@lubos please add the ability to tag debit note or credit note in payment & receipt respectively, just like we can tag invoices to accounts payable in receipt & payment forms. This is useful for knowing when supplier / customer debit/credit notes are settled & against which receipt or payment vouchers. For example, if supplier is giving 60 days credit against billing date, then he usually settles debit notes(supplier credit note) also only after 60 days of its issue date. But it is very difficult to know exactly when & against which receipt voucher is that particular debit note amount settledā¦
I donāt really understand this request.
Can you give specific example of your workflow? Try to demonstrate with screenshots so itās easier to follow.
Above receipt shows invoice whose original amount was 14808.00 , but when creating receipt from sales invoice tab a credit note amount 2468.00 was automatically reduced from original invoice amount to give reduced amount 12340.00 as shown in screenshot above. But there is no way to know which credit note amount was reduced looking at the receipt.
I think there should be second line with credit note details & amount(which user can deselect if he wish), and first line if particular invoice is chosen, should show original amount of that invoice, & final grand total should show amount equal to (sum of all invoices tagged - sum of all credit note tagged)
After selecting āaccount receivableā there should be an option to select credit note, same like there is option to select invoice.
Similarly this should work for payments & debit notes as well
This would fall apart as soon as you get into multiple receipts, credit notes and other adjustments made against single invoice.
Receipt just shows how it was allocated. You can re-print the original invoice that will show the receipt and credit note. Or issue customer statement.
You show a receipt but talk about purchase invoice - this isnāt clear as normally a purchase invoice would need a payment not a receipt
Perhaps you could show the full list of transactions so that it becomes clearer what you are asking
Sorry that was a typo mistake. I meant āsales invoice & credit noteā
I have edited the original post & corrected the mistake
I am not talking about multiple receipts & credit notes, all i am asking is for ability to select credit notes under account receivable account in receipts just the same way we can select any particular invoice & post amount against it. Whenever we select account receivable in payment/ receipts, new box with āinvoiceā label ( highlighted in below image) is created automatically where we could either leave it as automatic or select a particular invoice( invoice selection popup also highlighted).
what i am trying to say is whenever we select account receivable, we should be offered the choice to select invoice or credit note in the next box, and then decide whether to leave it as automatic or select particular invoice / credit note.
@romangarg, whether entering credit notes or debit notes, you have the opportunity to apply them to specific sales or purchase invoices. Likewise, when entering receipts and payments against Accounts receivable or Accounts payable, you also have the opportunity to designate specific invoices to which they apply.
That is not how the accounting works. A credit note reduces the balance due of one or more sales invoices. Receipts also reduce amounts due on sales invoices if posted to Accounts receivable. There is never a situation where a receipt would be posted against a credit note. A receipt represents the customerās reduction of the balance due via the customerās payment into your cash or bank account. A credit note represents your reduction of the balance due because of some business event, such as return of merchandise, price adjustment, items lost in shipping, etc. So, they are opposite things and cannot be mixed.
All i am saying is receipt should show clearly the credit note details also if its final grand total is obtained by deducting credit note amount to invoice.
Otherwise the receipt with invoice number selected will show lesser amount against that invoice number, than the actual total of that particular invoice alone
Also, there should be flexibility for users to apply credit note to a particular invoice or along with multiple invoices in receipts ( in case where credit note amount is more than single invoice amount, as sometime 1 single combined credit note is issued for multiple previously pending credit notes).
I am sorry, @romangarg, but this statement is illogical from an accounting viewpoint. First, a receipt is never applied against a credit note, so it would make no sense to allow credit notes to be selected. Second, the total of a receipt is never reduced by deducting a credit note amount from an invoice. The receipt is for the amount of money received. In the situation weāve been discussing, the receipt is not applied directly to a sales invoice, but to the Accounts receivable account, the customerās subaccount, and only then can then be allocated to a specific sales invoice or distributed automatically. But in allocating to sales invoices, the program is only allowing you track status of sales invoices. The receipt does not reduce the amount of the sales invoice. It reduces the customerās balance owed under Accounts receivable because of the sales invoice. That is an important difference.
