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Accounts Receivable - Credits

GrowPoint can create two types of customer credits. Both of these credit types reduce the balance due owed by the customer on the Customer Aging report and the Customer Statement report.

Credit against a Sales Order with a Balance Due
Create an Open Credit for Customer

Credit Sales Order with Balance Due

When a customer purchases goods and services from your business, a sales order is created and the detailed amounts are posted to the general ledger. A sales transaction recognizes income for a business and each part of the sales order is updated in the general ledger. The sales order transaction typically involves two accounts of the general ledger. When the customer is extended terms, the accounts receivable account and the sales revenue (income) account are updated when the sale is posted. Here is a sample transaction:

Item Description	Qty	Sell Price	Extended
Abies concolor 5’	15	$92.40	$1386.00
Acer rubrum ‘Red Sunset’ 1 ½”	20	$78.10	$1562.00
Taxus baccata ‘Repanndens’ 15”	50	$15.40	$770.00
		Net Amount	$3718.00
	-	5% Discount	$185.90
	+	Royalty	$4.24
	+	5 % Freight	$185.90
	+	6% Sales Tax	$211.93
	=	Total Amount	$3934.17

For this transaction, the following accounts would be posted to the general ledger:

Account Description	Debit Amount	Credit Amount
Accounts Receivable	$3934.17
Sales Income		$3718.00
Discounts		$185.90
Royalty Payable		$4.24
Freight	$185.90
Sales Tax Payable		$211.93

In the event your customer is not satisfied with the goods or services provided, you may have to create a credit memo to reverse all or part of an accounting transaction. The term ‘credit memo’ refers to the accounting transaction that adjusts the general ledger by crediting a G/L Account Number for the credit amount.

To enter a credit for a Sales Order record with a balance:

Start the Credit screen from the GrowPoint Menu. Select A/R, Activities, Enter Credits.
Press the Add button located on the Credit screen. The Credit Number is automatically assigned to the new Credit record. You can’t change this number. You can change the next credit number through the A/R Set Up Screen.
Select the Customer from the Customer Lookup list. From the list, you can search for customer records using any of the list columns. Simply click into a selected column and begin typing characters for the system to begin searching. When the desired customer record is highlighted, press the <Enter> key or the Return button to select the customer code.
When the Credit Detail screen appears, verify the correct Customer Code and then press the <> key or click into the Order key field. Enter the Order number or Right Click the mouse to display a list of unpaid sales orders for the selected customer. Enter any additional information on the Detail screen.

Customer Credits – Detail

Credit Amount:: If you want to enter specific item codes on the credit memo, do not enter a credit amount. This field is the total amount of the credit, if you enter items the sum of the credited items will fill here automatically.
Credit Date:

Enter the transaction date for the credit. This date is the transaction date recorded in the general ledger.

Batch:

This field is optional and is not required by the system.

Salesman: Enter the salesman to which the credit is assigned. The Salesman Commission report uses this field to reduce the total amount for the salesman when calculating commissions.

Reason for Credit:

Prior to creating a customer credit, you should set up a list of credit reasons. Each time a credit is entered, you may assign a reason for the credit. This information is useful for future examination of your credit policies. Currently there is no report in GrowPoint that shows this information, however you can access the data through the Crystal Report Writer.

Credit GL:

When a credit is entered for a customer, you need to indicate the General Ledger Account Number being credited. Typically, this is the Accounts Receivable account number. When a new credit is created, the system automatically defaults to the account number for Accounts Receivable, which is set up on the A/R Set Up screen.

Debit GL:

If you want to enter specific item codes on the credit memo, do not enter a Debit General Ledger Account Number on the Detail tab. Instead, when a line item is added to the credit, you are allowed to enter an account number for the line item. If the credit does not have line items, enter the General Ledger Account to debit. Description: Enter a description of the credit. This description prints on the Customer Statement and can be useful when reviewing credits later.

FOB:

Enter the FOB for which the credit is to be assigned. GrowPoint has the ability to separate Sales, Credit, Payment, and Interest transactions by FOB. This feature is discussed in detail in the A/R Set Up section of this manual.

Enter Item Codes on the Credit

To enter line items to be credited on the credit memo, press the Item Credits tab. This screen looks similar to the Sales Order screen except it is used to enter credit items. If the credit is for an unpaid Sales Order record and the Order Number was entered on the Detail tab, you can easily select the item codes to add to the Credit record. Press the Add New button to display an item list for the Sales Order. Use the checkbox in the left column to select specific items.

