Manually Create Corrective Invoice in AR

This document explains how to create a corrective invoice or credit note based on an incorrect customer invoice or credit note created in one of these programs:

'Customer Invoice. Enter Manual' (ARS120)
'Fixed Asset. Sell' (FAS130)
'TA Invoice. Create Proposal' (TAS130).

A common situation in which a corrective invoice is created is when an incorrect VAT code or VAT registration number is used on the original invoice.

Correction of Other Customer Invoices

Invoices based on customer orders, service orders, maintenance orders, and project orders are corrected in a similar way in the corresponding module.

Opening balances from a legacy system entered as invoice records in 'Customer Invoice. Enter' (ARS100) are reversed in 'Voucher. Reverse' (GLS900), as described in Reverse Voucher.

Outcome

You have:

In the first scenario, a corrective invoice with selected incorrect invoice lines with reversed signs together with the new replacement invoice lines. The text Corrective Invoice is printed on the invoice header together with the number and date of the original invoice.
Or, in the second scenario, a credit note for the entire original invoice with a reference to the original invoice number and date, together with a new invoice with no reference to the original invoice.
If the original invoice already has been corrected with a previous corrective invoice, the new corrective invoice displays the number of the original invoice the invoice header and the number of the previous corrective invoice in the corrected invoice lines ('Previous invoice [number]').
A correct customer balance.

The original invoices are still open.

Send the corrective invoice – and, in the second scenario, also the credit note – to the customer or payer.

When the payment is received, match it against the invoice records (original invoice, credit note and corrective invoice) in 'Payment Received. Record' (ARS110).

These are updated:

Accounts receivable and the general ledger are updated.
The transactions are saved with AR additional information numbers 235 (Original invoice number), 236 (Corrective invoice) and 237 (Previous invoice), enabling you to search for transactions based on these numbers in 'Acc Receivable. Display Additional Info' (ARS250). Additionally, if a finance reason code has been entered on (ARS120/E), number 257 (Finance reason code) will be saved.
The header of the corrective invoice is saved in the FMINHD table while the lines are saved in the FMINTL table.

Before you start

Tax method 1 (VAT is used) must be selected for the division on 'Company. Connect Division' (MNS100/G). Currently, the procedure described in this document does not extend to other tax methods.
At least one detail record for corrective invoices must be created for FAM function AR20 in 'FAM Function. Open Details' (CRS406), accessed from 'FAM Function. Open' (CRS405). The parameters listed in the Parameters to set table below must be defined.
Accounting rule AR20–122 (Revenue account for corrected invoice line) to use for the reversed invoice line created with corrective method 1 must be defined in 'Accounting Rule. Set' (CRS395).
If the company consists of several legal entities (MUC company), number series type 02 must be defined in 'Number Series. Open' (CRS165). The corresponding number series is then defined per division in 'Internal Invoice Series. Open' (MFS165). For a non-MUC company, number series 53 must be defined in (CRS165). The same number series is used for corrective invoices as for regular invoices manually entered.
You can create a 'Parallel invoice number' such as OCR, KID code, and so on for customer invoices. The rules for this are defined in 'Additional Payment Reference. Open' (CMS090).
For the second scenario described in the Outcome section, you can create the credit note and a new invoice with a different invoice number series and different invoice classes. To activate this functionality, parameter 330 'Credit Note - Separate number series' must be enabled on 'Settings - Accounts Receivable' (ARS905/F). Also, the values must be selected for fields 'Credit invc ser' (NBI1) and 'Credit Inv Cls' (IVCM) on (CRS406/F) for the FAM function (AR20) used for corrective invoices.
Note: The use of invoice classes is activated on 'Settings - General Ledger' (CRS750/F).
Finance reason codes are created and stored in 'Finance Reason Code. Open' (CMS103). Finance reason codes defined with 'Reason type' 1='Corrective AR transactions can be used for corrective invoices and credit notes.

