Credit Memo of a Credit Memo

Urzza

Hi,

I have posted a Sales Invoice Credit Memo, twice (using NAV 5.00sp1)

What kind of procedures can I follow in order to retablish the balance in my customer sheet?

Best Regards,

João Pedro Pereira

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I have searched for this topic first, but I didn't find anything related to. If there is already a topic concerning this issue I appologize.

Savatage

So you posted 2 credits instead of just 1 and now you want to remove one of them.

We (depending on the type of credit)
Create a phony invoice that matches the credit and apply them together to wipe each other out.

Or create a sales journal entry and apply it to the credit to wipe it out.

Urzza

Thanks for the quick answer Savatage.

Ye I have posted 2 credit memos instead of just one.

Loosed thoughts:

Is there any other way to undo the last credit memo, instead of creating a phony invoice or posting a sales journal entry?

Like some kind of function that Navision has to make the last credit memo inactive?


Best Regards,

João Pedro Pereira

djswim

Savatage wrote:

Create a phony invoice that matches the credit and apply them together to wipe each other out.

Or create a sales journal entry and apply it to the credit to wipe it out.

There may be another way, but this is absolutely the easiest... 8)

Urzza

I´m sorry to insist, but my intention is to know what are the other ways (if they exist).

Anyone knows?

Best Regards,

João Pedro Pereira

ssingla

No

jackies

I tried with one user recently, to post another credit memo copying document of posted credit memo, being the one you want to cancel. However, there was a problem writing down the entries in adverse amounts, something Navision didn't like. I think there is a way to do it but I couldn't succeed with it as an 'easy solution'. I have to agree that there should be a way to cancel it. :-k

philippegirod

In Nav 4, a ReverseTransaction Codeunit exists, it works very well.

To use it, from the General Ledger Entries form (20), select your entry then go to Functions, Reverse Transaction. It will reverse everything (it will insert a new entry which will cancel your wrong entry).

Alex_Chow

Savatage wrote:

So you posted 2 credits instead of just 1 and now you want to remove one of them.

We (depending on the type of credit)
Create a phony invoice that matches the credit and apply them together to wipe each other out.

Or create a sales journal entry and apply it to the credit to wipe it out.

This is the easiest way to do it. No modification, no changes.

garak

Follow Savatage's way.

To apply the one open credit memo, create a new invoice use the function "Copy document" now the field "Applies-to Doc. Type", etc. are filled out and both, to new created invoice and the one wrong cr. memo are closed and not open.

Regards

Alex_Chow

Urzza wrote:

Is there any other way to undo the last credit memo, instead of creating a phony invoice or posting a sales journal entry?

Like some kind of function that Navision has to make the last credit memo inactive?

This has been discussed many times before since version 1.2.

The reason why NAV does not allow "voiding" is because of paper trail reasons. Imagine auditors coming in an looking at your books and see a bunch of voided transactions. They would question you to no ends on why these entries were voided. However, if you have a proper credit memo, you can post entries with proper description on why it was voided. The auditors can see the proper paper trail on ALL transactions instead of hitting a dead end with void.

Voiding is easy. But it will cause you problems down the line. I would rank it amongst an IT person deleting a ledger entry because it's convenient.

djswim

Alex Chow wrote:

This has been discussed many times before since version 1.2.

The reason why NAV does not allow "voiding" is because of paper trail reasons. Imagine auditors coming in an looking at your books and see a bunch of voided transactions. They would question you to no ends on why these entries were voided. However, if you have a proper credit memo, you can post entries with proper description on why it was voided. The auditors can see the proper paper trail on ALL transactions instead of hitting a dead end with void.

Voiding is easy. But it will cause you problems down the line. I would rank it amongst an IT person deleting a ledger entry because it's convenient.

=D>

This. This is exactly right. Especially when it comes to core financials, NAV has worked the way it does for a long time, and for the most part has been exactly right. No it's not convenient sometimes, but it's like that for a reason. If you can't justify it, it shouldn't go into your financial system. If you don't believe me, try faking a bank rec. sometime. Make sure there aren't any firearms or sharp objects in the room with you though

If your controller/CFO/accountant isn't an anal, picky, SOB, then they're in the wrong industry...

