CREDIT MEMO !!!!

Film35HDFilm35HD Member Posts: 2

CREDIT MEMO - When will WAVE offer a CREDIT MEMO function. A business should be able to give a client a credit, but have it itemized so the client/customer is aware they got something of value, compliments of the business.

For now, if you issue a CREDIT MEMO as an ITEM in an Invoice, with a negative figure, say, -$40.00, the invoice will process and can be sent, as usual. But it shows as an UNPAID INVOICE forever. When you run a Customer STATEMENT of ACCOUNT, if you check "unpaid invoices only," it will show that negative invoice as being unpaid, but won't show if it applies to anything. If you run Statements with ALL invoices in the client's history, then you would have an accurate running total of a credit or "$0.00" balance (if there was an invoice/recurring invoice that billed, say, for the following month).

If you mark the 'unpaid invoice' negative credit as "PAID," then that screws-up the total in Statement balances, because it cancels out the credit and shows owed $40, which is wrong.

edited August 29, 2018 in Accounting Feature Discussion

Comments

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Hi, @Film35HD.

    Adding a dedicated credit note feature isn't currently on our roadmap. The "negative amounts on an invoice" workaround is very much a workaround, and I understand that it isn't ideal.

    Can you give me a bit more context on how and why you issue credit notes like this? I might be able to suggest a better alternative.

    While I can't make any promises that we will add this feature to Wave, feedback from Wavers has a significant impact on which feature we choose to build next, so thank you for taking the time to share yours.

  • FilmTVmediaFilmTVmedia Member Posts: 2

    Credit Memos are common – not only in our Industry. See below from an accounting site.

    We are mostly a services oriented company, so say Wave hires us to edit their TV commercial, and the estimate was $55,000, based on 6 days of editing and finishing after the spot was shot.

    During the editorial process, the director, producers, your ad agency, and you, Alexia, decide that a special visual effect that was thought to tell the story the best, is not working out as you thought. This was already estimated and you paid for the service ahead of time, as it was invoiced.

    The invoice amount was $55,000, and you arrived with a pre-printed check 2 days before the edit session began and your check cleared.

    Now, we found a simpler effect that does the job better, and it will save you $4,000 in time. So we would issue you a CREDIT MEMO. On Wave, that would be done on an INVOICE, which would show a negative -$4,000.

    However, now it flags as "not paid." Running STATEMENTS with ALL Invoice history checked, the balance is correct: <$4,000> credit. We ask if you want that refunded or applied to your next media project, and since you are doing a second TV spot in 3 weeks, you say you don't want to hassle with your corporate bureaucracy and for us to just apply that credit to the next project.

    QUICKEN SMALL BUSINESS and similar packages all allow for this. It does not send PAST DUE notices for negative running account balances. And the next invoice that is created, a window pops up saying "This customer has a credit. Would you like to itemize and apply this credit to this new invoice, or not apply it?"


    One type of credit memo is issued by a seller in order to reduce the amount that a customer owes from a previously issued sales invoice. For instance, assume that SellerCorp had issued a sales invoice for $800 for 100 units of product that it shipped to BuyerCo at a price of $8 each. BuyerCo informs SellerCorp that one of the units is defective and SellerCorp issues a credit memo for $8. The credit memo will cause the following in SellerCorp's accounting records: 1) a debit of $8 to Sales Returns and Allowances, and 2) a credit of $8 to Accounts Receivable. In other words, the credit memo reduced SellerCorp's net sales and its accounts receivable. When BuyerCo records the credit memo, the following will occur in its accounting records: 1) a debit of $8 to Accounts Payable, and 2) a credit of $8 to Purchases Returns and Allowances (or Inventory).

    #

  • FilmTVmediaFilmTVmedia Member Posts: 2

    Thank you Alexia, for your valuable time and consideration and efforts on our behalf.

    This is really a feature that should be added.

    Once an invoice is generated and mailed/sent, it is 'wrong' to void that and generate a new invoice (also, it is a hassle!). A paper trail of adjustments to what was billed, paid, and the aftermath of any project is important, often for legal reasons.

