profit reporting (we want one line with the net price; we do not two lines with full price and a return of partial price as that isn’t showing the correct sales price per item sold in total)

This is an example of how we would like to see it.

Example:

Original Invoice Individual Total

MATERIAL 1 3 cases @ $110.00 $330.00

MATERIAL 2 2 cases @ $125.00 $250.00

Credit/ Discount on Original Invoice

MATERIAL 1 3 cases @ $(15.00) $(45.00)

MATERIAL 2 2 cases @ $(25.00) $(50.00)

Tableau Report of Sales per Customer

MATERIAL 1 3 cases @ $95.00 $285.00

MATERIAL 2 2 cases @ $100.00 $200.00

Do you know if Navision can already process credit notes in this way? I could not figure out how to process a discount to an item without physically returning the item.

Cheers ~

The quickest way is to create two custom “reports” - read printouts- from standard SO, which is created with discounts included:

  • One titled “Invoice”, which ignores discounts - this doc will contain full price
  • and second, titled “Credit note”, containing only the discount part.

This is the only way to show (and trace later in COGS calculations) individual Items, not a GL account with generic discount amount.

However, if turnover figures do not bother you, and only balance matters, you can create a CM with TWO lines per Item - one as exact copy from SO (in this case SO must contain full price w/o any discounts), second with the same, but NEGATIVE Qty AND Line Discount added. This approach requires more job - creating an additional doc, and links between SO-CM are harder to trace, but no development at all is required.

Regarding the third requirement - any and all COGS-related reporting MUST be based on Item Ledger, never on posted documents, the latter do NOT contain precise COGS data. Hence, it does not matter what and how many docs you’ve created, correctly designed reports can show the info in the form as you wish - summarized or detailed in several lines.
Remember, that you may have indirect costs, too - e.g. freight, customs taxes, whatsoever, and all those may appear as separate documents. If correctly posted, those expenses will show up in ItemLedger and give you precise COGS data.

Hi Modris,

Thank you for your detailed and prompt response. Would it be possible to explain the process behind your suggestions below:

if turnover figures do not bother you, and only balance matters, you can create a CM with TWO lines per Item - one as exact copy from SO (in this case SO must contain full price w/o any discounts), second with the same, but NEGATIVE Qty AND Line Discount added. This approach requires more job - creating an additional doc, and links between SO-CM are harder to trace, but no development at all is required.

Why do we need to create a CM with two line items & what is the impact of the negative qty and line discount ?

TJ

also would the credit memo have an impact on stock since nothing is being returned?

if we do a credit memo for discount would that not impact the stock? I understand sales would e fine but since nothing is being returned how do we ensure the stock stays accurate?