This also shows incorrect understanding of the accounting. A receipt allocated for a specific sales invoice does not have its amount reduced. That amount is whatever the customer paid you. But if you allocate a receipt for a specific amount to a sales invoice for which the balance due has been reduced by a credit note, the sales invoice could end up being overpaid. That is an accounting error. It should be fixed according to this Guide: https://www.manager.io/guides/12951. As we discuss this, it is very important to understand that, although we speak about allocating to sales invoices, paying invoices, and so forth, we are really talking about posting receipts to Accounts receivable, but for designated purposes.
This much of your statement is true, and the flexibility exists.
When you mention receipts again, you make your statement incorrect. Credit notes have nothing to do with receipts.
Credit notes should never be issued against previously pending credit notes. That would be double counting. Credit notes can reduce amounts owed on multiple sales invoices, or even be undesignated credits to a customerās subaccount in Accounts receivable for later use, but they never affect other credit notes.
I recommend you search the Guides for these topics and read the relevant discussions.
I was talking about credit notes that were supposed to be issued in the past, but were not issued by the supplier then, & later one single credit note was issued for all the past returns & claims.
Exactly my point, i am requesting for method to track status of credit or debit notes as well if possible. I suggest there should be a status column in debit/ credit note tabs as well showing their current status like settled(green color), partially settled(yellow), pending(red color) etc.
Again, you apparently misunderstand the use of credit notes. They are not issued by suppliers (in your accounting records). They are issued by you. If a supplier sends you a credit note, that becomes a debit note in your account records. Read the Guide about credit notes.
There is no status for credit or debit notes. All are final at the moment they are entered. No further action with respect to them is possible. They are complete by themselves, and no future transactions will reference them.
As already explained, this is impossible and could have no accounting purpose. This also is not what you started out asking for. You asked for the ability to tag a payment or receipt to a debit or credit note.
I believe what @romangarg is requesting (I may be wrong) is something similar to the following-
I have a previous outstanding suppliers invoice of $25. (1110)
Supplier then invoices me $100 for parts (Inv 1111)
I repair widget using those parts under suppliers warranty and submit warranty claim for parts and labour.
I receive suppliers credit note on my account for the repair of parts at retail, $150, and labour, $100, total $250 (C222)
I allocate $100 of C222 to Inv 1111
I allocate $25 of C222 to Inv 1110
This leaves me with $125 credit with my supplier.
Opening the Debit Notes tab would show whether the Debit note still has credit or has been fully allocated etc. and drillin down on it would show where it was applied.
Similarly with Credit notes and Customers.
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@VACUUMDOG, you paint a confusing picture:
- Whose widget are you repairing?
- If it is yours (previously purchased) and the supplier has provided warranty parts, why would the supplier invoice you for them at all?
- Is the supplierās credit note (entered by you as a debit note) issued against an original invoice?
- If so, what is the relationship between the $100 invoice and the $150 invoice?
Without the answers to these questions, it is impossible to understand the scenario in your example.
This comment shows a common misconception. The debit note is not a reservoir of credit that is partially or fully used up by allocation to other transactions. The debit note immediately and fully posts a debit to the supplierās subsidiary ledger in Accounts payable. That is the end of it. There is no status to monitor. Its separation into pools for allocation to specific purchase invoices is something of a fiction inherent in Managerās chosen method for presenting supplier credits.
The method Manager uses provides a capability for monitoring purchase invoice status as a subset of supplier account status, not debit note status. The alternative method, which Manager used to employ years ago, would not post a debit note to Accounts payable, but instead to a contra liability account named Supplier credits. Both methods are valid. Each has its advantages and disadvantages. Each also has its proponents and detractors among professional accountants.
