Apply A/R Credits can be found under A/R> A/R Utilities.

System Five A/R works on an open invoice method. This means that all payments must be applied against an invoice. The advantage of this method is that you have a list of which goods have been paid for and which have not should there be any disputes or conflict in receiving money for these items. Often if there is a dispute against one invoice, a customer does not wish a payment be made against that particular invoice, but wishes to continue making payments on other invoices rather than suspending payment on all invoices until the conflict is resolved. Also credits invoices for returns can be applied directly against the original sale instead of being applied to the balance.

Conversely most major credit cards work on a balance forward method where payments are made to the balance but not applied to a particular invoice.

There are two methods of taking payments. One is the Received on Account which is made with the R type invoice and takes a payment on the account but is not applied to the invoices. This method is helpful for counter clerks who wish to take the payment, but do not know enough about the account to apply the payment. The Accounts Receivable person can later apply the credit to the outstanding invoices in the most logical order or the order specified by the customer.

The second method is to take the payment and apply the payment against the invoices in one entry using the Payment on Account. This method is usually made with mail in payments.

Apply A/R Credits routine can automatically apply credit invoices (Received on Account Invoices and Credit Invoices) to outstanding A/R invoices. This is done based on date and may not be the most logical method. This routine is used to simulate the balance forward method and users using the balance forward method should be run before printing statements or aged A/R reports.

If a customer has the following invoices

then the apply A/R credit routine which simply applies the payment against the invoice.

However is the customer has the following invoices

then the A/R credit routine which applies the payments in the following method.

The $3000 credit return is applied against the oldest invoice rather than the original sale of the $3000 item.

This routine lists all customers who have Credit invoices and Debit invoices on file. All customers and invoices defaults to be applied. You can check or uncheck a customer or invoice by clicking on the row header at the left.

To apply the invoices, press the System500000418.gif button. This then creates the Payment on Account records that links the credit invoices to the outstanding invoices.