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Automated Receipt Handling for Credits: How It Works

When you need to process a Credit Memo against an Invoice that has already been paid by a receipt, you need to define how you want to handle the funds from the Receipt payment.

In that case, you have the option of putting the receipt amount On-Account to be applied to a future invoice of the same customer, or you can choose to refund the payment back to the customer upfront .

With this Out of box featue in AR , this process involves unapplying the receipt payment against the invoice, and then handling the receipt to either:

The process of automating what will be done to the receipt is what Automated Receipt Handling for Credits feature handles.

If you want to use this Feature , You must ensure that you set up your feeder systems with business processes that support this assumption.


These five settings affect automated receipt handling for credits:

  1. Transaction Source: you need to define an imported transaction source and set the Receipt Handling for Credits option to indicate your enterprise policy. Assign this transaction source to the applicable imported credit memos.
  2. Minimum Refund Amount system option: If you plan to process refunds, specify in the Minimum Refund Amount system option the minimum amount necessary for AutoInvoice to create a refund.
  3. Receivables Activity: If you plan to process refunds, define a Credit Card Refund receivables activity for credit card refunds and a Refund receivables activity for non-credit card refunds. The receivables activity identifies the general ledger clearing account to use to clear the refund amounts.
  4. Credit Card Transaction Remittance Method: On the original credit card transactions, use a receipt class with a remittance method of Standard.
  5. Transaction Type: The transaction type assigned to the debit items must be set to Natural application only. If the transaction type of a debit item is set to Allow overapplication, then you must process the credit manually.


During AutoInvoice import, the process flow for automated receipt handling for credits is as follows:

  1. AutoInvoice verifies that the transaction source assigned to the credit memo has automated receipt handling enabled.
  2. AutoInvoice evaluates each credit memo and its associated transaction to determine eligibility for automatic receipt handling. To be eligible:
    • The transaction type of the paid transaction must be set to allow natural application only.
    • The transaction must not be in doubt.
  3. If eligible, then AutoInvoice unapplies the paid transaction from the receipt to be credited.
  4. AutoInvoice creates thecredit memo in the amount of the requested credit, and applies the credit to the transaction.
  5. If your policy is to automatically refund your customers, then AutoInvoice evaluates the receipt for refund eligibility. To be eligible, the receipt must not be in doubt.
  6. If eligible for refund, AutoInvoice creates the refund for all credit request amounts that are greater than or equal to the value entered in the Minimum Refund Amount system option.
    • AutoInvoice places on account any credit amount that is less than the specified minimum.
  7. AutoInvoice applies the appropriate receivable activity to the receipt, as determined by the transaction source.


There may be few senarios , when autoInvoice rejects a credit memo from automated receipt handling if one of the following conditions exists on the transaction to be credited:

If the credit memo is ineligible due to one of these conditions, AutoInvoice processes the credit memo using standard validation. This way you can evaluate the appropriateness of the credit request before taking action.

For refund requests, AutoInvoice automatically places on account the amount of a refund request if one of the following conditions exits:


Automatic receipt handling for direct debits is not working as expected. When running the Autoinvoice program, a credit memo is created correctly, then instead of creating a Refund application against the receipt, it creates an On-Account application instead.

You need to apply the patch #The issue is addressed in Bug 9473751