Some companies make invoice pricing corrections by entering the lines with the incorrect prices on an Accounting Only credit memo order, and then they enter the lines with correct prices on a Rebill order. While this method does correct most items such as commissions and customer's billing, it duplicates the update of book inventory and cost of sales in the general ledger. On-hand quantities are not affected, but rebills do update book inventory and cost of sales while Accounting Only type credits do not. So the original invoice and the rebill invoice duplicate the update of inventory and cost of sales.
There are two valid methods of entering pricing corrections to customer invoices:
Method 1: If the customer requires separate credit and corrected invoices, the original invoice must be voided and all of the lines must be re-entered on a rebill order. Neither the void nor the rebill updates on-hand quantities, but both properly update book inventory and cost of sales.
Method 2: If the customer accepts credit invoices that show the net effect of the pricing correction, enter only the lines to be corrected on a C/M one step order with a return indicator of Accounting Only. Each line to be corrected must be entered twice: once with a negative quantity and the incorrect price, then with a positive quantity and the correct price.
On the Customer Service Tab, click the Recent Transactions button. The Recent Transactions screen appears.
In the Specific Transaction field, type the order number or release number of the incorrect invoice and click the Search button.
In the Recent Transactions log at the bottom of the screen, right-click the incorrect invoice and select Void on the shortcut menu. The system displays a warning message asking you if you are sure you would like to proceed with the void.
Click the Yes button.
On the Customer Service tab, click the Current Order button. The Current Order screen appears.
Enter the order information, such as the order source, as usual.
In the Order Type area, select the Rebill option.
Enter all of the line items on the invoice, making sure to include the correct prices.
When you have finished entering all of the order information, click the Accept Order button.
The customer will receive a credit invoice and a corrected invoice. The invoices will be created during End-of-Day processing, and your accounts receivable will be updated at that time.
On the Customer Service tab, click the Current Order button. The Current Order screen appears.
Enter the order information, such as the order source, as usual.
In the Order Type area, select the C/M One Step option.
To apply the credit to a specific invoice:
Click the Order Details button. The Order Details screen appears.
In the Return Indicator drop-down list, select the Accounting Only option.
In the Reason drop-down list, select the appropriate option to identify why the customer is returning the product.
If you apply the credit to a specific invoice, then the system checks to make sure that the product(s) were on the original invoice, that the price and cost are the same as were charged on the original invoice, and that the sales rep on the credit memo is the same one on the invoice (for adjusting commission). Also, the system keeps track of the quantity being credited: you cannot credit more than was on the invoice.
Enter the line item with the incorrect price:
In the Product Number field, type the product number of the item that was incorrectly priced on the invoice.
In the UOM drop-down list, select the appropriate unit of measure.
In the Order Qty field, type a positive number for the quantity that was originally ordered. When the cursor is moved to another field, the system changes this to a negative number.
Note: When you type a positive quantity, the system automatically reverses it to a negative quantity. This is because you are crediting (reducing) your receivables.
In the Unit Price field, type the incorrect price.
In the Credits area, in the Return Indicator drop-down list, select Accounting Only.
Enter another line item, but for this line item, enter the correct price:
In the Product Number field, enter the product number of the item that was incorrectly priced on the invoice.
In the UOM drop-down list, select the appropriate unit of measure.
In the Order Qty field, type a negative number for the quantity that was originally ordered. When the cursor is moved to another field, the system changes this to a positive number.
Note: When you type a negative quantity, the system automatically reverses it to a positive quantity. This is because you are creating a debit to your receivables.
In the Unit Price field, type the correct price.
In the Credits area, in the Return Indicator drop-down list, select Accounting Only.
When you have finished entering all of the order information, click the Accept Order button.
The customer will receive a credit invoice that shows the net effect of the pricing correction. The invoice will be created during End-of-Day processing, and your accounts receivable will be updated at that time.
You can use the same logic to create a price-only debit memo if you undercharged a customer and you need to issue a debit memo for the difference between the overcharge and the correct price.