    Also, note that many businesses like our use an invoice PER service day, because of the complex nature of itemizing every single 24 hour period of services used, which vary day-to-day.

    Day 1 of a film may have a crew of 40 people. Day 2 of editing may have 7 people, but Day 3 may only have 1 person, like an editor. The work changes and morphs in all creative fields – a constant moving target.

    10 days of invoices for 10 days of varying work tracking every detail will necessitate the need for CREDIT MEMOS to reverse charges from earlier days.

    1 very long invoice for 10 days of work would be harder to audit. As for a summary grand total – that's what STATEMENTS are for.

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Hi, @FilmTVmedia.

    First, thank you so much for breaking this down further and for your feedback. Detailed feedback like yours is what allows us to grow and improve, to make Wave into the best thing it can be, so thank you for your help!

    In Wave (as it is now), here's how you would handle your first situation, first if you were doing a refund, and then if you're offering credit for a future project. Note that I do recognize those are workarounds and aren't perfect solutions, but they might help out for now.

    Issuing a refund through a negative invoice

    You've accepted and recorded a payment of $55,000 for your commercial, but because of that cheaper special effect, you've adjusted the price to $51,000. This is reflected on your original invoice, that now shows a total of $51,000 and a payment of $55,000. Wave asks for a refund. Here's what you do next:

    • Create a new invoice with a line item called "Refund for overpayment". Give it a price of $-4,000.
    • After giving the money back to your client, mark that invoice as paid, and choose the payment account from which you've refunded your client as the Payment account.
    • Your customer statement will now show $51,000, and your client will happily have been reimbursed.

    Using the overpayment as a credit on a future project

    Same scenario as above, but we ask for the remaining balance to be added to the next project. This process takes a bit more accounting gymnastics, but we, fortunately, have this handy Help Center article breaking it all down. While this method of handling overpayment does work, nothing will show on the customer statement, nor will it produce an actual credit note to offer to your client. Again, it's a workaround, and in no way a perfect solution.

    Let me know if that helps or if you have any questions! On my end, I'll make sure to forward your feedback to the right people. Thanks again!

  • Bruce_AllinsonBruce_Allinson Member Posts: 2

    I'll just but into this thread if you don't mind, having found it when looking for a solution that will allow me to connect the negative transaction from our bank account to the credit note issued, (negative invoice we created) This is all very well Alexia and I do not mind the "negative" invoice approach to credit notes. However the method of marking these "negative invoices" is floored unless we pay them with "cash"!!

    Our Wave account is tied into our business bank account and as I can not pay the negative invoice with the negative transaction (bank transfer) from our bank account showing in transactions, (it would appear that because it is a negative amount your system only allows me to allocate this amount to payment of bills and not payment of a negative invoice) this transaction is going to sit on there for ever, I need to link the transaction to the negative invoice/credit note.

    I find it difficult to believe that you even began to set up an accounting system without a robust credit note facility you say most customers do not need it in place, this might be the case in the US but here in the UK I find it very difficult to believe In my 40 years of SME business in the UK I have yet to see a business where credit notes are not an essential requirement of the business accounts.

    BTW, other than this, (and the difficulty in linking stripe payments to invoices this hardly ever works as it should and causes problems especially as the fee means the amounts do not match) we just love working with Wave it saves us a whole load f time and we hardly ever need to speak to our accountants anymore, they just login and get on with their job 👍

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Hi, @Bruce_Allinson.

    You're right, you can't use a transaction with a negative amount on the transactions page as an invoice (well, it would be more accurate to say you can't link a transaction as a payment to an invoice with a negative outstanding amount, but that's neither here nor there). There's a very easy workaround, however.

    Just delete the transaction uploaded from your bank and go to your Invoices page. Click on the arrow next to that invoice and then on Record a payment. You'll be able to record the payment manually there and link it to whichever payment account is appropriate. It's an extra few clicks, which ideal, but it'll work. With that said, I'll bring this up with our product team. We're always looking for ways to save you time.