The method currently used was selected because it more intuitively presents a supplierās net balance and is easier for novice accounting personnel to master. There is only one account for posting payments or debit notes (Accounts payable). Its principal shortcoming (in my opinion) is that it reinforces the notion that debit notes (and similarly credit notes on the customer credit side) have an independent status of their own. They do not.
The fact that it is the supplierās Accounts payable balance that is being affected rather than individual purchase invoices is why selection of a purchase invoice is optional. The program can automatically distribute payments and debit notes among invoices precisely because the distribution is fictional in the first place. Yet it is a convention that all tend to accept because it helps us understand and manage our payables situation.
We should not, however, extend the convenient fiction into a belief that we can monitor status of debit notes or credit notes. Once the debit or credit is recorded, it existsāall of it, never part of it.
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Whose widget are you repairing?
The widget was sold to the customer by the supplier, I am the service agent for the supplier. -
If it is yours (previously purchased) and the supplier has provided warranty parts, why would the supplier invoice you for them at all?
The supplier didnāt know the part was to be used specically for warranty repair when supplied. It was just for stock on hand. -
Is the supplierās credit note (entered by you as a debit note) issued against an original invoice?
No. -
If so, what is the relationship between the $100 invoice and the $150 invoice?
There is no invoice for $150ā¦please reread the scenario. I should have mentioned that the suppliers credit note was for the warranty repairā¦I have now put that in the original.
This is exactly how my business operates with several of the major manufacturers I am the service agent for.
Okay, @VACUUMDOG. With the extra details, you have described a very common situation. But nothing I have written changes. You have a $125 credit with that supplier. You know it and, assuming the supplierās accounting is correct, the supplier knows it. So the next time you purchase parts from that supplier, your purchase invoice will have $125 applied against it. That $125 comes from the supplierās balance in Accounts payable, not from something left over from an unused debit note.
Suppose the scenario repeated itself 10 times before you purchase again from that supplier. Your next purchase might be fully paid by your available credits and still not zero out the supplierās Accounts payable balance. Payment against the most recent purchase invoice will not have come from any specific debit note, but from the aggregate debit balance of the supplier in Accounts payable. (This is another reason some find the alternative presentation of supplier credits more attractive. That contra account feels more like a funding source. If you had actual funds in an escrow account instead of debits in Accounts payable or a contra account, you would not know or care where they came from. You would have accounted for them via a receipt, the status of which would be Cleared, not Pending or Partially used or Fully used.)
@lubos can you please rename the topic as - āCredit/ Debit note statusā, & consider adding same or similar type feature as mentioned by @VACUUMDOG in above post
@romangarg, adding someone elseās misunderstanding to yours does not change the facts. Credit and debit notes have no āstatusā related to whether they have been partially or fully used after they are created. As I have already explained, their effect is immediate and complete the instant they are entered. And no further transaction references them. From an accounting standpoint, there is no purpose served by your suggestion. Adding such a feature to the program is not only impossible; it would promote confusion by other users.
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Hopefully I can make sense of this for you, because Iām in a situation where I cannot allocate a Receipt for a Debit Note from a Supplier.
Scenario:
- Supplier ABC provided me with several items which I paid by card amount of $200. Here I created a Supplier Invoice, and also create a Payment to show it was paid from the bank account.
- Some items were returned to the supplier which totaled $100 and supplier gave me cash. Here I create a Debit Note and link it to the invoice created above, but iām unable to create a receipt of the cash against my Cash Account to show physical money on hand.
The problem:
Iām not able to create a receipt of the cash received against the debit note from the view screen.
this is a manual process, and iām not able to link the receipt of money to the Debit Note.
When I select receipt from a supplier, it only gives me the option to select an Invoice from the āAccounts Paybleā chart of accounts, but i need to reconcile it against the Debit Note received.
I hope I made the scenario a bit clearer? Was going to create another forum post but this one had the exact subject line.
Thank you.
Post a screenshot of the edit page of the invoice, the debit note and the receipt. Did you read the Guide Use debit notes for supplier returns and refunds?