Customer Balance Adjustment – An overview

Introduction

In the present virtual business age, for a very large organization with multi-location business setup, it is imperative, essential and vital to provide support for the following facility to all its valued customers:

• Facility to settle the outstanding in any one of the agreed currencies, as the business may cut across the geography of the globe

• Facility to settle the outstanding with any of the business centers / offices of the organization spreading across the geography of operation, which need not be the facility/center which had provided the supplies/services to the customer

The proceeds / realization against the sales have to be properly accounted for either appropriating or apportioning against the pending invoices.  These can be either against actual invoice or on outstanding invoices, on FIFO / LIFO basis. Considering the huge volume of transactions, complexities due to global level transaction and time frame, it is utmost important to account for the receipts as and when received, against pending invoices and dues immediately. Further there are circumstances, in which a credit or debit note is raised on the customer for price/ tax / quantity differences and goods rejection/return. The credit documents namely receipts, credit note and prepayment invoices have to be adjusted against the pending debit documents like invoice and debit notes.  This will reflect in the true and fair representation of customer balances and outstanding receivable. The system which is catering to the above requirements, should support for knocking off the dues, allow for discounts for the payments made within the stipulated / agreed credit period, and recover charges for belated settlement. In this scenario, the functionality of applying the money receipts and credit documents against various outstanding sales invoices and debit memos is considered.

Feature Highlights

• Support for Receipt Application, i.e, Support for matching a particular customer credit against one or more debits

• Support for automatic receipt application i.e. matching a credit document against a specified debit document on authorization of the credit document

• Provision for reversing a receipt application batch, leading to restoration of the original customer debit and credit documents

• Provision for posting of accounting entries to record exchange rate variances and write-offs of small residual values

• Supports receipt application across group customers and allow matching of credits of a customer against debits of other customers in the same hierarchy

• Support for Cross-Currency Receipt Application

• Support for Integration with Management Accounting and capturing cost center for adjustment transaction

List of Activities