Credit Note to customer and then payment received

are you selecting any invoice when making the credit note or when making the spend money transaction for 25000?
can you post screenshots of their edit screen?

No I am not selecting any invoice. Snapshots attached.

why have you created an inventory item for your rebates? creating an account alone will do.
also you have not shown the credit note screen completely. the invoice selection appears at the bottom.

when making the spend money transaction, select Accounts receivables as the account.

Item for rebate just a personal preference you can say, to standardize wording and tracking. This is my first file I setup in Manager so things are not ideal.

Default accounts receivable is selected, just that in my file I changed the name to Customer Control Account.

However, snapshot of the credit note is attached, invoice not selected you can see at the end.

Without knowing the actual date you posted the transactions into Manager its hard to comment, by this I mean, did the Sep 11 Credit Note get posted on Sep 11 or was it posted on Oct 18 but dated Sep 11 - which is what appears to have occurred based on the screenshots - as that Credit Note Sep 11 (posted Oct 18) has paid the two invoices that were outstanding on that date, being Oct 3 & Oct 18 and that is why those two are now overpaid.

If to had been processed on Sep 11, then it would have affected the Sep 13 & 19 invoices first if there was a problem but it hasn’t affected those invoices at all.

Therefore to resolve the overpaid status for those two invoices, go to their receipts dated Oct 19 & Nov 1 and delete the selection of the invoice number (leave blank).

Now, your Credit Notes could cause these issues if the Customer has a balance when it is created as it could be allocated to those outstanding invoices before the payment is processed - one way to avoid this conflict is not to select the Invoice no when processing the Receipt, this doesn’t prevent you from entering your descriptions.

If the item you createdfor rebates is an inventory item, your approach will distort your balance sheet, because a credit note adjusts quantities. If it is a non-inventory item, that will not happen.

@Tut Item is a non inventory item.

@Brucanna i tried deleting and recreating the credit note today (in back issue date after rebate payment but before invoice date). Still the software applies credit note before the payment. I think this has something to do with software logic which is fine in normal case, look for invoice, apply credit note to determine pending balance and then apply receipt.

Just that in my case, there is an advance rebate and since it is not an invoice, system is not detecting it as an item against which to offset the credit note.

@lubos can you please confirm my understanding and tell me how to resolve the issue. Deletion and recreation did not work.

@asifnwb - I clearly explained the cause and how to resolve your situation and “deletion and recreation” was definitely not part of that. Taking your action can only shift your problem to other invoices as all that you are doing is shifting the processing date and not the transaction date. The processing date (say Oct 18) can only react to the account’s status as at that day (Oct 18).

Yes, that is why transactions need to be done in transaction date order to apply correctly, if not, otherwise they will be applied based on account status at that date.

(1) Yes
(2) As already advised, you can’t amend historically.

The issue is only a temporary matter while you are setting up your processes.

Alternatively, to remove all the invoice overpaid conflicts you could create a 2nd customer account which only has the credit note and payment transactions and then issue the Customer with two statements.

I get your point and it is valid. But see, practically, it happens over and over again that you miss to enter one document, then you enter back dated transaction, specially if its the same month or reporting period or tax year, then every time the solution cannot be to delete all prior transactions and enter in date order from scratch for that customer. If anything goes wrong, numbers can get messed up pretty quickly as you can imagine.

What I am trying to say is in this post, [17.9.28] Improvements to automatic credit allocations there is the concept to leave over-payments as it is with that invoice only and not seek and auto-allocate to next outstanding invoice. System job is recording of transaction not auto guess right? So @lubos corrected it and its perfect.

Similarly, in case of credit note, if I don’t put an invoice number while making the credit note, it should not auto guess and apply itself to the next generated invoice (in date order). Further, in my case, as you rightly pointed out, I created the credit note later after invoicing and after receipt even and back dated it, at that point, 3 Oct invoice was already paid in full through normal Receive Money option on 19 Oct. Now once an invoice is marked as paid in full, then whether I enter a credit note or make any other adjustment and don’t refer to that invoice, Manager should not disturb the status of that invoice, right? I am just asking to prevent auto allocation of credit note to invoice irrespective of date.

No, your belief that Manager should not allow overpayment is not correct. What if the customer accidentally overpays? Should the program refuse to let you enter the receipt? No, it should not. It should accept the entry as show you where the problem lies.

Your difficulty comes from using a credit note to record an unearned rebate, as I said earlier.

No no my belief is that Manager should allow over-payment but like Lubos corrected and stopped the auto-allocation of payment (which is a credit) to next invoice, similarly auto-allocation of credit note to next open invoice should also be stopped unless specified while creating the credit note. Got it?

The program gives you the choice. Specify the invoice to record overpayment. Leave the invoice number blank for automatic allocation.

What about the option to select the advance rebate debit (done via spend money) instead of the invoice? There is no such option. So how do I allocate the credit note against this advance debit to prevent it from auto allocation to the next invoice?

Any solution or input from @lubos on this matter?

@asifnwb - I understand your points clearly but you have to remember that your situation (paying out the credit note) is not the norm but the software overall functions for the norm. Therefore you have to adjust your usage to suit your unusual situation.

If that date order is so important then the user can always resolve this themselves by temporarily changing their operating system date to match the required transaction date.

No, what if there is no open invoice to specify at the time the credit note is created, that credit note would remain unallocated even after the next open invoice is created, therefore forcing the user to go back and edit that credit note.

The oddity here is that if you weren’t paying out the credit note you wouldn’t be having the issue.

Read the Guide about advances and deposits. What you ask is already provided.

If business does not pay credit note and it is an oddity, then that means how do we handle rebates in business? It is same as my case right? Further, rebates need not be against any invoice at all. It could just be an year end one time discount. It could be based on total value of all invoices or any other commercial term. Commercial terms can be as and what the sales people agree and we all know customer demands can be never ending so this is in fact not so unusual and many businesses have this kind of transaction in many industries.

@Tut I went through the guide but could not grasp how advance and deposit links to paying out the credit note. In below image (cash spend money option), even if I can get the credit note option along with invoices in the drop down menu, that can resolve my issue. I think this should not be a big change to ask for.

@lubos can you please comment on this since you are the developer of this software.

There are many ways - each business does what best suits them.

  1. just write a cheque without it affecting the Accounts Receivable account.
  2. just put a credit note on the account and let the next invoices absorb it
  3. just offer the customer free products in lieu of credit note.
  4. just offer additional discount for next period of time.

No, most businesses require the customer to place and pay for their orders first and then they earn the rebate. In your case you are paying the rebate before the customer has even placed any orders.

You keep bringing credit notes into your responses to my suggestions. But my suggestions continue to be not to use credit notes for this purpose. The Guide also does not suggest this. So don’t look for credit notes to be listed.

Firstly, the guide does not talk of my situation where credit note needs to be paid and invoice are fully paid by customer later.

Secondly, in pharma industry trading, this kind of practice is often a norm for customers like big pharmacies who buy big but want to squeeze any new entrant to the market as much as possible, which is our situation as a 6 month old startup.

Thirdly, we are having all sorts of customization in Manager for little bits and pieces and a new improved version every 3 to 4 days on average but I don’t know why I am being suggested time and again to bend my genuine real-world transaction instead of just adjusting this bit in Manager to give greater flexibility for the highly varying users of this wonderful software.

Anyway, @sharpdrivetek @Brucanna @Tut thanks for your valuable time and swift replies. @lubos I hope you think through what I said.

Whether to go for an amendment in spend money option to refer to credit notes along with invoices (and contra-transaction in debit notes for the receiving end) or not is your call eventually.