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Create credit note for under payment of invoice
lizd
Member Posts: 7
My customer has underpaid an invoice by a small amount. Rather than the hassle of chasing up payment I want to create a credit note that will adjust both the income and the corresponding sales tax by the underpayment amount. How are credit notes created in Wave? I can't seem to find it anywhere.
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Hey Lizd,
In this case, I'd say writing off the small amount that the customer underpaid by is your best bet. Check out these instructions!
James
Hi James
That's what I did in the end, journaling out the underpayment amount including adjusting the GST (sales tax).
I also tried making an invoice for a negative amount which I thought would work but I could not record a payment against it.
Credit Note functionality is pretty standard for any accounting system - are there any plans to add this to Wave?
Regards
LizD
Hi @lizd,
You should be able to record a payment to an invoice with a negative price. You just have to do it through the invoice page itself. You won't be able to link an existing transaction to it. Is this what you're trying to do?
The reason for this is that invoices need to be paid through income transactions. A credit note needs to be recorded as a negative income transaction, not as an expense.
I agree and I believe many would too. How come there isn't a credit note function. It's a very basic function. Putting negatives and etc is really not the way to do it. The title needs to be changed to "Credit Note" too. Come on guys, I'm sure you can add this function!
I create a new invoice. Click V on top line 'Business Address and ...'. Replace the word 'Invoice' with 'Credit Note' . Enter Customer, click Add an item. Change Quantity to minus. Example (-1).
Amount should be negative. Click Save and Continue
Hi, @Livc3.
In the absence of an actual credit note feature, that's one of the ways we suggest doing it. You can either make the price or the amount negative. The result will be the same.
Hi there @Alexia and @James Hudson,
Thanks for your responses in this thread.
I have a similar issue and I was hoping that perhaps you can help me as well.
I invoiced a client of mine £100. He only paid £99.07 and I recorded the invoice as paid and merged the invoice payment with the payment that had come through as a new transaction from reconciling with my bank account.
I could now go and make a journaled transaction to account for the missing £0.93 – this would be a fine solution for me as setting up an 'Undeposited Funds' account might be a bit overkill for my small business – but after having recorded the invoice as paid it still appears as an overdue invoice on the Invoices page.
How can I make the system accept that the invoice has been paid even though it is not for the full amount?
Is it really best practice and necessary to set up the 'Undeposited Funds' account or do you agree that it would be fine to account for the 93p with a journaled transaction? If it isn't possible to make the system accept the invoice as paid in any way, do you then recommend to change the figures on the invoice to match the payment of £99.07?
Hope you can help and many thanks in advance!
Hi, @Skafte.
It is best practice to handle writing off an invoice, in full or in part, this way. The only other way for the invoice to be marked as paid would be to change the price on that invoice. You can edit invoices at any point, so you could add another line item with an amount of £-0.93, which would bring down your total to the right amount.
This would essentially be treating this as you giving the client a small discount on this invoice instead of treating it as a loss. Is there a particular reason why this invoice was underpaid by a few cents? With a bit more context about the real-world situation, I might have a better idea of the best way to handle this situation.
Hi there @Alexia,
Many thanks for your response and apologies for not having replied to you before now – I didn't realise that you had actually responded to me as I didn't receive a notification about it (I'll look at my account settings after this).
Anyway, to answer your question – the reason why this invoice is underpaid is that my client paid via bank transfer from a different country and they didn't make sure to specify what the exact final amount should be that would hit my bank account, and so there were transaction fees for the transfer which resulted in the slightly underpaid invoice.
In this case, I might just take your advice of adding another line to invoice bringing it down to the correct amount. However, for the future, I'll try and see if I can work out how to use the 'Undeposited Funds' account solution as outlined here. Reading through it again now it seems to make good sense.
Anyway, is there any news on potentially adding a 'Credit Note' feature to Wave?
Many thanks for your help!
Hi, @Skafte,
Thanks for following up! You don't have to worry too much about replying if you can't or don't want to, but we're always happy to chat. You can find your notification options by clicking the cog on the top-right of the screen here and going to "Edit profile". You'll find "Notification preferences" in the menu on the right.
I don't have news to offer about a credit note feature coming to Wave, but I'm happy to pass your feedback along to the right team on my end.
Always happy to help out!