Alex_Chow

djswim wrote:

If your controller/CFO/accountant isn't an anal, picky, SOB, then they're in the wrong industry...

I would also add that to learn a great deal about NAV, you need a anal, picky, SOB boss.

djswim

Either the boss has to be or the senior person who you're shadowing has to be

idiot

The crux of the problem is how to distinguish a cancellation vs a real credit note as well as how the audit trail is being maintained.
Voiding is possible when reasons must be specified for the void, & is preferred as a more efficient way sometimes...
In fact I'd encountered requests for such automation of voiding by way of dummy invoices by just a click, but did not proceed due to costs...
In fact there are other simpler softwares which are support voiding with proper audit trails...

ssingla

idiot wrote:

The crux of the problem is how to distinguish a cancellation vs a real credit note as well as how the audit trail is being maintained.
Voiding is possible when reasons must be specified for the void, & is preferred as a more efficient way sometimes...
In fact I'd encountered requests for such automation of voiding by way of dummy invoices by just a click, but did not proceed due to costs...
In fact there are other simpler softwares which are support voiding with proper audit trails...

For return I suggest usage of Return Orders whereas for cancellation Credit Memo. Not sure of the world wide taxation scenarion but in Indian DB credit memo passes the negative amount entry and for return a sale type entry for Purchase Return and vice-versa.

Alex_Chow

idiot wrote:

In fact there are other simpler softwares which are support voiding with proper audit trails...

Yes, they are simple to void, until you get into problems. Quickbooks allows you to void transactions with ease. It's fine when it's a one user system because you know exactly the ins and outs. When more than 1 person are voiding transactions in an accounting system, then to keep track of all those voids becomes a problem itself.

You'd be surprised on the number of hours lost when auditors and/or new controllers/CFO coming in and question the nature of of the void from their legacy system.

idiot

Alex Chow wrote:

You'd be surprised on the number of hours lost when auditors and/or new controllers/CFO coming in and question the nature of of the void from their legacy system.

Well I seen what you described, but I'd also seen some question why the wrong invoices are not voided but credit notes were raised instead. It's a matter of preference & control/policies that the company requires...

DenSter

Creating offsetting credit memos is a much easier papertrail though because you have actual documents to support the transaction. You can have the original (wrong) invoice, plus the credit memo, plus the new (correct) invoice all stapled together in the file cabinet. A junior auditor can figure that out. With void transactions you have to explain everything, and provide supporting documentation, get more senior people involved.

Alex_Chow

idiot wrote:

Alex Chow wrote:

You'd be surprised on the number of hours lost when auditors and/or new controllers/CFO coming in and question the nature of of the void from their legacy system.

Well I seen what you described, but I'd also seen some question why the wrong invoices are not voided but credit notes were raised instead. It's a matter of preference & control/policies that the company requires...

If voiding was GAAP, then under GAAP, you should be able to delete ledger entries.

Voiding is not GAAP and real controllers and real accountants would never take short cuts like this to "save time".

Urzza

DenSter wrote:

Creating offsetting credit memos is a much easier papertrail though because you have actual documents to support the transaction. You can have the original (wrong) invoice, plus the credit memo, plus the new (correct) invoice all stapled together in the file cabinet. A junior auditor can figure that out. With void transactions you have to explain everything, and provide supporting documentation, get more senior people involved.

I have no more arguments after reading your post DenSter.

I agree with your point of view.

Since I feel it covers up I will change the topic to solve.

Thanks for all the explanations.

Best regards,

João Pedro Pereira

idiot

Voiding is a process. Creating a credit note is another process or could be par of the voiding process. The voiding process can be one of automatically create a credit note or something else, depends on the developer.
The client will not be interested in what happens behind when an invoice is voided as long as end of the day everything can be explained & the process is simple.

In some companies there are specialist doing credit notes so erroneous invoices should not increase their workload but should be the responsibilities of the invoicing specialists...

