How to Automatically Apply Credit Notes in Microsoft Dynamics GP

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In part one, we explored how to manually apply credit notes in Microsoft Dynamics GP. Read on to learn how to use the Auto Apply feature on unposted or posted credit notes.

Automatically Applying Posted or Unposted Credit Notes

When applying an unposted credit note in the Payables Transaction window or using the Apply Payables Documents feature, Dynamics GP will navigate to the Apply Payables Documents window as seen in the screen shot below. In this window, credit notes are automatically applied by selecting Auto Apply from the menu.

Note: to remove the Auto Apply, click the Unapply icon (located to the left of auto apply).

Auto-Applying Credit Notes at the Time of Payment

By auto-applying the credit note at the time of payment, the credit documents are attached to any invoices based on document date or due date (depending on the payables setup options).

For example, if the user is processing June payments using the Select Payables Cheques, the system will default to auto-apply credit notes. This is based on the settings of the screen shot below.

Note: if you decide not to use Auto Apply, unselect the credit note option when building the batch. This leaves the credit memos unapplied. Navigate to Apply Payables Documents and apply the credit memo to a vendor invoice.

The screenshot below shows how Dynamics GP automatically applies the credit memo in the Payables Cheque Batch. In this case, it’s based on invoice due date. The icons in the furthest right column (see below) indicate the credit notes applied to the invoice.

Invoice and Credit Memo When Payment Term is 2%

In this case, a vendor invoice for $1,000 with payment term 2%, 10/Net 30 is offset by a credit note for $200.

When the payment is made within the payment term, the discount is calculated on the invoice before applying the credit memo.

The below screenshot demonstrates how this was calculated.

The payables posting journal (below) displays the general ledger distributions and indicates the credit note applied to the invoices being paid.

Applying A Partial Credit Memo

The screenshot below shows the vendor inquiry for all outstanding invoices and credits in June 2016. You can see the invoices total  $1,500 and the credit notes total $2,900.

When a zero dollar payment is created, the credit applies to all invoices available for payment.

If you rerun the Payable Transaction Inquiry for the vendor after the cheque is processed, the remaining credit amounts show they are unapplied.

The remaining credit amount ($1,400) is cleared in the next payment.

In the below example, there are two remaining credits from the previous cheque run, and two invoices outstanding to the vendor to be paid.

In the next batch of payments, the credit memo applies itself to the invoices that are open to be paid.

The screenshot shows that the credit is applied and the amount remaining is zero.

You have now successfully automatically applied a credit note in Microsoft Dynamics GP. If you missed part one, you can read it here.


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