Credit Memos - Please give me your process and opinions!

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Credit Memos - Please give me your process and opinions!

james-2
I have been struggling with the Credit Memo and Vendor Credit Memo
process for a while and I think this needs a real hard look.  Can
someone tell me the proper way to apply a Credit Memo generated from a
return to the Original Invoice from the sales order.

Here is the Example

Customer buys GZ1000 for a $1000 and is invoiced for $1000
He returns GZ1000 and is given a credit for $1000

How is that credit applied to the original invoice so it shows in
accounting that the customer no longer owes $1000?


Same thing on the Vendor side when returning a product back to vendor.

Thanks,

Jame
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RE: Credit Memos - Please give me your process and opinions!

james-2

Anyone experience this process?
-------- Original Message --------
Subject: Credit Memos - Please give me your process and opinions!
From: <[hidden email]>
Date: Wed, October 25, 2017 6:49 am
To: [hidden email]

I have been struggling with the Credit Memo and Vendor Credit Memo
process for a while and I think this needs a real hard look. Can
someone tell me the proper way to apply a Credit Memo generated from a
return to the Original Invoice from the sales order.

Here is the Example

Customer buys GZ1000 for a $1000 and is invoiced for $1000
He returns GZ1000 and is given a credit for $1000

How is that credit applied to the original invoice so it shows in
accounting that the customer no longer owes $1000?


Same thing on the Vendor side when returning a product back to vendor.

Thanks,

Jame
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RE: Credit Memos - Please give me your process and opinions!

marcopaul
I don’t have time to dig into the credit memo logic but there SHOULD be a payment in the accounting app generated somewhere that can be applied against that invoice.


On Oct 27, 2017, 15:34 -0500, [hidden email], wrote:

>
> Anyone experience this process?
> -------- Original Message --------
> Subject: Credit Memos - Please give me your process and opinions!
> From: <[hidden email]
> Date: Wed, October 25, 2017 6:49 am
> To: [hidden email]
>
> I have been struggling with the Credit Memo and Vendor Credit Memo
> process for a while and I think this needs a real hard look. Can
> someone tell me the proper way to apply a Credit Memo generated from a
> return to the Original Invoice from the sales order.
>
> Here is the Example
>
> Customer buys GZ1000 for a $1000 and is invoiced for $1000
> He returns GZ1000 and is given a credit for $1000
>
> How is that credit applied to the original invoice so it shows in
> accounting that the customer no longer owes $1000?
>
>
> Same thing on the Vendor side when returning a product back to vendor.
>
> Thanks,
>
> Jame
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Re: Credit Memos - Please give me your process and opinions!

Pierre Smits
In reply to this post by james-2
Hi James,

The simple answer is NOT. On invoice level. And that is regardless of
whether you're talking about a Sales or Purchase. A sales Credit Note (or
Credit Invoice) is not a payment of the Sales Invoice, and - equally so - a
Purchase Credit Note is not a payment of a Purchase Invoice. For
convenience purposes I will explain more below using only the sales domain.

Both the Invoice and the Credit Note stem from the  Order. When the Invoice
has been generated and encompasses all elements regarding the Order, the
obligation of the customer to pay the (agreed) amount due has been
established in the debtors sub ledger and in the general ledger. When (due
to whatever reason) a Credit Note is issued, the total obligation is
reduced. The reference to the order (and other documents as delivery notes,
RMA's, etc) help to identify where it came from.

So the Credit Note reduces the outstanding debt. When subsequently a
payment from the debtor comes in, all the appropriate Invoices and Credit
Notes should have payments (positive for Invoice, negative for credit
note).against them. If in anyway the payment is unclear Invoices and Credit
Notes should not be should not be marked against that payment. More
investigation is required!.

Suppose the following:
Order  = USD 1.000,00, and goods have been delivered
Invoice = USD 1.000,00.
RMA is granted for 1 time on the order, valued at USD 100,00
Credit Note is issued for USD 100,00
At this moment the outstanding debt (in Accounts Receivable)  is 900,00 for
the order, but the total position of the debtor can also be higher or lower.

Subsequently a payment of UDS 910,00 arrives, but the description is
unclear. Then you can't tell which Invoices and Credit Notes are
applicable. If you take the first one(s) that may seem appropriate, you're
creating a confusion that will go from bad to worse. So you need more
information and keep chasing the debtor.

And when everything regarding the received payment is clear (accepted by
the accounting department) an accounting transaction must be created to
ensure that everything is correct:

In the sub ledger the Invoice for USD 1.000,00 will be marked as paid
Also the Credit Note for USD 100,00 will be marked as paid
And an undesignated payment of USD 10,00 will also be registered.

