Credit Note Alternatives

[Keith Fetterman]

Hi Geert,

I experimented with your suggestion (from Robert Brush) below for handling
credit notes. Could you clarify one point?

Another method of dealing with credit notes was explained to me by Robert
> Brush:
> Currently I process credit memo's by creating a standard invoice, but using
> negative quantity fields, it won't save this way of course.  The last item
> on
> the invoice I put Refund in the description field and use a top level Asset
> account labeled "Refunds" then enter a value to cancel the preceding lines.
> The business logic won't allow you to save a negative invoice, but it will
> allow a zero balance save.  To apply the credit to their account, you
> receive
> a payment to the Refund account, making the refund account return to zero.
>  If
> you are actually refunding the money you can do a transfer from the
> checking
> account, or the cash account into the Refund account, solving the
> disappearing
> money and returning the Refund account to zero.  This allows the recording
> of
> negative income, negative sales tax, and applying funds.


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)?

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.

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.

Am I missing something?

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.

Thanks a lot for the help.

Keith







On Fri, Feb 17, 2012 at 9:26 AM, Geert Janssens
<janssens-geert at telenet.be>wrote:

> Op vrijdag 17 februari 2012 08:54:05 schreef Keith Fetterman:
> > I am considering using GnuCash's small business features for managing the
> > finances of a small non-profit corporation.  It looks perfect, except for
> > one important feature.  I need to be able to create credit memos, refund
> > customers and handle bill credits to vendors.  I have reviewed the
> GnuCash
> > 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
> >
> > I am assuming this will handle credits for both customers (credit memos)
> > and vendors (bill credits) from what I've read in the Wiki.
> >
> > I don't see when Credit Notes will become available on either the Wiki
> page
> > 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
> based
> > on what I read in the GnuCash dev mailing list archives.  There was some
> > talk of it being in the 2.6 release, but nothing definite.
> >
> It will be in gnucash 2.6. The feature is mostly implemented already in the
> development branch. It still needs some polishing to be end-user ready
> though.
>
> > I have extensively played with GnuCash and I really like it.  What are my
> > alternatives for accomplishing credit notes for customers and vendors?
>  It
> > looks like accounts receivables and payables have been around awhile so
> > what are other users doing to get around this?
> >
> I have heard several people treat a credit note as a payment. So if you
> receive a credit note, you can apply a payment for the given
> vendor/customer.
> This works nicely in you balances and gnucash will match this payment with
> any
> current or future outstanding invoices for the vendor/customer.
>
> The part you won't have with this workaround is the document
> (invoice/bill).
> So you can't create a credit note and print it to send to your customer.
>
> Another method of dealing with credit notes was explained to me by Robert
> Brush:
> Currently I process credit memo's by creating a standard invoice, but using
> negative quantity fields, it won't save this way of course.  The last item
> on
> the invoice I put Refund in the description field and use a top level Asset
> account labeled "Refunds" then enter a value to cancel the preceding lines.
> The business logic won't allow you to save a negative invoice, but it will
> allow a zero balance save.  To apply the credit to their account, you
> receive
> a payment to the Refund account, making the refund account return to zero.
>  If
> you are actually refunding the money you can do a transfer from the
> checking
> account, or the cash account into the Refund account, solving the
> disappearing
> money and returning the Refund account to zero.  This allows the recording
> of
> negative income, negative sales tax, and applying funds.
>
> Regards,
> Geert
>