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

[james-2]

CONTENTS DELETED

The author has deleted this message.

[Pierre Smits]

Hi James, all,

Please see inline

Best regards,

Pierre Smits

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

OEM - The OFBiz Extensions Marketplace1
http://oem.ofbizci.net/oci-2/
1 not affiliated to (and not endorsed by) the OFBiz project

On Thu, Nov 9, 2017 at 9:42 PM, <[hidden email]> wrote:

> Pierre - Thanks for the response but I dont believe the system is
> behaving this way.  Right now when a return is done against the sales
> order the system is actually creating a payment that can be processed as
> a check.  This should NOT be the case.


Any system not behaving in expected ways (read: as competing solutions do)
is disqualified in the eyes of potential adopters. In our situation (in
general, and in this situation in particular) this is more often than not
influenced by decisions makers and influencers in the accounting department
and auditing companies.



> How do I get the system to
> generate the credit note?
>

The easy answer is: fix the problem. Yet that easy answer will require
quite the effort applied. You can either fix it in your own implemented
system, or wait on the OFBiz community to help you.

>
> -------- Original Message --------
> Subject: Re: Credit Memos - Please give me your process and opinions!
> From: Pierre Smits <[hidden email]>
> Date: Sat, October 28, 2017 2:00 am
> To: [hidden email]
>
> 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
> >
>