Understanding Invoice Match with Write-Off (TI Codes 10 and 15)

If the payment that you receive is not enough to pay the open amount of the invoice, or if you receive a small overpayment, you might want to write off the difference and close the invoice. For example, you might receive a payment from a customer that is slightly less than the invoice amount. To maintain a good relationship with the customer, you might select to write off the minor amount instead of creating a chargeback invoice for the difference or leaving the amount open.

These two options are available for performing write-offs:

Option	Usage
Automatic write-off (TI Code 10)	The system calculates the difference between the payment amount and the open amount of the invoice. If the difference is within the tolerance limits that are defined in the processing options, the system automatically performs the write-off. For example, if you establish the maximum write-off amount as 10, the invoice open amount is 500, and you enter a receipt or draft for 490, the system automatically writes off 10, provided that you either enter 490 in the Payment Amount field or accept the system default. You do not have to calculate or specify a write-off amount. Automatic write-offs require you to enter a default reason code in the processing options, which the system uses to determine the write-off account. When you enter the receipt or draft, you cannot override the write-off reason code for automatic write-offs. When you apply the payment to invoices, the system displays a remaining open amount. After you enter the receipt or draft and review it, the system displays the write-off amount and write-off reason code. You can override the write-off reason code at this time.
Manual write-off (TI Code 15)	You specify that you want the system to perform a write-off by using type input code 15, and the system calculates the write-off amount for you. If you exceed the maximum manual write-off amount specified in the processing options, the system issues an error when you click OK. You can then manually adjust the write-off amount. You can set up a default reason code to use for manual write-offs, but it is not required, and you can override it when you enter the receipt or draft.

Option

Usage

Automatic write-off

(TI Code 10)

The system calculates the difference between the payment amount and the open amount of the invoice. If the difference is within the tolerance limits that are defined in the processing options, the system automatically performs the write-off.

For example, if you establish the maximum write-off amount as 10, the invoice open amount is 500, and you enter a receipt or draft for 490, the system automatically writes off 10, provided that you either enter 490 in the Payment Amount field or accept the system default. You do not have to calculate or specify a write-off amount.

Automatic write-offs require you to enter a default reason code in the processing options, which the system uses to determine the write-off account. When you enter the receipt or draft, you cannot override the write-off reason code for automatic write-offs.

When you apply the payment to invoices, the system displays a remaining open amount. After you enter the receipt or draft and review it, the system displays the write-off amount and write-off reason code. You can override the write-off reason code at this time.

Manual write-off

(TI Code 15)

You specify that you want the system to perform a write-off by using type input code 15, and the system calculates the write-off amount for you. If you exceed the maximum manual write-off amount specified in the processing options, the system issues an error when you click OK. You can then manually adjust the write-off amount.

You can set up a default reason code to use for manual write-offs, but it is not required, and you can override it when you enter the receipt or draft.

Regardless of the type input code you use, if you specify a write-off amount and reason code, the system generates a write-off.

For the write-off to occur on amounts that exceed the invoice open amount, such as overpayments, you must override the transaction payment amount with the receipt or draft amount. Otherwise, the system generates an unapplied payment record for the amount. For example, if the payment amount is 100.00 and the invoice amount is 95.00, and you wish to write off the 5.00 automatically, you must change the payment amount in the detail area from 95.00 to 100.00. Otherwise, the system generates an unapplied payment record for 5.00.

After you enter receipts and drafts, you must post them. When you post payments with write-offs, in addition to crediting the bank account (or draft receivables account) and debiting the A/R trade account, the system updates a write-off account that you specify for the AAI item RAxx, where xx is the write-off reason code. You must set up an AAI for each write-off reason code that you use.