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This information applies to MYOB AccountRight version 19. For later versions, see our help centre.


 

 

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ANSWER ID:9110

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Invoices may have been created from an order, if a payment is made against that order, it is considered to be a deposit. This support note describes how to refund these deposits when the sale is cancelled or has been incorrectly created.

Looking for information about reversing a deposit you've paid to a supplier? See our support note Reversing supplier deposits.

Want to see how to reverse a customer deposit?

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Watch our demonstration video.


How are deposits recorded and why do they prevent the deletion of invoices?

Payments applied to orders are automatically recorded as deposits. Although these deposits are individual transactions, they are associated with the final invoices that are created from the original order. This association prevents the invoices and the deposit payments from being deleted.


How do I know if an invoice has had a deposit applied?

When trying to delete or reverse an invoice that is associated with a deposit, an alert is displayed as shown below.

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Attempting to delete or reverse the deposit payment will result in the alert below.

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How do I cancel an invoice that has had a deposit applied?

There are several tasks involved in canceling these invoices. A credit note or reversal needs to be created, and the credit note is used to pay the deposit back to the customer and, if necessary, used to close the original invoice.

This process involves the following tasks:

  1. Set the security preference
  2. Find the invoice
  3. Determine if there was a finance charge applied
  4. Reverse the invoice
  5. Reverse finance charges (if applicable)
  6. Create an invoice for the deposit (if non-refundable)
  7. Process refunds
  8. Making sure everything is closed correctly

Task 1 - Set the security preference

The ability to reverse or delete transactions is determined by a security preference within your software.

  1. Go to the Setup menu and choose Preferences.
  2. Click the Security tab and select the option Transactions Can't be Changed; They Must be Reversed [System-wide].
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Task 2 - Find the invoice

  1. Go to the Sales command centre and click Find Transactions.
  2. Click the Search by field drop down arrow and select Invoice No., then click on the adjacent field's drop down arrow and select the invoice to which the deposit has been applied. The example Find Transactions window below shows an invoice and its associated deposit.
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Notes:

  • The first line represents the invoice ( ID# 00000019)
  • The second line represents the deposit (ID# CR000039)
  • The third and fourth lines represent the conversion of the order to an invoice (ID# SJ000006)
  • There may be additional lines if more than one payment or finance charges have been applied to this sale

Task 3 - Determine if there was a finance charge applied

Open the payment (or payments) on the invoice. In our example shown below, the payment is on line 2.

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Is there a finance charge?

If a finance charge is listed on the invoice, take note of the amount. This will need to be credited back from the finance charge account.

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Task 4 - Reverse the invoice

  1. On the Find Transaction window shown above, click the zoom arrow next to the invoice. The invoice will be displayed.
  2. Go to the Edit menu and choose Reverse.
  3. Check the reversal transaction details then click Record Reversal.

    When checking the Date: If you're running on an Accrual Basis, ensure the Date is set in the correct reporting period.

Note: If there is no finance charge, skip to Task 6.


Task 5 - Reversing finance charges (if applicable)

If a finance charge was taken as part of the payment:

Check your Linked Account:

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Note the account being used for the Income Account for Late Charges. This account will be needed for creating the credit note.

Create a new Credit Note

  1. Go to the Sales command centre and click Enter Sales.
  2. Select the applicable customer.
  3. Click Layout and select the Service invoice type.
  4. Enter or select the allocation account - this will be the linked account for finance charges as noted earlier.
  5. Enter the amount of the finance charge as a negative amount.
  6. Select the N-T tax code and record the sale. See our example below.

    When setting the Date: If you're running on an Accrual Basis, ensure the Date is set in the correct reporting period.

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    This credit note will be refunded in Task 7.

Note: If the finance charge was an overpayment of the customer's account, please see our support note Handling overpayments which explains how to record account overpayments correctly. Also see our support notes Finding and deleting or reversing a finance charge.


Task 6 - Create an invoice for the deposit (if non-refundable)

If a deposit paid on a sale is non-refundable, complete the following:

  1. Go to the Sales command centre and click Enter Sales.
  2. Create and record a new invoice for the deposit amount. This invoice will be paid for and closed when processing the credit notes/refunds.

    When checking the Date: If you're running on an Accrual Basis, ensure the Date is set in the correct reporting period.


Task 7 - Process refunds

After the credit notes and any additional Invoices have been created, we need to close the sale (if it's still open) and refund the credit notes.

When paying the refunds in the steps below: If you're running on a Cash Basis, ensure the Date is set in the correct reporting period.

  1. Go to the Sales command centre, click Sales Register then click the Returns and Credits tab.
  2. [If the deposit is non-refundable] Apply the credit note to the new sale created for just the deposit amount. This will close the new deposit sale and make it part of the business income.
  3. [If there are Finance Charges to be refunded] Highlight the credit note for the Finance Charge and click Pay Refund to close this part of the transaction.
  4. [If the invoice is fully paid] Highlight the reversed invoice then click Pay Refund. This is because the money needs to be taken back out of the bank account to which it was deposited. Make sure the account selected in the following window is the correct bank account to refund the deposit from.
  5. [If the invoice is partially paid] Highlight the reversed invoice then click Apply to Sale.
  6. Change the Credit Amount to be just the amount left owing on the invoice.
  7. Click in the Amount Applied column on the same line where the original invoice appears with the outstanding amount.
  8. Click Record.
  9. Highlight the invoice again in the Returns & Credits tab (which will show a credit Amount equal to the deposit amount) and click Pay Refund.
  10. Make sure the Account selected in the top left of the window is the correct bank account from which to refund the deposit amount.
  11. Click Record. This procedure will reverse both the sale and the deposit made against it.

Task 8 - Making sure everything is closed correctly

To verify that all steps have been completed correctly, the best place to look is in the Customer Sales Summary report. In this report, we want to see the original transaction (ID# 00000019) and its reversal (ID# 00000064) and the status of both is "Closed". Additional reversals may be shown if you had finance charges or non-refundable deposits. These are all OK as long as their status is "Closed".

  ID# Orig Date Sale Amount Tax Current Balance Status Due Date
MyCustomer              
  00000019 25/11/2013 $500.00 $0.00 $0.00 Closed  
  00000064 30/11/2013 -$500.00 $0.00 $0.00 Closed  

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