Cash Application – Creating Overpayment, Prepayment and Debit memo invoices

The Cash Application program will only allow you to save a payment  transaction when the entire amount of the customer payment has been applied to open invoice balances for the customer.

In some cases, you may need to apply a customer payment when the payment detail from the customer does not match your open invoice detail.  This may be due to the customer overpaying your for an invoice, or due to the customer making a prepayment.  A customer may also show a deduction on their remittance information that you have not authorized.  In these cases, you may not be able to apply the customer check as directed by the customer, since the invoices may not be open, or they may not even exist.

In all of the above cases, the preferred method to handle the situation is to create a new invoice document to track the payment amount.  This document can be a negative invoice (to track an overpayment or prepayment), or a positive invoice (to handle a customer taking an un-authorized deduction).  The new invoice allows you to specifically id the payment discrepancy, and to apply the payment as directed by the customer (so you spend less time talking about why your invoice payment details don’t match up).

Overpayment, prepayment and debit memo situations are handled during cash application by creating invoice documents to track the over or underapplied invoice amounts.  The Cash Application program contains a “Create dm or pp” button which allows you to create overpayment, prepayment and debit memo invoice documents.  Comments and other information, such as a PO number and reference number, can be added to these documents to record the reason that they were created.

As each new invoice document is created in the Cash Application program, the system assigns a temporary invoice number to the document.  This number is converted to a permanent invoice number if the payment transaction is saved, or it is deleted if the payment transaction is not saved.


Cash Application - Applying one check to invoices for multiple companies