Credit Note Alternatives

[Bob Brush]

On 02/26/2012 03:32 PM, Keith Fetterman wrote:
> Hi Geert,
>
> You mention 1) receiving a payment from the Refund account and 2) transfer
> money between a checking account and Refund account.  Do you perform both
> of these steps for every customer credit note?  Or, do you do one or the
> other depending if you want to apply the credit to a future invoice (step
> 1) or refunding the money to the customer (step 2)?

Yes, you would do one or the other, if the customer has a balance you 
can use the "credit" to pay the balance, it is essentially just another 
asset that can be spent or moved, it is just helpful to coral it from 
the rest to handle better and also to remember later on what happens, 
similar to receiving a check payment from a customer to a "Checks to 
Deposit" account, when you are not sure which bank you may take a 
deposit to, but need to record that the customer has made payment.  In 
some cases you might do both, so long as the total is balanced, say for 
instance, someone takes back a $30 thing but owes you $5 you would 
receive a payment from the Refund account for $5, then write a check for 
$25 transferring to the Refund account from the checking or cash account.


> In my case, I need to refund the customer by sending a check from the
> checking account. In my experiment, I tried to perform both steps (step 1
> first then step 2.)  This didn't work because receiving the payment from
> the Refund account zero's out the Refund account.  There is no money in the
> Refund account to transfer to the checking account.

Need to keep it balanced, so either partial for both, or one or the other.

> In the previous experiment, I did have a negative balance in the AR account
> so I tried to zero this out and create a credit transaction (withdrawal) in
> the checking account for the check.  I tried to do by creating another
> payment, but the payment needs to be negative.  I discovered in GnuCash
> 2.4.10, I can not create a negative payment.

If the customer did not owe any money and you created a return invoice, 
then received the payment from the refund account, you will find that 
customer now has a negative balance, which if you did not pay them would 
be a reality, you could just let it sit there and apply to a future 
transaction.  You could create another invoice to cancel it out, but I 
couldn't justify that, and besides that would have tax implications 
also.  I think it would be best to delete that payment by opening the 
account register for the refund account, find the "payment" and delete 
it.  Now you can use the transfer function, or skip over the the 
checking account and write the refund.

> I discovered the Customer Summary report shows the reduced income from the
> customer, but the Customer Report does not show the refund unless I perform
> step 1.  The originating invoice that creates the refund shows as $0 in the
> Customer Report.  Ideally, it would show a negative invoice (or credit
> note) and a positive payment.

Yes, it is not a perfect work around, and this is one of the 
shortcomings, a report for the customer may show several normal 
invoices, and several for $0.00, in my case they may be "Estimates" or 
"Refunds" and really no way to tell other than the conspicuous "payment" 
right after a $0.00 invoice assuming nothing else happened that day. I 
have to check by opening to see..  You can print the "Refund Invoice" 
and get the customer to sign confirming the credit and application to 
their account, or you can put in the description "Paid via check #567" 
if you pay them by check.  I experimented with Reversing payments early 
on, in other words for a refund of $30 receiving a payment of $30, then 
opening the a/r or checking register and reversing the amounts from the 
credit column to the debit column and back, it did show on the reports, 
but overall was error prone and hard to explain to anyone, so I 
discontinued that process.  Some times it can screw up your A/R for 
reasons I can't explain, and the only solution is to delete the 
transactions and enter all over again..  not fun.

>>> documentation, Wiki and both the GnuCash users and dev mailing lists to
>>> find out how to accomplish this.  I don't see anything in the GnuCash
>>> application.  The closest thing I have found is Credit Note Wiki page:
>>> http://wiki.gnucash.org/wiki/Credit_Notes

Yes, and it is awesome..

>>> or on the road map for GnuCash.  Does anyone have an idea when this
>>> functionality might be available?  I fear that it may be a long time

Using the latest development version is probably not a good idea just 
yet, I will say that credit memos have saved me more time than any other 
single feature, so you have to weigh the risk with the  improved 
productivity, for most the best idea will be to wait.

:)

-- 
Bob