Configuration of Automatic Write-Offs in Invoices

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You configure the system to automatically generate adjustments on small discrepancies by doing the following:

1. On the Chart of Accounts (GL202500) form, you configure an expense account (and subaccount, if needed) to be used for the small amounts that are written off.
2. On the Reason Codes (CS211000) form, you configure a reason code that specifies the account and subaccount to be used for writing off balances. For details, see To Configure a Reason Code.
3. On the Accounts Receivable Preferences (AR101000), you specify the reason code that you have configured in the Balance Write-Off Reason Code box. By default, the system will use this reason code for writing off balances.
4. On the Order Types (SO201000) form, you select a particular sales order type, and you allow write-offs for the orders of this type by selecting the Auto Write-Off check box on the General tab.
5. For each customer for whose documents you want to allow write-offs, on the Customers (AR303000) form, you select the customer, and then you do the following on the General Info tab:

   On the Customer Classes (AR201000) form, you can specify that write-offs are enabled (or not enabled) by default for customers of a particular class. (If needed, you can modify the default setting for any customer of the class.)

   1. To allow write-offs for the documents for which this customer is selected, you select the Enable Write-Offs check box.
   2. In the Write-Off Limit box, you specify the customer’s write-off limit. The system processes a write-off for an invoice to the customer only if the calculated discrepancy does not exceed the customer’s write-off limit.

The write-off amount can be either positive (if the invoice amount is greater than the amount of its applied payment or payments) or negative (if the invoice amount is less than the amount of applied payment or payments). You can correct the calculated write-off amount, if needed, before releasing the SO invoice. When the SO invoice is released, the write-off amount is posted to the account specified in the reason code. Accounts are affected as shown below.