    If your Stripe account is connected to Wave, everything should be accounted for automatically. Your invoice payments will be recorded in full to a Money in Transit account. Then the merchant fee will be subtracted and you'll then be able to mark the matching bank transaction as a transfer from that Money in Transit account. If this isn't what's happening, could you tell me more? I'd love to see if I can help out with this one.

  • Bruce_AllinsonBruce_Allinson Member Posts: 2

    Thanks for that Alexia, most helpful. 👍
    When get the time I will defiantly take a look at your suggested workaround. Regarding the Stripe account it sometimes works as you described but at other times this is not what happens at all, unfortunately I have no time to look at this in the near future, we are all just maxed out with work at the moment.

  • bushbabybushbaby Member Posts: 2

    Hey Wave Guys--
    You really need to develop a credit note system -- I know you said it was'nt on the roadmap -- But accelerate it -- I'm sure people would pay for this service

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Hi, @Bruce_Allinson and @bushbaby,

    @Bruce_Allinson, reach out to me with more details about that Stripe issue when you can. I'll be more than happy to help figure the best way to handle it.

    @bushbaby, thank you for the feedback. I can't make any guarantees that this feature will be added to Wave, but I'll pass your comment along. Thank you for taking the time to join in on this discussion.

  • bushbabybushbaby Member Posts: 2

    Hi Alexia -- It's Bush baby coz i'm from Botswana --- your app is beautiful but without a credit note option then your developers are not shaking the ground -- you really need to push this to the team -- The whole problem with the internet -- is that -- it's global !!! -- i think you know what i;m talking about -- being at the mine face , you get the action -- i guess one minute it's a guy from London , next Lusaka , then new Zealand -- it's a serious disappointment for all of us using the British system of accounting -- without credit notes --

    Ps on other note my collaborators can not upload any receipts -- what could be the problem -- thanks

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Hi, @bushbaby,

    I took a look for your collaborator, and there shouldn't be anything stopping them from uploading receipts via the website or the mobile app. They won't be able to upload receipts by email, however, as this can only be done from the primary email address of the business' owner. Does that explain what's happening?

    If they're using the website or the mobile app, can you tell me a bit more about what happens when they try?

  • BWI_BWI_ Member Posts: 15

    The workaround is to reduce invoice amount then create a prepayments and credits account for a client. then split payment between the invoice and the prepayments account. on the next invoice you pay using amount from prepayment account

  • SteveHaleSteveHale Member Posts: 3

    Alexia

    I have seen now in several posts that you ask the same question about "reaching out" as to why people need a crdit note. In each and every post the people in the discussion say the same thing to you! So surely you have taken this on board?

    It is STANDARD practice in any business accounting app to have a credit feature on BOTH the sakes and purchases side, so that taxes are posted in the correct period, so that there is an audit trail and also so that the correct documentation is issued!

    Your app DEFINATELY needs a credit note function.

    Steve B

  • JamieDJamieD Administrator Posts: 1,091 admin

    Hey @SteveHale. I did just reply to a previous thread you had reached out on, but I would like to know more about your business. I do think that it's fairly obvious why users would need a credit note feature in our software, but I would like to know more specifically about your sales flow works, what type of business you are in, and what your current workaround is for using a credit note. Having more insight and specific detail on how businesses function helps give us a stronger idea on how to best go about create an implementation in Wave.

  • MerlinAccounts_UKMerlinAccounts_UK Member Posts: 173 ✭✭✭

    @JamieD

    Just need to jump in on this for a UK perspective.

    Once you have issued a sales invoice and attributed to it a tax point date (for VAT and indeed tax purposes) you cannot subsequently go back and alter the invoice to a lesser amount because you have agreed to reduce the price for a customer, and especially so when you might not agree that adjustment until some time after the original invoice was raised. The correct and only way to record this in your accounting systems is to raise a credit note that bears a tax point date relevant to when the note was issued, not dated the same date as the original invoice.

    You cannot simply do a workaround that involves altering original data just to make things fit.

    I do actually find it most puzzling that you don't seem to be able to grasp this concept and the significance of it.

    edited March 28, 2019
  • NeilRNeilR Member Posts: 12

    @MerlinAccounts_UK Same applies in Australia.

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