Deduction and Chargeback Management
The Deduction and Chargeback Management SuiteApp enables the A/R Clerk role to efficiently account for customer deductions, chargebacks, and write off small balances.
For information about managing deductions and chargebacks, watch this video:
For information about managing small balances write-offs, watch this video:
The SuiteApp has the following three parts:
Deductions
Deductions are legitimate expenses subtracted from the account’s receivables. When a customer makes settlement of one or more invoices with an amount less than the outstanding amount, the difference amount is considered as deduction. Deduction can be applied for various legitimate reasons such as extra insurance incurred by the customer, rebate for volume sales achieved, and so on.
Chargebacks
A chargeback is the amount that the user charges the customer back for expenses that have not been agreed upon. A chargeback can also apply for expenses where the deduction claim needs to be investigated before being written off against the receivables.
The difference between deductions and chargebacks is that in case of chargeback, the A/R clerk does not write off the payment discrepancy from the customer’s account. The trade invoice is paid after accounting for the payment discrepancy through a separate chargeback invoice. The net impact on receivables is that the trade invoice is paid in full, but the separate chargeback invoice remains open.
Small Balances Write Offs
Sometimes, after paying the invoices, there is still a small balance outstanding against the invoices. To avoid small outstanding balances, the A/R clerk may write these off against an expense account and close the invoice. For example, small balances often accrue when payments are made involving different currencies with fluctuating exchange rates. Instead of resubmitting the remaining balance to the customer, the A/R clerk pays remainder of the balance on an invoice using a predefined small balance threshold.