Configuration of Automatic Write-Offs in Invoices

When a company is integrating its e-commerce system with MYOB Advanced, sales orders and their applied payments are imported to MYOB Advanced. The payment amounts are then transferred to the SO invoices created for these sales orders. In some cases, a small discrepancy can occur between the payment amount applied to a sales order and the amount of SO invoice created for this sales order (for example, as a result of the system recalculating the applicable taxes in the SO invoice). You can configure the system to write off these small discrepancies automatically when the SO invoice is released.

You configure the system to automatically generate adjustments on small discrepancies by doing the following:

1. On the Chart of Accounts (GL202500) form, you configure an expense account (and subaccount, if needed) to be used for the small amounts that are written off.
2. On the Reason Codes (CS211000) form, you configure a reason code that specifies the account and subaccount to be used for writing off balances. For details, see To Configure a Reason Code.
3. On the Accounts Receivable Preferences (AR101000), you specify the reason code that you have configured in the Balance Write-Off Reason Code box. By default, the system will use this reason code for writing off balances.
4. On the Order Types (SO201000) form, you select a particular sales order type, and you allow write-offs for the orders of this type by selecting the Auto Write-Off check box on the General tab.
5. For each customer for whose documents you want to allow write-offs, on the Customers (AR303000) form, you select the customer, and then you do the following on the General Info tab:
   1. To allow write-offs for the documents for which this customer is selected, you select the Enable Write-Offs check box.
      Note: On the Customer Classes (AR201000) form, you can specify that write-offs are enabled (or not enabled) by default for customers of a particular class. (If needed, you can modify the default setting for any customer of the class.)
   2. In the Write-Off Limit box, you specify the customer's write-off limit. The system processes a write-off for an invoice to the customer only if the calculated discrepancy does not exceed the customer's write-off limit.

After you configure the listed entities and settings, the system will automatically calculate small write-offs for SO invoices that are prepared for the orders of the order type for which you enabled write-offs, if the payment amount differs from the invoice amount, and this difference does not exceed the write-off limit specified for the customer.

The write-off amount can be either positive (if the invoice amount is greater than the amount of its applied payment or payments) or negative (if the invoice amount is less than the amount of applied payment or payments). You can correct the calculated write-off amount, if needed, before releasing the SO invoice. When the SO invoice is released, the write-off amount is posted to the account specified in the reason code. Accounts are affected as shown below.

Note that if a payment is applied to multiple sales orders, the system automatically creates a write-off only on the closing of the last payment application for the invoice that is related to the last sales order to which the payment is applicable. If multiple payments are applied to the same sales order, then the system writes off the discrepancy for the last payment application (the one that causes the SO invoice and the last payment to be closed).

Also, you can manually process small write-offs by entering them directly on the Documents to Apply tab of the Payments and Applications (AR302000) form before applying a payment. For more information, see Invoice Payments: Manual Payment Application. For a detailed description of the batch that is generated and posted to the general ledger when you release the payment application with the written-off balance, see Invoice Payments: Release of Application Records.