Personalized Community is here!
Quickly customize your community to find the content you seek.
Choose your path Increase your proficiency with the Dynamics 365 applications that you already use and learn more about the apps that interest you. Up your game with a learning path tailored to today's Dynamics 365 masterminds and designed to prepare you for industry-recognized Microsoft certifications.
Visit Microsoft Learn
2022 Release Wave 1 PlanDynamics 365 release plan for the 2022 release wave 1 describes all new features releasing from April 2022 through September 2022.
2022 release wave 1 plan
The FastTrack program is designed to help you accelerate your Dynamics 365 deployment with confidence.
FastTrack Community | FastTrack Program | Finance and Operations TechTalks | Customer Engagement TechTalks | Upcoming TechTalks | All TechTalks
If there is an allowance (or "rebate") that a customer takes, end users tend to create a credit memo and apply it to the customer's cash receipt.
For example, let's say that the Invoice is $100.00. But, the customer paid $80.00. And, the customer claims a $20.00 volume rebate allowance.
NAV users would need to create a credit memo for $20.00 in order to apply to the difference. The credit memo will hit the volume rebate G/L account.
If they don’t create a credit memo, the remaining $20.00 will remain on the aging.
Is there a way to avoid creating a credit memo and simply write off the $20.00 difference straight to the G/L when in the cash application screen?
You could setup a Payment Tolerance. Let me explain...
We have all received checks from customers that were less than what they owed—that is a given. The question is, why did they send less than what they owed? Outside of any extraordinary situations, the most common reasons include: the customer was not paying attention when they issued the check and sent a lesser amount, they did not enter the invoice into their accounting system correctly, or they may have transposed some numbers when issuing the check. In these cases, if the amount is insignificant, and it came from a good customer, you may wish to just write off the amount. Lucky for you, Microsoft Dynamics NAV 2013 (Navision) provides you with a great feature called Payment Tolerance that automates this process based on rules defined by you. This saves you time because you don’t have to worry about issuing a credit memo or making a journal entry to write off that insignificant amount after the fact. Let’s take a look at how this feature works in Dynamics NAV 2013. The first thing that we need to do is to define the Payment Tolerance rules that will apply to short pay invoices. In General Ledger Setup on the Actions Ribbon, you will find a button called “Change Payment Tolerance.” Figure 1 – General Ledger Setup Actions Ribbon
Clicking on that button will bring you to a window that allows you to define by currency (or for all currencies) the maximum percentage of an invoice that you will allow to be written off, as well as the maximum amount to write off. In our case, we have defined that for all currencies, we will allow up to 2% of the invoice to be written off, but we are capping the total dollar amount at $5.00. Figure 2 – Change Payment Tolerance Window
Also in General Ledger Setup on the Application FastTab is the ability to define whether you want to receive warnings before posting the payment tolerance, as well as what G/L Accounts you want the payment tolerance amount to post to. In our example, we would like to receive a warning prior to posting and we have chosen to post to the Payment Tolerance Accounts defined in your Customer Posting Setup. Figure 3 – General Ledger Setup Application FastTab
Figure 4 – Customer Posting Groups window
OK, now that we got all that pesky setup stuff taken care of, let’s take a look at how easy it is to actually use the feature! In your normal course of business, you will be entering deposits for all of the checks you receive. In our example, our customer owes us $100.25 for a single invoice; however, they sent us a check for only $100.00, and we want to allow the system to post the remaining amount due to the payment tolerance accounts instead of keeping it as an open balance. Here is what the deposit line looks like prior to applying the payment:
Figure 5 – Deposit Lines FastTab
In the Apply Entries window, we have chosen to apply the full check amount to the open invoice:
Figure 6 – Apply Entries window from the deposit line
If you recall from earlier in this blog (which shouldn’t be that hard, unless you have reached your middle age and have trouble remembering like me), we asked the system to give us a warning when it is going to post the payment tolerance. After pressing the OK button in the Apply Entries window, you are presented with the following warning:
Figure 7 – Payment Tolerance Warning Window
We are going to choose to post the Balance as Payment Tolerance and then click the Yes button. This sets the wheels in motion so that when the Deposit is posted, the system will take that remaining $0.25 and post it to the Payment Tolerance Debit Account defined in our Customer Posting Group. Behind the scenes, I have auto-magically posted the deposit, so let’s now navigate on the posted Payment and take a look at the G/L Entries that were posted:
Figure 8 – Navigate Window for Payment
The Navigate window indicates that three G/L Entries were posted. Looking at the G/L entries that were posted, we see that the $0.25 was posted to G/L Account 80460 – Payment Tolerance Granted, which is the Payment Tolerance Debit Account defined in our Customer Posting Group.
Figure 9 – G/L Entries Posted
And looking at the Customer Ledger Entry for the Invoice that this payment was applied to, we see that it has been closed and has no remaining amount so it will not show up on any open A/R Reports or Customer Statements in the future.
Figure 10 – Customer Ledger Entries
In summary, choosing to use payment tolerance can be a big time saver for those of you who do not wish to have to clean up small, insignificant balance due amounts. It provides you with a simple, efficient way to write off those amounts without cluttering your Aged A/R reports or customer statements and will free up time for more productive things… Helpful Hint: I have been focusing on your good customers, you might not wish to grant this payment tolerance “privilege” to a specific customer. Have no fear—it is easy-peasy, just check the Block Payment Tolerance box on the Customer Record… Figure 11 – Customer Payments FastTab
Hope this helps.
I really appreciate this! These are great insights, and I thank you!
This seems to relate to small variance writeoffs to G/L. For large writeoffs, we would need the ability to specify which G/L account since we have various allowance accounts.
So, are there chargeback item codes that we can use upon applying cash?
Yes, this is for small dollars. If you want to expand to larger dollars and make disposition write-offs for the short-pays, look at this addon that I have used before for other customers:
Business Applications communities