Hi James, The simple answer is NOT. On invoice level. And that is regardless of whether you're talking about a Sales or Purchase. A sales Credit Note (or Credit Invoice) is not a payment of the Sales Invoice, and - equally so - a Purchase Credit Note is not a payment of a Purchase Invoice. For convenience purposes I will explain more below using only the sales domain.
Both the Invoice and the Credit Note stem from the Order. When the Invoice has been generated and encompasses all elements regarding the Order, the obligation of the customer to pay the (agreed) amount due has been established in the debtors sub ledger and in the general ledger. When (due to whatever reason) a Credit Note is issued, the total obligation is reduced. The reference to the order (and other documents as delivery notes, RMA's, etc) help to identify where it came from. So the Credit Note reduces the outstanding debt. When subsequently a payment from the debtor comes in, all the appropriate Invoices and Credit Notes should have payments (positive for Invoice, negative for credit note).against them. If in anyway the payment is unclear Invoices and Credit Notes should not be should not be marked against that payment. More investigation is required!. Suppose the following: Order = USD 1.000,00, and goods have been delivered Invoice = USD 1.000,00. RMA is granted for 1 time on the order, valued at USD 100,00 Credit Note is issued for USD 100,00 At this moment the outstanding debt (in Accounts Receivable) is 900,00 for the order, but the total position of the debtor can also be higher or lower. Subsequently a payment of UDS 910,00 arrives, but the description is unclear. Then you can't tell which Invoices and Credit Notes are applicable. If you take the first one(s) that may seem appropriate, you're creating a confusion that will go from bad to worse. So you need more information and keep chasing the debtor. And when everything regarding the received payment is clear (accepted by the accounting department) an accounting transaction must be created to ensure that everything is correct: In the sub ledger the Invoice for USD 1.000,00 will be marked as paid Also the Credit Note for USD 100,00 will be marked as paid And an undesignated payment of USD 10,00 will also be registered. I trust this helps. Best regards, Pierre Smits ORRTIZ.COM <http://www.orrtiz.com> OFBiz based solutions & services OFBiz Extensions Marketplace http://oem.ofbizci.net/oci-2/ On Wed, Oct 25, 2017 at 3:49 PM, <ja...@productive1.com> wrote: > I have been struggling with the Credit Memo and Vendor Credit Memo > process for a while and I think this needs a real hard look. Can > someone tell me the proper way to apply a Credit Memo generated from a > return to the Original Invoice from the sales order. > > Here is the Example > > Customer buys GZ1000 for a $1000 and is invoiced for $1000 > He returns GZ1000 and is given a credit for $1000 > > How is that credit applied to the original invoice so it shows in > accounting that the customer no longer owes $1000? > > > Same thing on the Vendor side when returning a product back to vendor. > > Thanks, > > Jame >
