Deduction management in Microsoft Dynamics AX (AX 7)

With this I would like to explain the common issue and demonstrate how to manage it in AX. The issue is when the customer short pays on their invoices. A short pay is when the customer pays less than the invoiced amount. Unidentifiable amount at the time of payment processing impede your company’s cash flow and lead to slowdown accounts receivable department while it deals with discrepancy. In this case invoice remains unpaid until the full invoice amount is closed and settled with a payment or other adjustment if deemed uncollectable. There are many reasons why a customer will deduct from the amount owed on an invoice:

  • Discount or rebate taken
  • Wrong item shipped
  • Quality issue or defect as well as inspection costs from quality problem
  • Incorrect price or price dispute
  • Late arrival
  • Damaged shipment
  • Handling/administrative fee
  • Downtime incurred
  • Wrong quantity invoiced or shipped

Deduction types

The deduction type allows you to determine variety of rebate types that customers might use

To set up deduction type, follow these steps:

  1. Click Sales and marketing > Trade allowances > Deductions > Deduction types.
  2. Click New to create a deduction type.
  3. Enter a unique identifier (ID), description for the deduction type and Offset account.

1

Deduction denial reasons

The deduction denial reasons allow you to set up reason codes to describe the various reasons for denying a deduction in the deduction workbench. On the whole it is used for reporting and analysis purposes to describe why you are rejecting the customer deduction.

To set up deduction denial reasons, follow these steps:

  1. Click Sales and marketing > Trade allowances > Deductions > Deduction denial reasons.
  2. Click New to create a deduction denial reason.
  3. Enter a unique reason code and description for the deduction denial reason.

2

Deduction write-off reasons

The deduction write-off reasons allow you to set up reason codes to describe the various reasons for writing off a deduction in the deduction workbench. On the whole it is used when you are going to accept the deduction but do not have any transaction to settle the deduction with.  Each deduction write-off reason specifies a main account where the amount will be written off to.

To set up deduction denial reasons, follow these steps:

  1. Click Sales and marketing > Trade allowances > Deductions > Deduction write-off reasons.
  2. Click New to create a deduction write-off reason.
  3. Enter a unique reason code and description for the deduction write-off reason.
  4. Enter the maximum write-off amount that is allowed for the reason code. A value of 0 indicates that there is no maximum amount.

3

Process deductions

Get the ball rolling by entering in an invoice payment for the customer

  1. Click Account receivable > Payments > Payment journal.
  2. Click New, and then, in the Name field, select the name of the deduction journal.
  3. On the Action Pane, click Lines.
  4. Enter the date, customer account number. In the Invoice field, select the invoice that the deduction is associated with.
  5. In the Credit field, enter the amount that the customer actually paid. Click OK to confirm that the amount is less than the total of the marked transaction.
  6. Select the offset account type and the offset account.
  7. Click Deductions.4
  8. In the Deduction form, click New.
  9. The Deduction ID field is populated automatically. Select the deduction type in the list.
  10. In the Amount field, enter the amount that is displayed in the Balance field above the deduction list. This amount represents the amount that the customer deducted from the payment.5
  11. Close the Deduction form. In the Journal voucher form, a new line is displayed for the deduction.6
  12. On the Action Pane, click Validate, and then select Validate. You should receive the following message: “Journal is OK.”
  13. On the Action Pane, click Post, and then select Post.

Once deduction has been recorder you can go to the Deduction workbench form and match deductions to open credit transactions, split deductions, deny deductions and return it to the customer account, and write off deductions as a valid deduction.

Click Sales and marketing > Trade allowances > Deductions > Deduction workbench.

7

 

Deduction can be in one of the below statuses:

Created – as soon as the deduction is generated in the Payment journal before posting

Open – as soon as the Payment journal with deduction is posted

Close – as soon as the deduction is written off

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s