Deductions

Miscellaneous deductions taken by the customer are recorded by the payment entry clerk through the Deduction Entry screen (AR120S07).  Before you can record a deduction for a customer, you must apply a payment for that customer during the current session.

Deductions can be recorded in the following ways:

·     During add mode after you have applied payments for a customer

·     During change mode after a payment has been applied

Use the following steps to record deductions in Accounts Receivable during add mode:

1.   Select Payment Entry and Application from the Accounts Receivable Menu.

2.   Enter customer number, co/loc, payment number, payment and accounting dates, payment amount, currency code, and 'Y' for open item list.  If the data is valid, the Open Item List screen will be displayed.

3.   From this screen, you may select items to be paid at gross, at net of cash discount, or in detail.  Items selected for detail will be displayed on the detail screen, which allows partial payments, write-offs, and chargebacks.  Once a payment has been applied for the customer, you can record deductions against that customer.

4.   On the open item list, press F21=Deductions to display the Deduction Entry screen.

5.   On the Deduction Entry screen, enter a reason code, reference number, deduction amount, and co/loc.

6.   Press Enter and the deduction amount will appear in the upper right hand column in the Deduction field.

When recording a deduction, a reference field will be available to record a document number or a customer reference number.  This field will not be validated, therefore, no open item amount will be affected.  Multiple deductions may be recorded for the same document number, but for different reasons.

Use the following steps to record deductions in Accounts Receivable during change mode:

1.   Select Payment Entry and Application from the AR Menu.

2.   Press F7 - Transaction Selection.

3.   Enter customer number, co/loc, payment number, and 'C' for change transaction.  The program will retrieve the information for the check header.

4.   Enter a 'Y' in the Deduction field.  The Deduction Entry screen will be displayed.

5.   On the Deduction Entry screen, enter a reason code, reference number, deduction amount, and co/loc.

6.   Press Enter and the deduction amount will appear in the upper right hand column in the Deduction field.

Deduction Reason Codes

The reason code must be a valid deduction reason code on Reference File category 350.  It will be used to define whether a debit/credit memo is to be created automatically for the deduction or whether a VAT adjustment will be made.  If the memo is created automatically, the payment terms for the memo are also defined on category 350.

If you want to accept the deduction without creating a debit or credit memo, then the Automatic Creation flag on Reference File category 350 must be set to 'N'.

If you do not create an open item for the deduction and in a VAT recalculation environment, a VAT code can be assigned for each deduction entered on the Deduction Entry screen.  The VAT code must be valid on Reference File category 308 and must be a normal VAT type.  In addition, the VAT adjustment flag must be 'Y' and the Automatic Creation flag must be set to 'N' for the deduction reason code defined on Reference File category 350.  Each deduction amount entered on a line will be divided into the goods amount posted to the deduction account and the VAT amount posted to the VAT account.

For example, if you enter a deduction of DEM 230 and a VAT code of 15%, then 200 will be posted to the deduction account and 30 will be posted to the VAT account.

To create a debit or credit memo, the Automatic Creation flag must be set to 'Y'.  An underpayment results in a positive deduction (a debit memo).  The open item created will be assigned the debit memo document type retrieved from Reference File category 350.  An overpayment results in a negative deduction (a credit memo).  The open item created will be assigned the credit memo document type retrieved from Reference File category 350.

If an open item is created for the deduction, the next available document number will be retrieved from Reference File category 440 unless an external numbering program has been defined for the company/location on Reference File category M12.  In that case, the next available number will be retrieved by the user-defined external numbering program.