The Accounts Receivable module allows for the entry of customer credit memos via the AR Invoice form. This along with the ability to process customer refund payments directly into Accounts Receivable eliminates the need for making double, or even triple, entries in order to accommodate the return/credit/refund process. If the credit involves a part return, inventory counts may be automatically be updated as well.
Customer invoice credit processing streamlines several processes, including…
· Credit or refund to a customer unsatisfied with work performed
· Credit or refund due to an overcharge
· Return of purchased parts
· Correcting a previously posted invoice that cannot be adjusted (e.g. fiscal period is closed, etc.)
Customer credit processing will also make reporting tasks easier since credits processed as invoice credits will automatically be reflected in invoice related reports.
The following permissions in the User Groups form control user access to customer credit and refund features:
· Receivables tab
o Post Refunds – post a refund via Billing Account History in Accounts Receivable
· Invoicing tab
o Credit Memo
§ Create/Modify – create and/or modify a credit memo
§ Post – post credit memo /refund to accounting system
§ Apply Refund – apply a refund on a credit memo
A credit invoice is basically an invoice with a negative total. Credit memos are entered using the AR Invoice form since most of the features of an invoice must also be available for a credit memo.
To create a credit memo,
· From an existing invoice (job invoice, counter sale, project invoice, etc.)
o select the plus (‘+’) sign next to the Invoice field, or
o select the invoice number drop down next to the Invoice field, and select New Credit Memo from the menu
· Follow the credit memo wizard to create a credit memo based upon the current invoice or from scratch.
· Note: You can also create a “scratch” counter sale credit memo using the right-click popup menu from the Customer Form after locating the correct customer for the credit.
The credit memo wizard is designed to inform and guide the user through the initial process of creating a credit memo. In some cases you may have a choice of creating a credit memo from “scratch” or if you had an invoice previously selected you can create the credit memo based on an existing invoice.
Additional options include:
· G/L posting
· Returning Parts to Inventory
· Reversing Paybase.
You may also identify the reason of the Credit Memo and additional notes pertaining to the credit memo.
Credit memos will, by default post to the G/L Account you have identified as your default Returns and Allowances account. You can uncheck this option however to post to the original G/L accounts of the invoice line items or you may choose a specific G/L account to post to.
Once a credit memo has been created, you can modify, print, and post it just like you would an invoice. Individual line items on a credit memo can be either negative or positive, but the total “due” must be negative in order to post it.
Note that some functions handled by an invoice cannot be reversed on a credit memo, including:
· New/renewal agreement activation (deactivation)
· Agreement visit completion (uncompletion)
· Agreement periodic billing (credit billing)
· Labor hours associated to timecard entries (reducing hours invoiced)
When posting the document an additional dialog helps inform the user of the status of the credit memo and lists available options before continuing to post the credit memo.
Status and options include
· Status of returning parts
· Status of reversing Paybase
· Status of any additional costing performed on the credit memo
· Status of G/L posting preference selected when the wizard was used to create the credit memo
· Status of the original invoice (total, payments, adjustments, credits, and balance)
· Status of the credit memo (total, amount to refund, balance after refund, apply to invoice, credit on account)
· Option to process refund after posting
· Option to credit open balance on invoice
In the case where the customer already has a credit balance – previously issue credit, overpayment, etc., you may need to post a customer refund without also making a credit memo.
To enter/post a customer refund,
· Open Billing Account History (F4) for the customer you wish to refund.
· If you are refunding a specific credit memo, select the credit memo
· Select Refund
· Enter the refund (the process is similar to making a cash receipt)
o Default Apply setting is determined based upon whether a credit memo had been preselected or not
o Select the register account from which the payment is being made
o Enter payment information – date, amount, payment method, etc.
o Select how you would like to allocate the refund after posting
o If the refund amount is not equal to the total amount of the selected credit memo, you may choose Auto with Adjustment automatically make an adjustment for the difference.
· If you are making the refund via check from your checking account, you may Print the check, or Post without printing (handwritten check)
· Post the refund
· If Manual Allocation was selected, enter allocate and save allocations
Credit memos appear in receivables with receivable type ‘CRM’, carry a negative receivable balance, and can be allocated to any other item with a positive balance – invoices, positive adjustments, or refunds.
Refunds appear as ‘REF’ with a positive receivable balance, and can be allocated to any other item with a negative balance – credit memos, negative adjustments, or payments.
The following Events are recorded in the Event Log in relation to AR Credits and Refunds.
Invoice credits use same events as invoice, showing negative instead of positive amounts:
|
Event Type |
Description |
|
Post Invoice |
Invoice Total { negative amount} |
New event type for customer refunds:
|
Event Type |
Description |
|
CB Post |
Customer Refund {check/reference no}, {amount} |