Wednesday, November 18, 2009

Recording a Refund of a Prepayment or Advance

The other day someone asked me how to do we collect a refund from an employee to whom we have made an advance payment (prepayment). There are a couple of approaches that can be used. The same approach applies to refund from suppliers as well.
Approach 1: Invoice to retire the prepayment and then Debit Memo for refund.
Step1: Create a standard invoice and apply the remaining amount of prepayment to it.
Step2: Then enter a debit memo and pay it with a Refund payment in the Payments window.The result will be that the outstanding prepayment / advance made is no longer there as this is matched to the invoice and the refund that is collected from the employee is matched to a Debit Memo in AP so that the refund is also recorded in Oracle. However, one needs to ensure that the expense account that you use in the invoice to retire the prepayment and Debit Memo for the refund is the same account.
Approach 2: Create an invoice to retire the prepayment to an amount equal to the refund. This approach to handle this scenario is pretty straight forward.
Step1: Create a standard invoice equal to the refund amount and apply the outstanding amount of prepayment to it.
Approach 3:If the employee is a salesperson or someone who would incur employee expenses regularly, then in that case the easist option would be to leave the advance / prepayment amount as-is and match it to the expense the person incurs next time around.


Anonymous said...

Hi Krishnu,

Its really good information.
But i m having some doubts regarding this.
Suppose we made advance to employee of Rs. 2000

Scenerio 1:-
Prepayment- 2000
Actual expense- 1500
we need to take Rs.500 back from employee

Scenerio 2:-
Prepayment- 2000
Actual expense- 2100

we need to pay Rs.100 to employee

Can you please guide me how we account above two scenerios in system (oracle apps).

Please reply on this as soon as possible.

orac said...

Even i am not aware of this.

Kindly help us to understand this in perspective of oracle apps


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Krishanu's Oracle Applications Blog - Oracle Apps consulting services scenario in India. Also, an inside view of Oracle Apps outsource services in India. Also the blog features new developments in Oracle Apps and my learning's in this field. The views expressed are my own only and not of my employer Wipro Technologies. The views and opinions expressed by visitors to this blog are theirs and do not necessarily reflect mine.