Automatic application using the balance forward method

This method applies the oldest payments to the oldest invoices and debit memos. The process determines age by the transaction due date. Credit memos are conditionally applied to either payments or invoices and debit memos. You can use the balance forward method for both open item and balance forward processing customers.

Balance forward processing for Automatic Cash Application Audit

For customers that are not part of a national account relationship:

  • No Payment Batch is selected
    • All payments for the customer are processed.
    • Payments are applied to open items, including debit memos and invoices in due date order until fully applied or no more open items exist. Open items that have mixed sign line items and are processed by a payment are self-applied before any payment application.
    • After all payments have been processed, it checks for any remaining credit memos. Those credit memos are applied to any remaining debit memos or invoices in due date order until fully applied or no more open items exist.
  • Payment Batch is selected
    • Payments are processed by batch number and in payment sequence order.
    • Payments are applied to open items, including debit memos and invoices, in due date order until fully applied or no more open items exist. Open items that have mixed sign line items and are processed by a payment are self-applied before any payment application.
    • If the next payment belongs to the same customer, then it is applied to open items, including debit memos and invoices, in due date order until fully applied or no more open items exist.
    • If the next payment belongs to a different customer, then the process checks to see if any credit memos remain open for the previous customer before processing the next customer’s payment. If credit memos exist for the previous customer, then those credit memos are applied to open debit memos and invoices in due date order. It is possible to apply one or more payments for a customer if they are in sequential order in the batch, process all open credit memos, and then locate another payment for that customer further down in that same batch.
    • If there are no more payments in the batch, then any remaining open credit memos for the last customer are applied to open items, including debit memos and invoices, in due date order until fully applied or no more open items exist.

For national account customers, no differences are detected in the report when processing payments, if a batch number is specified. An exception of order in which payments are selected for processing is used. Payments from the national account customer or the invoiced account customer are processed in the same manner. Credit memos are only applied to payments:

  • If you select Yes in theNational Account Credits field, then all of the credit memos in National Account are applied to the first payment that is found. Credit memos that have mixed sign line items are self-applied before any payment application. If any mixed sign line item credit memos remain open after self-application has taken place, then the open amount of those credit memos is applied to the payment.
  • If you select No in the National Account Credits field, then the credit memos that belong to a customer are applied to the first payment that is found for that customer. Mixed sign line items that are processed by a payment are self-applied before any payment application. If any mixed sign line item credit memos remain open after self-application takes place, then the open amount of those credit memos is applied to the payment. If there are no payments for a customer, then any credit memos for that customer remain open.
  • All invoices and debit memos in National Account are processed in due date order regardless of customer. All payments, whether they belong to the parent customer or child customer, are applied to the next invoice or debit memo in due date.

Discount conditions

The process discounts an invoice during application and creates an adjustment record to reflect the discount if these conditions exist:

  • The payment deposit date is on or before the open item discount date plus the number of payment grace days that is defined for Customer.
  • The open item had no previous applications.
  • A discount reason code has been assigned to Customer.

Processing conditions

Application tolerances, if it is defined for the customer, do not apply. If you select Yes in the Currency Override field on Automatic Cash Application Audit , then all possible currency combinations are attempted such as base currency to base currency, non-base currency to the same non-base currency, base currency to non-base currency, and non-base currency to a different non-base currency.

If you select No in the Currency Override field, then only certain combinations are attempted such as base currency to base currency and non-base currency to the same non-base currency.

1.

Balance forward method where the customer is not part of a national account

The table shows how Automatic Cash Application Audit processes open records for a balance forward customer, when the customer is not part of National Account.
Transaction number Deposit/Due date Open amount
Payment 101 10/17 200.00
Payment 105 10/21 250.00
Payment 102 10/30 100.00
Credit memo 201 10/27 70.00
Credit memo 202 11/05 140.00
Invoice 301 10/10 150.00
Invoice 302 10/14 90.00
Debit memo 401 10/22 40.00
Invoice 303 10/29 100.00
Debit memo 402 11/03 100.00
Invoice 304 11/07 200.00

This list shows the application order and application amounts:

  1. Payment 101 (200.00) is applied to invoice 301 (150.00). An applied record (150.00) is created for the fully applied invoice 301.
  2. The remaining 50.00 from payment 101 is then applied to the next oldest invoice or debit memo, invoice 302 (90.00). An applied record (50.00) is created for the partially applied invoice 302.
  3. The next oldest open payment, payment 105 (250.00), is applied to the remaining 40.00 from invoice 302, creating a second applied record (40.00) for the fully applied invoice 302.
  4. The remaining 210.00 from payment 105 is then applied to the next oldest invoice or debit memo, debit memo 401 (40.00), creating an applied record (40.00) for the fully applied debit memo 401.
  5. The remaining 170.00 from payment 105 is then applied to the next oldest invoice or debit memo, invoice 303 (100.00), creating an applied record (100.00) for the fully applied invoice 303.
  6. The remaining 70.00 from payment 105 is then applied to the next oldest invoice or debit memo, debit memo 402 (100.00), creating an applied record (70.00) for the partially applied debit memo 402.
  7. The next oldest open payment, payment 102 (100.00), is applied to the remaining 30.00 from debit memo 402, creating a second applied record (30.00) for the fully applied debit memo 402.
  8. The remaining 70.00 from payment 102 is then applied to the next oldest open item, invoice 304 (200.00), creating an applied record (70.00) for the partially applied invoice 304.
  9. With all payments applied, credit memo 201 (70.00) is applied to invoice 304. An applied record (70.00) is created for the partially applied invoice 304.
  10. Credit memo 202 (140.00) is applied to invoice 304. An applied record (60.00) is created for the fully applied invoice 304. The credit memo 202 is partially applied with a (80.00) balance.