Customer Credits – Select Items to Credit

Item Code:: To credit a specific Item Code, enter the Item Code. To add a new item to the Credit record, press the Add New button. To accurately track Sales History, you should enter specific item codes on the Credit record.
Returns:: GROWPOINT DOES NOT RETURN ITEMS TO INVENTORY! To return an item quantity to inventory, you must change the on hand quantity on the Inventory Products screen or create an Inventory Adjustment record.
Quantity:: Enter the quantity of the item being credited. If the credit is only for a dollar amount, leave this field blank. If the item is being returned to inventory on-hand, this quantity will need to be re-added to the existing on-hand as either a count or an adjustment. Because Items rarely actually get returned, GrowPoint Credits do not return items to inventory.
Disc?:: If the item code is a discountable item, be sure to check this column.
Price:: If the credit is for a price adjustment, enter the amount to credit. For example, if the item is sold for $15.40 per unit, but you are giving a $2.00 per unit credit, enter $2.00 in this field.
Debit GL:: The General Ledger Account for the line item on the Sales Order being credited automatically appears when the item is added to the Credit record. You can change the account number as desired. This is the account that is updated when the Credit record is posted to the General Ledger.
Total:: The line item total is automatically calculated by multiplying the Quantity by the Price. You may override this amount if necessary.
Credit Reason:: Select a reason for the line item credit from the drop down menu. (Credit reasons must be setup in the Accounts Receivable> Maintenance> Setup> Lookups >Credit Reasons sub tab.)

Customer Credits – Item Credits Tab

Net Credit:: The net amount of the Credit record is calculated by the system and can only be changed by changing the total amount on a line item record.
Discount:: You may credit back the original discount by entering a discount amount in this field.
Royalty:: You may adjust the royalty by entering an amount in this field.
Freight:: Credit freight by entering a freight amount. Typically, this amount is not changed because the product was delivered, however you can credit freight if necessary.
Tax 1 and 2:: If taxable items are added to a Credit record, the system calculates sales tax.
Total Credit:: This value is the total credit applied to a sales order or created as an open credit.
Tax Base 1 and 2:

Create an Open Credit

An open credit is a credit that isn’t applied to a specific customer invoice, but is a credit that appears on the Customer Statement or A/R Aging report. The only difference between a credit applied to a specific sales order and an open credit is that the credit for the sales order is entered with the order number and the open credit doesn’t have a sales order number. The open credit is created exactly like an order credit. The open credit may also have specific item codes included on the credit record. When creating an open credit, make sure to do the following:

Do not enter an Order Number for the Credit.
Do enter a Total Amount on the Detail tab. This amount is the total of the open credit.
Do enter a Debit General Ledger Account Number on the Detail tab. If you are adding item codes to the open credit, you don’t have to enter a Debit GL on the Detail tab.

Open credits do not have an Order Key If no item codes are entered on the credit you must enter a Debit GL account number.< caption> Customer Credits – Open Credit

Delete a Credit Record

Only credit records that have not been posted can be removed. If the credit has not been posted, use the following steps to delete the credit:

Locate the Credit record using the List tab on the Credits screen.
Select the Delete button.
Answer Yes to the question about deleting the Credit record.

If a Credit record is an open credit, then it may be deleted as long as the credit has not been applied to an invoice.

Apply Open Credits to Invoices Balances

Open Credits appear on the Customer Statement and Aging reports as an offset to any unpaid Sales Order. When a customer has an Open Credit and a new Sales Order is entered and posted, the Open Credit amount can be applied to the Sales Order balance. To apply an open credit:

Print the Customer Aging report to see a list of Open Credits and unpaid Sales Orders for a customer.
Select the Apply screen from the A/R Menu>Credits> Apply Credit to Orders.
Enter the Customer Code or choose the Customer from the drop down list. Only Customer records with posted open credits are displayed in the list.
Select the Open Credit Number from the drop down list. Only open credits for the selected customer appear in this list.
A list of unpaid Sales Orders appears in a list on the screen. Enter the amount applied to each Sales Order. The system keeps a running total of the amount applied.
Press the Apply or OK button to apply the open credit. When the Apply button is selected, the system applied the amount but remains on the screen to apply additional open credit amounts. The OK button saves the changes but exits the screen.

Once you have saved your credit you must go to the posting screen to post the applied credit. You must do this even though you posted your original credit.

Refund Open Credit

Sometimes your customer has a credit that may be refunded. This is usually the case if the customer won’t be purchasing additional items in the future. Other times, the customer has given a down payment on items that exceed the Sales Order amount.

New

New 2022!!

Credits can be edited after being saved. As long as the credit has not been posted, it may now be edited. Changes allowed are: Customer, Order Number, Items, Item Quantities, Dollar amounts, Taxes, Freight, and GL Accounts.

This feature is currently not a part of GrowPoint by default so ask your support rep if you are interested in receiving the version that does allow this.

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