Defining Adjustment Reason Codes

Adjustment codes default general ledger accounts and set review limitations or requirements for adjustments during cash application. There are four types of adjustment codes: Chargeback (CB), Discount (DS), Over/Short (OS), and Grouped Obligations (GP). There are three types of Chargebacks: detail, summary, and memo. This procedure will describe how to set up adjustment reason codes.

To define adjustment reason codes

  1. Access Adjustment Reasons (AR15.1).
  2. Define adjustment codes. Use the following guidelines to enter field values:
    Reason

    Type an adjustment code

    Type and Description

    Select the type of adjustment the code will be: CB, DS, OS, GP.

    Adjustment GL Account

    This field is required for CB, DS, and OS type adjustment reason codes. Leave this field blank for GP type codes.

    Ovrd (Override)

    If you want to allow the accounting unit to be overridden, select No in the Ovrd column. Select Yes if you want to prevent the accounting unit from being overridden.

  3. Click the More link to open Expanded Reasons (AR15.2). Use the form to define chargeback types and review limits for OS and DS adjustment types. Use the following guidelines to enter field values:
    Status

    Select the status of the adjustment reason code. (A) Active or (I) Inactive.

    Activity

    Select whether to Post Activities or GL Only Activities when this reason code is used.

    Dispute Code

    Type a dispute code for a partial application that uses this adjustment reason code, where the remaining open amount is desired to be automatically disputed. This can only be entered for reason types DS - (discount) and OS - (over short). Example: $100 invoice where $60 is applied and $10 adjusted with a $30 dispute created with the default dispute code.

    Chargebacks Type

    If the adjustment code is a CB type, select what kind of chargeback it is: detail, summary, or memo.

    GL Account/ Subaccount

    If you are defining CB type adjustment code, select the charge back contra account number and sub-account, if applicable.

    Chargeback Dispute Code

    Enter a chargeback dispute reason code if the created chargeback (on Application Closing (AR190) ) is desired to be in dispute.

    Review LimitsAmount/Percent

    Type an adjustment amount or percentage that will trigger whether a review is required.

    Review

    Select which type or review you want:

    • If you select No, no review is required unless review limits are exceeded. You must chose No if you define a Review Limit Amount or Percent.
    • If you select Optional, a review is required if the deposit date is not on or before the discount date plus the payment grace days, the discount taken exceeds the discount amount, the discount is taken on a partially applied invoice, or the discount taken for an application that will not fully apply the invoice. Valid for a DS type adjustment reason code only.
    • If you select Yes, a review is always required.
    Accrual GL Account

    Enter an accrual GL Account Unit to first accrue the adjustment before it is expensed.

Related Reports and Inquiries

To Use
List reason codes

Operational Setup 2 (AR215).

Select Reason Code in the Report Option field.
Related topics