Write-offs and Receipts

A write-off is a receipt activity that cancels an open debit item and assigns it to a write-off account. You can write off both overpayment and underpayment amounts.

You write off an overpayment when, after applying a receipt to debit items, a small unapplied amount remains. You write off an underpayment when a receipt underpays an invoice by a small amount and the write-off is preferable to billing the customer for the difference.

Considerations for write-offs include:

• Write-off Setup

• Recommendations for Write-offs

• Automatic Write-offs

• Foreign Currency Write-offs

Write-off Setup

You can set up Receivables both to write off receipt amounts automatically and to present write-off amounts as recommendations for review and manual update.

These setups are related to receipt write-offs:

• Receivables activity: Set up accounts under the Receivables activity Receipt Write-off to credit receipt write-off amounts.

• Application exception rule set: Define an application exception rule set and assign the rule to Receivables System Options: Cash Processing tab. The application exception rule set defines how to manage overpayments and underpayments.

• Receivables system options: Define the write-off limit range per receipt. You can't write off receipt balances that are less than or greater than this range.

• Approval limits: Define user approval limits per currency for write-offs.

Recommendations for Write-offs

During automatic payment processing, Receivables identifies underpayments and overpayments after receipts are applied to transactions. Depending on the details of your setup, Receivables can write off certain payments automatically and present other payments to you for review.

If you decide after review to write off a given overpayment or underpayment, you can manually enter a write-off up to the total amount assigned to both your receipt write-off approval limits and the system-level write-off approval limits.

Automatic Write-offs

Use the Create Automatic Receipt Write-offs program to automatically write off receipts. You can only use this program to write off overpayment amounts.

The Create Automatic Receipt Write-offs program writes off selected receipts for the designated unapplied amount or percentage, and closes the receipts. The program checks that the unapplied amount or percentage is within your approval limits.

You can use the Create Automatic Receipt Write-offs program to:

• Schedule periodic write-offs as receipt adjustments for small remaining balances.

• Limit write-offs by a percentage of the original receipt amount and by the policy of your enterprise.

• Create write-offs for specific currencies and customers.

You can also print and review write-offs generated by the program before applying them.

The account assigned to the Receivables activity that you select for the program run is the account credited for all write-off amounts.

Foreign Currency Write-offs

When you write off a foreign currency receipt, Receivables uses the conversion rate information from the original receipt for the write-off record.

If you adjust the conversion rate of a foreign currency receipt, Receivables reverses the write-off with the original conversion rate and then applies the new conversion rate to the write-off. Receivables reverses the write-off only if the converted amount doesn't exceed the system level write-off limit. If the converted amount exceeds the system level write-off limit, Receivables leaves the write-off amount as unapplied.