Chargeback Processing

In the Payment Entry and Application conversation, you may create a chargeback transaction for any underpayment of an invoice or overpayment of a payment.  The chargeback feature allows you to pay an invoice while creating a debit or credit memo for the amount of the underpayment or overpayment.  Debit or credit memos can be created automatically for the chargeback based on the chargeback reason code defined on Reference File category 350.  If the chargeback is positive, the open item created will have a debit memo document type.  If it is negative, then the open item will have a credit memo document type.  This document type will be retrieved from Reference File category 350.

If an open item is created for the chargeback, the next available document number will be retrieved from Reference File category 440 unless an external numbering program has been defined for the company/location on Reference File category M12.  In that  case, the next available number will be retrieved by the user-defined external numbering program.

You can also void a chargeback for a payment that has been voided.

Chargebacks are performed on the detail screen in the conversation through one of two methods.

·     You may enter a Y (yes) in the Chargeback Remainder field.  The remaining gross amount of the invoice after subtracting the amount applied, the discount amount, and any write-off amount will be charged back to the customer.  A valid chargeback reason code must also be entered. 

Note:    You may only use the Chargeback Remainder field for underpayments (positive chargebacks).  If the chargeback is an overpayment and you use this field, the overpayment will remain on-account and the chargeback will not be processed.

·     You may enter the amount to be charged back in the Chargeback Amount field.  A valid chargeback reason code must also be entered.  You may use this field for both underpayments and overpayments, but an overpayment must be entered as a negative amount.

Overpayments during payment application are associated with the customer's payment, not a specific invoice.  Therefore, any overpayment chargebacks created for the customer during payment application are displayed on the header portion of the Open Item List Screen in the Chargeback field. 

Underpayments during payment application are associated with the invoice that was not completely paid  Therefore, any underpayment chargebacks created for an invoice during payment application are displayed on the specific line of the invoice in the Write-Off/Chargeback field.

If an open item is not created for the chargeback, the VAT adjustment can be performed in a VAT recalculation environment.  The process is similar to VAT recalculation for write-offs.

Enter and Apply a Chargeback

A chargeback is an open item created for a customer's underpayment or overpayment of an invoice.  An underpayment results in a positive chargeback (a debit memo).  An overpayment results in a negative chargeback (a credit memo).  When applying a payment to an invoice, you may choose to create a chargeback for the remaining amount on the Application Detail screen.

You may define your system to automatically generate open items for chargebacks on Reference File category 350.

Void a Chargeback

If the original payment included a chargeback, you should void the chargeback when you back out the payment.  To void a chargeback, enter the amount of the chargeback to be backed out in the Chargeback Amount field, then enter a chargeback reason code and a 'Y' in the Void Chargeback field.  If the original chargeback you entered was an underpayment (positive), enter the chargeback as a negative amount in the Chargeback Amount field.  If the original chargeback was entered as an overpayment (negative), then enter the chargeback as a positive amount. 

If you enter an 'N' in the Void Chargeback field or leave it blank, then the original Chargeback field will be updated with the amount you entered and will not be voided.

Chargeback Reason Codes

In both cases you must specify a valid reason code for the chargeback.  Reason codes are defined on Reference File category 350.  The reason code is used on Reference File category 302, Account Number Assignment, to define the account to be affected by the chargeback.  Since you can define multiple reason codes, you have the capability of affecting multiple accounts with the reason code.

In addition, the reason code is used to define whether a debit/credit memo is to be created automatically for the chargeback or whether a VAT adjustment will be made.  If the memo is created automatically, the payment terms for the memo are also defined on category 350.  If the memo is not created automatically, then VAT will be recalculated for the chargeback.  Installments cannot be defined for the payment terms.