Dealing with A/R Prepayments and Overpayments

Prepayments: If you have an A/R receipt for a customer that has no outstanding A/R invoices (all invoice balances are zero), you can record the receipt by selecting the Prepayment option, on the Choose Invoices form, which displays after selecting a Customer ID on the Transactions>Accounts Receivable>Enter A/R Receipts form.

Overpayments: The system allows an overpayment to be entered two different ways:

• By applying the exact amount of the invoice (Transactions>Accounts Receivable>Enter A/R Receipts>Choose Invoices), in the Amount to Apply column. And then upon Save, click the New button to create a unique prepayment for the remaining amount using Transactions>Accounts Receivable>Enter A/R Receipts>Choose Invoices and select the Transaction Type Prepayment . This will liquidate the original invoice and create a unique record of the overpayment to be used later as a prepayment.
• By applying the full amount of the check to the invoice (Transactions>Accounts Receivable>Enter A/R Receipts>Choose Invoices), in the Amount to Apply column. Once posted, the system will change the invoice from a positive balance to a negative balance. Note that the system will not liquidate the invoice and the system will show a credit to the subledger for that invoice. When you apply this credit, the original invoice number will be associated with the invoice to which it is applied.

Refunds: A refund can be issued for an outstanding credit balance by first liquidating the invoice balance with an invoice adjustment (must use the same invoice number) or by applying a credit to bring the receivables balance down by the amount of the refund. If a payment has already been received and a liability is owed back to the customer then a refund check can be issued either through Activities>Write Checks. Alternatively a liability can be accrued in Accounts Payable and a check can be cut through the AP payment process to issue the refund.

Applying Prepayments in a Non-Cash Transaction: An Offset Account Assignment can now be setup for the Transaction Source ARM to use on the Transactions>Accounts Receivable>Enter A/R Credits form. By setting the Offset GL account to a clearing account you can setup an easy way to apply a prepayment in a non-cash transaction. Once there is a new invoice recorded in the system, the prepayment can be applied by selecting both the Prepayment and the new invoice in the Choose Invoices form, set the Amount to Apply of the new invoice to a value equal the amount of the Prepayment being applied. To Document Amount of the Credit should be set to zero, then click the offset button to complete the transaction.