| 1. ManEx Minute - 30 - Customer Credits |
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"I'm not confused, I'm just well mixed."
-Robert Frost
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November, 2009
Issue 30
Dear David,
Thank you to everyone who responded to the case for this issue of ManEx Minute.
Some may have had concerns about how your cases are presented for other readers. As you will see, we standardize the cases so it can apply to anyone. We hope this will encourage you to present your cases and allow us and other ManEx Minute readers to provide solutions and ideas.
Please take a moment to submit your questions and challenges and see if others can help you work through it.
As always, we look forward to your participation and feedback as you gain new insights and become a more effective provider of Electronic Manufacturing Services.
Sincerely,
David Sharp
ManEx, Inc.
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 Business Case - Accounting |
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Customer Credits
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North Eastern Company (NE Company)* has had customers send in payments and take credits that are not available to apply against the invoice. Either the credit was not recorded, or the credit was already taken. NE Company believes the invoice is still open, but the customer believes it is paid in full.
NE Company first tried leaving the invoice open. However, if the discrepancy wasn't resolved quickly, and the customer later questioned why the invoice was not closed, it took a lot of research to find out why there was still a balance on the invoice.
NE Company next tried recording a negative prepayment in check receipts. This kept the discrepancy visible, until the issue was resolved.
Recent ManEx accounting upgrades prevent users from using this work around because it was causing problems in other areas of the system. While the upgrade increases the security and stability in the system, it makes it difficult for NE Company to manage non-existent customer credits.
How can NE Company track these situations so the items stay on the action list until resolved without creating extra work or difficulty in reconciling discrepancies between NE Company and the customer?
*Name has been changed
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ManEx Case Solution
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ManEx recommends keeping information in the system as accurate as possible...
Read the full ManEx Case Solution >>
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Ghost Customer Credits
"I believe the problem is that the customers should be communicating to the sales or customer service department. Accounting should not allow the customer to decide to take credits. If a credit is really due, it should be discussed with the proper person who handles sales orders. They can thus adjust the sales order accordingly and make the proper record regarding why the adjustment was allowed. They should also make management aware of such issues to prevent further problems. It may be also that there is a disagreement with the customer on a given discount. It should fall on the account manager to resolve this problem so that all parties agree and the customer also has their systems in agreement with NE Company's system."
-Wayne, OR
"I have had the problem mentioned in the newsletter for the last seven years... We post the negative payments but then have no way to relieve the credit. We have to create an invoice for the amount and then offset.
-Bonnie, WA
"I believe that this type of situation just needs to be tracked. It is going to happen in the type of business that we are in. I believe that using the Customer Follow-up module would be a great tool for this type of situation and to continually update make notes. As long as you track your credits, the reasons for doing them, why you are applying it to a particular Invoice, etc, then you should not have too many problems when the customer's system doesn't quite match-up."
-Nick, TX
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Please share your challenges and issues. Give us a challenge and see if we are able to provide a workable solution. All cases are presented using North Eastern Company (NE Company) as the principle in the case.
To suggest a new topic please send us an email or click here to submit the topic through our website.
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| 1.1. ManEx Solution - 30 - Customer Credit |
ManEx Case Solution
ManEx recommends keeping information in the system as accurate as possible. Trying to work around an apparent problem is likely to create other issues and concerns. Recording inaccurate information will lead to inaccurate results.
In a situation with missing or closed customer credits, ManEx suggests the following:
- Create a deposit for the actual check amount - If the invoice is for $1,000.00 and the customer pays $800.00 and tries to apply a missing/closed/non-existent credit for the balance, record a payment for $800.00.
- Inform the Customer - As soon as possible, notify the customer that the applied credit is already applied, or is not entered in the system. The invoice will remain open with a $200.00 balance until the matter is resolved or the invoice is paid in full.
- Apply Future Payments - If the customer realizes the credit does not apply and sends another check for the balance, users can record another payment to close the invoice.
- Create/Update Credit - If users later discover that they do owe or want to credit the customer the $200, they can create a General Credit Memo and apply it to the invoice via the AR Offset Module.
Following these steps will ensure the system reflects the current state of the invoice and allow users and customers to research the matter.
To fully track the progress of the issues, users can make notes of each call* with the customer in the AR Aging module, or create an action item in the Customer Follow-up module.
* notes are customer specific and not invoice specific so users should indicate the invoice number in the note.
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