This section describes how accounts recievable invoice amounts can be adjusted or written off to general ledger accounts.
This section does not describe how to correct invoicing errors. Invoice corrections, returns processing, and credit and rebill options are described in later sections of this document.
The AR Invoice Adjustment program is used to adjust the open balance of accounts receivable invoices, and to post the amount of each adjustment to a specific account in the general ledger. The AR Invoice Adjustment program allows you to "write off" small and large invoice balances to handle issues such as discounts taken, small balance writeoffs, bad debt adjustments, freight adjustments, and similar situatoins
The AR Invoice Adjustment program will allow you to adjust open and closed invoices ( invoices with positive, negative, or zero open balances), and it will allow you to increase or decrease the balance in each invoice. The AR Adjustment program can only be used to adjust accounting or non-shipper invoices (invoices which are posted to the general ledger and included in the accounts receivable subledger balance).
The AR Invoice Adjustment program restricts the general ledger accounts that you can used for invoice adjustments.
The Disallow AR Adjustments flag in the Account Description file is used to identify which accounts AR Adjustment transactions can be posted to. If the flag is set to N (unchecked), the system allows the GL Account to be selected during adjustment processing. If the flag is set to Y (checked), the account may not be selected during adjustment processing.
The AR Invoice Adjustment program also blocks specific general ledger accounts (based on the autopost numbers in the accounts) even if the Disallow AR Adjustment flag for the account is set to N). Acounts that may not be posted to include Cash Accounts and the Accounts Receivable Control Account in the General Ledger (Cash accounts should be posted to using the Cash Application or Deposit processing programs, and posting an adjustment to the AR Control Account would cause the subledger detail to go out of balance with the balance in the Control Account). You may NOT adjust an invoice and charge the adjustment to a cash account, or an accounts receivable control account or any other balance sheet sub ledger or control accounts. The program will not allow you to select any accounts with an autopost number of less than 500.
The AR Invoice Adjustment program will also not allow you to drive an invoice balance in an opposite direction from the original balance. For example, you may not adjust an invoice which was created with a positive subtotal and charges amount negative (i.e. turn it into a credit memo), or force a prepayment invoice to have a positive balance. This restriction is in place to reduce confusion and force payments and adjustments to be applied in a consistent manner.
The invoice adjustment process consists of the following steps.
Select the AR Invoice Adjustment program from the AR Operations or another menu (MyCove, MyGroup, Recent)
Find and Select the invoice to be adjusted.
Select the General Ledger account that the adjustment will be charged to (the prompt button next to the Account window can be used to display a list of the General Ledger Accounts that adjustments can be posted to..
Adding an optional short note about the adjustment into the Memo field. This note is written to the memo field of the invoice being adjusted. The operator may also assign a project to the adjustment, using the Project field. The Project field is a Gencode table driven field.
Selecting the Adjustment Type to be used for the transaction. The adjustment type is assigned from the Transaction Codes or Trancode file. This file stores the standard transaction codes that are used during AR payment and adjustment processing.
Setting the batch and Post Date to be used for the transaction. The Batch number in the AR Invoice Adjustment program is assigned from a system counter F248:ARBATCH, and it can also be manually specified by the operator. The Post Date defaults to the current date, but the field can be changed to reflect the date on which the adjustment should have posted.
Entering the total amount of the adjustment. The amount should be entered as a positive amount. The amount should not exceed the invoice balance.
Adding a comment to the invoice to indicate why the invoice was adjusted. The AR Comment Tab in the Invoice Adjustment program can be used to view any exisitng AR or collections comments for the selected invoice, to edit the comment for the invoice or to create a new comment for the invoice. This comment can be accessed from the invoice and will be printed on the AR Aging if the invoice is open.
Selecting the Adjust Up or Adjust Down Button. When the Adjust Up or Adjust Down Button is activated, the system adjusts the invoice balance based on the adjustment amount and it creates a journal entry to post the adjustment. The journal entry is posted to the AR Control account (autopost) specified in the invoice, and to the adjustment account that was selected during processing.