ANSWER ID:36209

Bills 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 receive a refund to balance out the deposits that are already paid when the bill is canceled or has been incorrectly created.

Looking for information about reversing a customer deposit?  See our support note .

Want to see how to reverse a supplier deposit?

Watch our demonstration video.

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

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

How do I know if a bill has had a deposit applied?

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

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

How do I cancel a bill that has had a deposit applied?

There are several tasks involved in cancelling these bills. A debit note or reversal needs to be created, and the debit note is then used to receive a refund back to yourself, and, if necessary, used to close the original bill.

This process involves the following tasks:

1. Set the security preference
2. Find the bill
3. Determine if a finance charge was applied
4. Reverse the bill
5. Reverse finance charges (if applicable)
6. Create a bill 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].
   

Task 2 - Find the bill

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

Notes:

• The first line represents the bill (ID# 00000012)
• The second line represents the deposit paid (ID# 110)
• The third and fourth lines represent the conversion of the order to a bill (ID# PJ000011)
• There may be additional lines if more than one payment or finance charges have been applied to this purchase

Task 3 - Determine if a finance charge was applied

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

Is there a finance charge?

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

Task 4 - Reverse the bill

1. On the Find Transaction window shown above, click the zoom arrow next to the bill. The bill 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:

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

Create a new Debit Note

1. Go to the Purchases command centre and click Enter Bills.
   
2. Select the applicable customer.
   
3. Click Layout and select the Service bill 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 purchase. 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.

   

   
   This debit 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  which explains how to record account overpayments correctly. Also see our support notes .

Task 6 - Create a bill for the deposit (if non-refundable)

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

1. Go to the purchases command centre and click Enter purchases.
   

2. Create and record a new bill for the deposit amount. This bill will be paid for and closed when processing the debit 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 debit notes and any additional bills have been created, we need to close the purchase (if it's still open) and refund the debit notes.