Please do not make assumptions like voiding = deleting for everything.
Otherwise there will be some who will think Navision's Reverse Transaction = deleting as well.

DenSter

From a technical point of view sure it's quite easy. And yes there is a difference between deleting a transaction and voiding a transaction. And sure you can have a paper trail for voiding transactions.

Having worked as an auditor at a CPA firm in a past life (a very Junior auditor, but still ) I can tell you that voiding transactions is a no win situation, and anyone who voids transactions and has auditors come in every year should just take a look at the bill and see how much time is on there for the actual on site audit.

For every single transaction that there is no piece of paper, you must investigate its origins. Every single one of them. You cannot ignore a void transaction just because you found a few that checked out. If you have an invoice, plus a credit memo that offsets it, plus a new invoice, the auditor goes 'check' and moves on to the next transaction without leaving their desk. When they find a voided transaction, they have to leave the desk, or call someone, or go back to the file cabinet to research. It just plain and simply takes time to investigate each and every one of them.

So it's up to you. You want to save the time that it takes to do a copy document into a credit memo and recreate a good invoice by voiding the transaction, go ahead. Just remember that the auditors will spend twice that much time investigating the transaction, and they charge about $200 an hour to do it.

ssingla

DenSter wrote:

From a technical point of view sure it's quite easy. And yes there is a difference between deleting a transaction and voiding a transaction. And sure you can have a paper trail for voiding transactions.

Having worked as an auditor at a CPA firm in a past life (a very Junior auditor, but still ) I can tell you that voiding transactions is a no win situation, and anyone who voids transactions and has auditors come in every year should just take a look at the bill and see how much time is on there for the actual on site audit.

For every single transaction that there is no piece of paper, you must investigate its origins. Every single one of them. You cannot ignore a void transaction just because you found a few that checked out. If you have an invoice, plus a credit memo that offsets it, plus a new invoice, the auditor goes 'check' and moves on to the next transaction without leaving their desk. When they find a voided transaction, they have to leave the desk, or call someone, or go back to the file cabinet to research. It just plain and simply takes time to investigate each and every one of them.

So it's up to you. You want to save the time that it takes to do a copy document into a credit memo and recreate a good invoice by voiding the transaction, go ahead. Just remember that the auditors will spend twice that much time investigating the transaction, and they charge about $200 an hour to do it.

I will second that. I have done this for 7 long years.

ssingla

So it's up to you. You want to save the time that it takes to do a copy document into a credit memo and recreate a good invoice by voiding the transaction, go ahead. Just remember that the auditors will spend twice that much time investigating the transaction, and they charge about $200 an hour to do it.

Though the rate "$200 an Hour" was no where in sight. If I would have any chance getting this much I would still have been a auditor.

DenSter

The point being that it is a LOT more expensive to pay for the auditors to check up on voided transactions than it is to have your internal accountant create an offsetting credit memo.

Alex_Chow

DenSter wrote:

The point being that it is a LOT more expensive to pay for the auditors to check up on voided transactions than it is to have your internal accountant create an offsetting credit memo.

:roll:

I thought we're done with this?

DenSter

well if I see someone that I think is missing the point, I post a reply, anything wrong with that? :-k

idiot

I think everyone is missing the point here
A lot of things are subjective, depending on circumstances, especially if the document has been sent out or not...
It can also be a case of question why the company has so many credit notes...

As for auditors, please do not go there, really too subjective... It really depends on how efficient the auditors are, what's the management stand, whether they request for a list of voided transactions or go transaction by transaction...

DenSter

Well I would rather manage my business process from a point of my strength, not someone ale's weakness. I'd rather have a solid papertrail and document everything, instead of hoping that my auditors will miss it when I void a transaction.

You're right it can be subjective. What one auditor accepts, another might not accept. It just sucks when the latter is employed by the IRS.

The point that I might be missing is that what you call 'voiding a transaction' or what is called 'voiding a transaction' in another software package actually does have a legitimate papertrail. It's all about the papertrail, as long as you have proper documentation to back up your numbers, you can do whatever you want without getting into trouble.