Friday, April 11, 2008

Customer Refund in Receivables

There are cases when customers overpay, or pay one invoice twice. In all such cases the customer is due for a refund. The easiest approach would be to ask the customer to absorb the overpayment if the amount is small. However, if the amount is large the customer would no doubt ask for a refund. There are basically three ways to handle customer refunds:
1. Issue a manual check for refund to the customer and record a Debit Memo in Receivables and match this to the receipt.
2. Ask the customer to leave the cash as "on-account" and apply this later to any other open invoice.
3. Setup customer as supplier in Payables, and issue a check out of payables. The third option is more cumbersome but will make bank reconciliation a lot smoother. First create a debit memo in receivables, using a clearing account (the clearing account should always show zero balance). Match the receipt to this Debit Memo. Then create an invoice for this customer (set as supplier in AP), using the same clearing account as the expense account in the invoice. Pay the invoice in the normal way and do a bank reconciliation.
The above process of customer refund is only limited to 11i. In Oracle R12, Oracle Receivables is fully integrated with Oracle Payables to deliver a seamless, automated process to generate check and bank account transfer refunds for eligible receipts and credit memos.


Gene S. said...

The way I handle overpayment of credit card receivables is to just issue a credit to the account of the customer in the amount they overpaid. If the object to this (some of them use their accounts very infrequently), we will then issue them a refund check. But we like to avoid that situation at all costs.

Archana said...

Can you please explain how refunds are handled in R12? This has become a very popular interview question oflate.
Please help.


阿辉 said...

Hi, can you advice on how to refund the deposit (full refund and partial refund)? thanks.

阿辉 said...

sorry, I am using R11.

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Anonymous said...

Can you explain how to handle the exact opposite scenario? A customer pays several invoices in full and issues an unrelated payemnt deduction for cost recovery. Cash receipt will deplete working batch cash into a negative value at which point we then want to back charge a larger amount onto the statement. How is this achieved?

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