Rules of the Application Rule Set
When you apply a receipt or credit memo to a transaction, the application rule set determines how Receivables reduces the open balance of the line, tax, freight, and late charge amounts on a transaction.
Receivables uses the application rule set assigned to the transaction type to process payment applications. If no application rule set is assigned to the transaction type, then the application rule set assigned to Receivables system options is used.
You can arrange the order of the line types and application rules in an application rule set according to your needs. Each line type must appear in an application rule set, and appear only once. The Overapplication rule is always last in the sequence.
Line First - Tax After Rule
The Line First - Tax After rule first applies the payment to open line amounts, and then applies the remaining amount to the associated tax.
If the payment is greater than the sum of the open line and tax amounts, Receivables attempts to close each remaining open item by applying the remaining amount in the following order, stopping when the payment has been fully applied:
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Freight
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Late charges
After the payment is fully applied, if a receipt amount remains, this amount is managed by the Overapplication rule.
Line and Tax Prorate
The Line and Tax Prorate rule applies a proportionate amount of the payment to open line and tax amounts for each line.
If the payment is greater than the sum of the open line and tax amounts, Receivables attempts to close each remaining open item by applying the remaining amount in the following order, stopping when the payment has been fully applied:
-
Freight
-
Late charges
After the payment is fully applied, if a receipt amount remains, this amount is managed by the Overapplication rule.
Prorate All
The Prorate All rule applies a proportionate amount of the payment to each open amount associated with a debit item (any line, tax, freight, and late charge amounts for this item).
Receivables uses the following formula to determine the applied amount:
Applied Amount = open application line type amount / sum of application line types in rule details * Receipt AmountAfter the payment is fully applied, if a receipt amount remains, this amount is managed by the Overapplication rule.
Overapplication Rule
The Overapplication rule is always the last rule in an application rule set. This rule manages any remaining receipt amount after the open balance of all transaction lines has been reduced to zero.
If the transaction type for the debit item allows overapplication, Receivables applies the remaining amount to transaction lines, making the balance due negative. If the transaction type for the debit item doesn't allow overapplication, you can either place the remaining amount on-account or leave it unapplied.