Tuesday, 15 July 2008

Reverse Payment that already applied to Invoice.

Payment has been posted and applied to an invoice, but at a later stage, you found out that the payment has been posted wrongly or due to some other reasons, you want to reverse out this transaction. Can it be done ? Yes. It can be done in 2 steps:
Step 1) Unapply the payment from the invoice
Step 2) Reverse out the transaction.

Let's consider the following example. Cronus has make a payment of $373,317.14 to offset Invoice 12345. The payment has been posted and applied to Invoice 12345 as shown in the Vendor Ledger Entries screen below.

Please note taht the Remaining Amount field has been zerorized while the Open status has been set to False because the Invoice has been fully offset by the Payment.

Step 1 - Unapply Payment from Invoice
1) Open Vendor Card and browse to vendor 3000.
2) Click on the Balance (LCY) to drill down to the Vendor Ledger Entries.
3) Select the Payment Line that need to be unapplied (in this case is entry 2728)
4) Select Function --> Unapply Entries.
5) Click on Unapply button on the Unapply Vendor Entries screen.

6) Click on Yes when you are prompted with the following confirmation message "To unapply these entries, the program will post correcting entries. Do you want to unapply the entries?" The unapply process will begin once you click on the Yes button.

After unapply entry, the Remaining Amount has been increased back to $373,317.14 while the Open status is reset to Yes. The following screen show the Vendor Ledger Entries screen after the unapply function.


Step 2 - To reverse the payment entry
1) At the Vendor Ledger Entries screen, select the Payment entry that you want to reverse.
2) Click on Reversing --> Reverse.

3) Click on the Yes button to confirm on the reversing when you are prompted with the message "To reverse these entries, the program will post correcting entries. Do you want to reverse the entries?"

The reversal will create a Payment entry with -ve Amount. This new entry (2783) will apply to the original entry (2728). The Remaining Amount field will be zerorized while the Open field will set to No for both the original payment entry and the reversal entry. The reversal will also increase back the Balance (LCY) for the vendor.




If you do not want to use this method due to certain reasons. you can also manually reverse it using General Journal by
1) Debit Bank Acccount
2) Credit Vendor Account

Using General Journal to do the reversal will open back the original Invoice entry for application. When you make payment again in the future, you will need to apply to the entry created by the General Journal reversal.

2 comments:

Anoop Baalu said...

Hi,
I have a similar situation where a PO is invoiced for a wrong Qty, Instead of 2 it's invoiced for 3 for the total line Qty of 5, After this 2 item are Sold. These are serialized. System doesn't allow me to do a credit memo b'cos the inventory is Zero. What is the best way to correct the wrong Invoice

Anoop Baalu said...

Hi,
I have a similar situation where a PO is invoiced for a wrong Qty, Instead of 2 it's invoiced for 3 for the total line Qty of 5, After this 2 item are Sold. These are serialized. System doesn't allow me to do a credit memo b'cos the inventory is Zero. What is the best way to correct the wrong Invoice in this situation?