Over Payments
If a customer overpays a bill (i.e., we receive more cash than receivables), we strongly recommend you set up the system to NOT keep the excess credit on the customer's regular service agreements. Rather, we recommend you segregate the receivable onto an "excess credit" service agreement. If you do this, the system will transfer any excess credits to the regular service agreements at bill completion time. When this transfer occurs, the same accounting described under
Payments Segment Financial Transaction Algorithms Transfer Holding Amounts To Payable GL Accounts occurs as shown in the following example. Note: this example assumes an excess credit of $110 was transferred to a normal service agreement and the normal service agreement had $10 of held payables.
Fastpath:
Refer to
Overpayment Segmentation for how to set up the system to segregate overpayments on a separate service agreement.
Note:
Why not keep excess credits on a customer's regular service agreement? Because the system can't differentiate between a credit that exists as a result of an overpayment and a credit that exists because of cancel/rebills, it would be impossible for the system to know if payables should be realized as a result of the reduced credit balance. However, if you keep overpayments on an excess credit service agreement, the system knows to treat any transference of these credits as "payments" and therefore it can transfer holding balances to true payables.
Event | Normal SA GL Accounting | Excess Credit SA GL Accounting |
Bill segment created | A/R 110 Revenue <100> Tax Holding <10> | |
Payment of $300 is received | Cash 110 A/R <110> Tax Holding 10 Tax Payable <10> | Cash 190 Overpay <190> |
Bill segment created | A/R 110 Revenue <100> Tax Holding <10> | |
Transfer excess credit amount to normal service agreement (when bill is completed). | Xfer 110 A/R <110> | Overpay 110 Xfer <110> |
Because the transfer adjustment is the equivalent of a cash relief outstanding tax holding is relieved in proportion to the amount of receivables that are reduced by the transfer | Tax Holding 10 Tax Payable <10> | |
Net effect of the transfer | Xfer 110 A/R <110> Tax Holding 10 Tax Payable <10> | Overpay 110 Xfer <110> |
Note:
Prepaid taxes - future functionality. If your organization allows customers to prepay taxes in anticipation of a future tax increase (the customers receive the lower rate if they pay in advance), we do not consider this prepayment to be an overpayment. Rather, it is a payment of future taxes that will be remitted to the taxing authorities at payment time (due to cash accounting). Please speak to your account manager for when corresponding functionality will be available.
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