I trust this helps.

Best regards,





Pierre Smits

ORRTIZ.COM <http://www.orrtiz.com>
OFBiz based solutions & services

OFBiz Extensions Marketplace
http://oem.ofbizci.net/oci-2/

On Wed, Oct 25, 2017 at 3:49 PM, <[hidden email]> wrote:

> I have been struggling with the Credit Memo and Vendor Credit Memo
> process for a while and I think this needs a real hard look.  Can
> someone tell me the proper way to apply a Credit Memo generated from a
> return to the Original Invoice from the sales order.
>
> Here is the Example
>
> Customer buys GZ1000 for a $1000 and is invoiced for $1000
> He returns GZ1000 and is given a credit for $1000
>
> How is that credit applied to the original invoice so it shows in
> accounting that the customer no longer owes $1000?
>
>
> Same thing on the Vendor side when returning a product back to vendor.
>
> Thanks,
>
> Jame
>
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Re: Credit Memos - Please give me your process and opinions!

Mike Z
Awesome detail.  Now I know who to contact for accounting questions.  πŸ˜€

On Oct 28, 2017 2:00 AM, "Pierre Smits" <[hidden email]> wrote:

> Hi James,
>
> The simple answer is NOT. On invoice level. And that is regardless of
> whether you're talking about a Sales or Purchase. A sales Credit Note (or
> Credit Invoice) is not a payment of the Sales Invoice, and - equally so - a
> Purchase Credit Note is not a payment of a Purchase Invoice. For
> convenience purposes I will explain more below using only the sales domain.
>
> Both the Invoice and the Credit Note stem from the  Order. When the Invoice
> has been generated and encompasses all elements regarding the Order, the
> obligation of the customer to pay the (agreed) amount due has been
> established in the debtors sub ledger and in the general ledger. When (due
> to whatever reason) a Credit Note is issued, the total obligation is
> reduced. The reference to the order (and other documents as delivery notes,
> RMA's, etc) help to identify where it came from.
>
> So the Credit Note reduces the outstanding debt. When subsequently a
> payment from the debtor comes in, all the appropriate Invoices and Credit
> Notes should have payments (positive for Invoice, negative for credit
> note).against them. If in anyway the payment is unclear Invoices and Credit
> Notes should not be should not be marked against that payment. More
> investigation is required!.
>
> Suppose the following:
> Order  = USD 1.000,00, and goods have been delivered
> Invoice = USD 1.000,00.
> RMA is granted for 1 time on the order, valued at USD 100,00
> Credit Note is issued for USD 100,00
> At this moment the outstanding debt (in Accounts Receivable)  is 900,00 for
> the order, but the total position of the debtor can also be higher or
> lower.
>
> Subsequently a payment of UDS 910,00 arrives, but the description is
> unclear. Then you can't tell which Invoices and Credit Notes are
> applicable. If you take the first one(s) that may seem appropriate, you're
> creating a confusion that will go from bad to worse. So you need more
> information and keep chasing the debtor.
>
> And when everything regarding the received payment is clear (accepted by
> the accounting department) an accounting transaction must be created to
> ensure that everything is correct:
>
> In the sub ledger the Invoice for USD 1.000,00 will be marked as paid
> Also the Credit Note for USD 100,00 will be marked as paid
> And an undesignated payment of USD 10,00 will also be registered.
>
> I trust this helps.
>
> Best regards,
>
>
>
>
>
> Pierre Smits
>
> ORRTIZ.COM <http://www.orrtiz.com>
> OFBiz based solutions & services
>
> OFBiz Extensions Marketplace
> http://oem.ofbizci.net/oci-2/
>
> On Wed, Oct 25, 2017 at 3:49 PM, <[hidden email]> wrote:
>
> > I have been struggling with the Credit Memo and Vendor Credit Memo
> > process for a while and I think this needs a real hard look.  Can
> > someone tell me the proper way to apply a Credit Memo generated from a
> > return to the Original Invoice from the sales order.
> >
> > Here is the Example
> >
> > Customer buys GZ1000 for a $1000 and is invoiced for $1000
> > He returns GZ1000 and is given a credit for $1000
> >
> > How is that credit applied to the original invoice so it shows in
> > accounting that the customer no longer owes $1000?
> >
> >
> > Same thing on the Vendor side when returning a product back to vendor.
> >
> > Thanks,
> >
> > Jame
> >
>
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Re: Credit Memos - Please give me your process and opinions!

velusamy T
Hi,
I have been searching this piece of functionality for a long time in OFBIZ
forums.
As per my understanding, the system Generated Sales return is in Accounting
- AP invoice menu because of this when the customer payment created the
sales return invoice is not available on the application tab under the new
payment.