Parameters to set


Program ID/Panel	Field	The field indicates …
(CRS406/E)	Invoice category	... the category of customer invoices to create manually using FAM function AR20 in (ARS120). Alternatives 0=Regular invoices 1=Credit notes. The invoice entry is made with positive amounts and the account entries are reversed automatically. 2=Corrective invoices. The number of the original invoice – the invoice to credit – is specified when creating the corrective invoice. 9=Supplier invoices. The supplier, supplier invoice number, and supplier invoice year are entered when using this option. This alternative is only available if country version is set to 'IT - Italy' on (MNS100/L). Note: For invoices created with a FAM function defined for invoice category 9='Supplier invoices', you can update the supplier, supplier invoice number, and supplier invoice year on 'Customer Invoice. Display Manual' (ARS122/E).
(CRS406/E)	Corrective method	... how to create a corrective invoice if alternative 2 (Corrective invoices) was selected in the 'Invoice category' field. Alternatives 1=Corrective invoice that is created for one or several invoice lines in the original invoice. The printed invoice displays the reversed invoice lines and the new replacement invoice lines. A reference to the original invoice is printed on the invoice. 2=Corrective credit note and new invoice. The original invoice is fully credited by means of a credit note with the same accounting lines as the original invoice but with reversed signs. A new invoice with the correct invoice lines but with no reference to the original invoice is also created. Note: You cannot correct an invoice using corrective method 1 if it has already been adjusted using corrective method 2, and vice versa. For cross-division vouchers (invoices that have been created centrally and the revenue distributed between several divisions), only corrective method 2 is valid.
(CRS406/E)	Subtotal	... whether subtotals of new invoice lines replacing a specific invoice line in the original invoice will be printed on the invoice. This check box is only applicable if you selected invoice category 2 and corrective method 1.
(CRS406/E)	Negative sign	... whether negative invoice line amounts and quantities will be printed with a negative sign on the corrective invoice. This check box is only applicable if you selected invoice category 2 and corrective method 1.
(CRS406/E)	Credit invoice series	… the invoice number series to be used for credit notes. This field is only applicable if you have selected invoice category 2 and corrective method 2, to create a credit note and a new invoice, and only if parameter 330-'Credit note - separate number series' has been enabled on (ARS905/F).
(CRS406/E)	Credit invoice class	… the invoice class to be used for credit notes. This field is only applicable if you have selected invoice category 2 and corrective method 2, to create a credit note and a new invoice, and only if parameter 330-'Credit note - separate number series' has been enabled on (ARS905/F), and the use of invoice classes has been enabled on (CRS750/F).

Follow these steps

Initiate Generation of Corrective Invoice

Start (ARS120).
Select the Select option for a FAM function detail record with corrective method 1 or 2.
On the E panel, specify the number of the original invoice.
By prompting in the 'Original invoice' field, you can search for all invoices that can be corrected per invoice number and year in (ARS122). You can also reprint invoices in the same program.
If the original invoice already has been corrected by a corrective invoice that now must be corrected in turn, you still specify the original invoice number. M3 automatically recognizes that a previous corrective invoice exists and displays the corrected invoice lines of the previous corrective invoice together with the uncorrected invoice lines of the original invoice on the H panel.
Optionally, specify a finance reason code to describe why the transaction was entered.
On the same panel, specify the invoice year, new invoice, and accounting dates, and select whether to use the original invoice date or the new invoice date as the VAT rate date. Press Enter.
The VAT rate date determines which date to use when selecting a VAT rate for the new invoice lines.
Note: Use the same VAT rate date if you create several corrective invoices based on the same original invoice.
Optionally, on the F panel, specify a person as a reference whom the customer or payer can contact if there are any questions regarding the invoice. Press Enter.
On the G panel, review, adjust, or complement the payment details such as payment terms, due date, and cash discount terms. Press Enter.
The payment details are proposed from the header of the original invoice.
Note: If the FAM function has corrective method 1 and the 'VAT calculation on cash discount' check box is selected in 'Country. Open' (CRS045), no cash discount details can be changed.
If account supplementation is selected for the FAM function used, you can also specify any additional accounting IDs in the accounting string for the accounts receivable account on the G panel.
If you selected a FAM function with corrective method 1, go to step 8. If the FAM function has corrective method 2, go to step 14.
Create Corrective Invoice for Specific Invoice Lines
On the H panel, where the invoice lines of the original invoice are displayed, select the Select option for an invoice line to correct.
Press Enter to reverse the selected invoice line.
The invoice line is now displayed with a reversed sign for the line amount.
Create a new invoice line by specifying any of these values in the panel footer: invoice line text, line amount, VAT code, quantity, unit of measure, and unit price. Press Enter.
Select one of these alternatives:
- If needed, add more new invoice lines on the same panel, as described in step 10, and press Enter after each one of them.
- To select another invoice line from the original invoice, press F14='New line' and repeat steps 8–10.
When you are finished with the corrections, press F3.
On the coding panel displayed, specify the offsetting accounting string. Press Enter and then exit (ARS120) to create the corrective invoice.
On the coding panel, the revenue for the reversed lines is displayed in a separate accounting line based on accounting rule AR20–122.
Create Credit Note and New Invoice
On the H panel, where the proposed invoice lines of the new invoice are displayed, select the Change option for an invoice line to correct.
Note: A credit note has been created automatically in the background based on the original invoice, but those invoice lines are not displayed.
Make the necessary changes and repeat the step for any other invoice lines to correct. When you are finished, press F3.
On the coding panel displayed, specify the accounting string to offset the accounts receivable account and press F3.
Exit (ARS120) to create a credit note for the original invoice and the new, corrective invoice with the adjusted invoice lines. When parameter 330-'Credit note - separate number series' is enabled on (ARS905/F), different invoice number series and different invoice classes are assigned to the credit note and new invoice.