2.

Balance forward method where customers 1 and 2 are part of a national account and Yes is selected in the Account Credits field in Automatic Cash Application Audit

This example shows how Automatic Cash Application Audit processes open records for a balance forward customer, when customers 1 and 2 are part of a national account relationship and in Automatic Cash Application Audit, Yes is selected in the National Account Credits field:
Note: The Automatic Cash Application Audit Payment Batch field is not specified.
Customer Transaction number Deposit/Due date Open amount
1 Payment 101 10/17 200.00
1 Payment 105 10/21 250.00
2 Payment 102 10/30 100.00
2 Credit memo 201 10/27 70.00
1 Credit memo 202 11/05 140.00
2 Invoice 301 10/10 150.00
1 Invoice 302 10/14 90.00
1 Debit memo 401 10/22 40.00
2 Invoice 303 10/29 100.00
2 Debit memo 402 11/03 100.00
1 Invoice 304 11/07 200.00

This list shows the application order and application amounts:

  1. Payment 101 (200.00) is applied to credit memo 201 (70.00). An applied record (70.00) is created for the fully applied credit memo 201. Payment 101 open amount is 270.00.
  2. Payment 101 open amount (now 270.00) is applied to credit memo 202 (140.00). An applied record (140.00) is created for the fully applied credit memo 202. Payment 101 open amount is now 410.00.
  3. Payment 101 is applied to invoice 301 (150.00). An applied record (150.00) is created for the fully applied invoice 301.
  4. The remaining 260.00 from payment 101 is then applied to the next oldest invoice or debit memo, invoice 302 (90.00). An applied record (90.00) is created for the fully applied invoice 302.
  5. The remaining 170.00 from payment 101 is then applied to the next oldest invoice or debit memo, debit memo 401 (40.00). An applied record (40.00) is created for the fully applied debit memo 401.
  6. The remaining 130.00 from payment 101 is then applied to the next oldest invoice or debit memo, invoice 303 (100.00). An applied record (100.00) is created for the fully applied invoice 303.
  7. The remaining 30.00 from payment 101 is then applied to the next oldest invoice or debit memo, debit memo 402 (100.00). An applied record (30.00) is created for the partially applied debit memo 402.
  8. The next oldest open payment, payment 105 (250.00), is used to continue the application process. An applied record (70.00) is created for the fully applied debit memo 402.
  9. The remaining 180.00 from payment 105 is then applied to the next oldest invoice or debit memo, invoice 304 (200.00). This creates an applied record (180.00) for the partially applied invoice 304.
  10. The next oldest payment 102 (100.00) is used to continue the application process. An applied record (20.00) is created for the fully applied invoice 304. Payment 102 is partially applied with a (80.00) balance.

3.

Balance forward method where customers 1 and 2 are part of a national account and No is selected in the National Account Credits field in Automatic Cash Application Audit

This example shows how Automatic Cash Application Audit processes open records for a balance forward customer, when customers 1 and 2 are part of a national account relationship and in Automatic Cash Application Audit, No is selected in the National Account Credits field:
Note: The Automatic Cash Application Audit Payment Batch field is not specified.
Customer Transaction number Deposit/Due date Open amount
1 Payment 101 10/17 200.00
2 Payment 105 10/21 250.00
1 Payment 102 10/30 100.00
2 Credit memo 201 10/27 70.00
1 Credit memo 202 11/05 140.00
2 Invoice 301 10/10 150.00
1 Invoice 302 10/14 90.00
1 Debit memo 401 10/22 40.00
2 Invoice 303 10/29 100.00
2 Debit memo 402 11/03 100.00
1 Invoice 304 11/07 200.00

This list shows the application order and application amounts:

  1. Payment 101 (200.00) is applied to credit memo 202 (140.00). An applied record (140.00) is created for the fully applied credit memo 202. Payment 101 open amount is 340.00.
  2. Payment 101 is applied to invoice 301 (150.00). An applied record (150.00) is created for the fully applied invoice 301.
  3. The remaining 190.00 from payment 101 is then applied to the next oldest invoice or debit memo, invoice 302 (90.00). An applied record (90.00) is created for the fully applied invoice 302.
  4. The remaining 100.00 from payment 101 is then applied to the next oldest invoice or debit memo, debit memo 401 (40.00). An applied record (40.00) is created for the fully applied debit memo 401.
  5. The remaining 60.00 from payment 101 is then applied to the next oldest invoice or debit memo, invoice 303 (100.00). An applied record (60.00) is created for the partially applied invoice 303.
  6. The next payment for customer 1, payment 102 (100.00), is used to continue the application process. An applied record (40.00) is created for the fully applied invoice 303.
  7. The remaining 60.00 from payment 102 is then applied to the next oldest invoice or debit memo, debit memo 402 (100.00). An applied record (60.00) is created for the partially applied debit memo 402.
  8. The next payment for customer 2, payment 105 (250.00) is applied to credit memo 201 (70.00). An applied record (70.00) is created for the fully applied credit memo 202. Payment 105 open amount is 320.00.
  9. The remaining 320.00 from payment 105 is then applied to the next oldest open invoice or debit memo, debit memo 402. An applied record (40.00) is created for the fully applied debit memo 402.
  10. The remaining 280.00 from payment 105 is then applied to the next oldest open invoice or debit memo, invoice 304. An applied record (200.00) is created for the fully applied invoice 302. The payment 105 partially applied with a 80.00 balance.