A customer comes in to cancel a work order, or return a product, for which they have made a partial payment (deposit) on an invoice. The following steps will allow you to zero out the old invoice, issue a refund, and reclaim the taxes paid.
Basically, you will do two things. 1) You will need to take a payment (Credit Memo) on the old invoice to get it to a zero balance. This will clear it from your Accounts Receivable.
2) Create a new invoice for the same product/work order with a negative quantity (Eg. -2). Enter two payments. One to refund the customer and another (Credit Memo) to zero out the invoice. This will allow you to reclaim your taxes on this day.
Here are the detailed steps:
Access: Main Menu> Invoice file
- In the Invoice file, perform a Find for the customer’s invoice.
- If you are selecting the customer’s invoice from the List View, you will need to click on the purple Data Entry button to move to the Line Item Entry screen. Otherwise, go to the next step.
- In the Line Item Entry screen, click on Enter A Payment (lower left corner).
The amount will automatically be entered on the Receipts screen.
- In the Receipts dialog box, select the Tender “Credit Memo”. If you do not see it in the list, scroll down to the bottom of the list and click on Edit. Add Credit Memo into the list on it’s own line above the hyphen.
- Click Done Go To Form View.
The full amount of the invoice has been paid with a Credit Memo and the balance is now zero.
- Take note of the invoice number, customer name and item(s) sold on this old invoice. Or, print out the invoice, as you will be entering them onto the new invoice to reclaim the taxes and zero out the ‘credit memo’.
- The above steps will removed the invoice from your accounts receivable list.
Creating a new invoice and reclaiming the taxes
- Create a new invoice.
- Enter the customer’s name or ID number.
- Use the magnifying glass (or purple search button) to enter the product or work order number so that the item(s) appear on this new invoice, the same as they appeared on the old invoice.
- Enter the negative value in the Qty field (e.g. -1, -2, -3).
The Subtotal and Price will all appear in red as negative numbers. (If this is a retail product and the number is still in the Products file, the inventory for the item will be increased to show the return of the item. If it is a work order, inventory will not be affected.)
- Click Enter A Payment (lower left corner).
The Receipts dialog box will appear and the Amount field will contain the negative total amount.
- Change the number in the Amount field to match the dollar value of the refund you are issuing. This should be the same amount as their payment on the old invoice.
- Select the appropriate Refund item from the lower portion of the Tender list. (Eg. Refund – VISA)
- Click Done.
- Click the Enter A Payment button again.
The Receipts dialog box will appear with the balance owed in the Amount field as a negative amount. This number should match exactly to the amount of the Credit Memo on the old invoice.
- Select “Credit Memo” from the Tender list.
- Click Done Go To Form View.
You may need to enter the name of the sales rep if your program is not set up to automatically enter a name.
- In the Inv Note field (lower left corner), enter a brief explanation of the return and identify the original invoice number. This will save you time at the end of the year end explaining this to your accountant or an auditor. Eg. Created invoice to correct canceled order on invoice #100461.
- Go back to the original invoice and enter a similar note identifying the new invoice created to reclaim the taxes.
This will generate a tax credit for you on today’s sales.
You will now have two invoices for the same customer. Both with a zero balance.
On your Sales Report, you will notice the taxes for the invoice as a negative which reclaims the amount of taxes paid. Both the monthly Sales Report and the End of Day Sales Report will look the same.
In the Payment Report showing your Receipts for the day, you will see the tender, Credit Memo, listed with the same amount of money being paid and removed so that the total is zero.