Quoting the same example

> Suppose the following:
> Order  = USD 1.000,00, and goods have been delivered
> Invoice = USD 1.000,00.
> RMA is granted for 1 time on the order, valued at USD 100,00
> Credit Note is issued for USD 100,00
> At this moment the outstanding debt (in Accounts Receivable)  is 900,00 for
> the order.


*Assume customer pays company USD 900.00, to clear his outstanding *
*When we create a new payment for that customer, payment header section we
should be entering USD 900.00 and on the application screen, we have to
select the Sales invoice USD 1000.00 & return Invoice USD 100.00. Once the
payment is confirmed system should back update both invoices as paid and
the mark the sales invoice & sales return invoice outstanding as zero.*


Please let me know if anyone knows this functionality working in Ofbiz

On Sat, Oct 28, 2017 at 9:57 PM, Mike <[hidden email]> wrote:

> Awesome detail.  Now I know who to contact for accounting questions.  πŸ˜€
>
> On Oct 28, 2017 2:00 AM, "Pierre Smits" <[hidden email]> wrote:
>
> > Hi James,
> >
> > The simple answer is NOT. On invoice level. And that is regardless of
> > whether you're talking about a Sales or Purchase. A sales Credit Note (or
> > Credit Invoice) is not a payment of the Sales Invoice, and - equally so
> - a
> > Purchase Credit Note is not a payment of a Purchase Invoice. For
> > convenience purposes I will explain more below using only the sales
> domain.
> >
> > Both the Invoice and the Credit Note stem from the  Order. When the
> Invoice
> > has been generated and encompasses all elements regarding the Order, the
> > obligation of the customer to pay the (agreed) amount due has been
> > established in the debtors sub ledger and in the general ledger. When
> (due
> > to whatever reason) a Credit Note is issued, the total obligation is
> > reduced. The reference to the order (and other documents as delivery
> notes,
> > RMA's, etc) help to identify where it came from.
> >
> > So the Credit Note reduces the outstanding debt. When subsequently a
> > payment from the debtor comes in, all the appropriate Invoices and Credit
> > Notes should have payments (positive for Invoice, negative for credit
> > note).against them. If in anyway the payment is unclear Invoices and
> Credit
> > Notes should not be should not be marked against that payment. More
> > investigation is required!.
> >
> > Suppose the following:
> > Order  = USD 1.000,00, and goods have been delivered
> > Invoice = USD 1.000,00.
> > RMA is granted for 1 time on the order, valued at USD 100,00
> > Credit Note is issued for USD 100,00
> > At this moment the outstanding debt (in Accounts Receivable)  is 900,00
> for
> > the order, but the total position of the debtor can also be higher or
> > lower.
> >
> > Subsequently a payment of UDS 910,00 arrives, but the description is
> > unclear. Then you can't tell which Invoices and Credit Notes are
> > applicable. If you take the first one(s) that may seem appropriate,
> you're
> > creating a confusion that will go from bad to worse. So you need more
> > information and keep chasing the debtor.
> >
> > And when everything regarding the received payment is clear (accepted by
> > the accounting department) an accounting transaction must be created to
> > ensure that everything is correct:
> >
> > In the sub ledger the Invoice for USD 1.000,00 will be marked as paid
> > Also the Credit Note for USD 100,00 will be marked as paid
> > And an undesignated payment of USD 10,00 will also be registered.
> >
> > I trust this helps.
> >
> > Best regards,
> >
> >
> >
> >
> >
> > Pierre Smits
> >
> > ORRTIZ.COM <http://www.orrtiz.com>
> > OFBiz based solutions & services
> >
> > OFBiz Extensions Marketplace
> > http://oem.ofbizci.net/oci-2/
> >
> > On Wed, Oct 25, 2017 at 3:49 PM, <[hidden email]> wrote:
> >
> > > I have been struggling with the Credit Memo and Vendor Credit Memo
> > > process for a while and I think this needs a real hard look.  Can
> > > someone tell me the proper way to apply a Credit Memo generated from a
> > > return to the Original Invoice from the sales order.
> > >
> > > Here is the Example
> > >
> > > Customer buys GZ1000 for a $1000 and is invoiced for $1000
> > > He returns GZ1000 and is given a credit for $1000
> > >
> > > How is that credit applied to the original invoice so it shows in
> > > accounting that the customer no longer owes $1000?
> > >
> > >
> > > Same thing on the Vendor side when returning a product back to vendor.
> > >
> > > Thanks,
> > >
> > > Jame
> > >
> >
>