Navigating Invoice Discrepancies in Business Central: A Guide to Reconciliation and Closing

Navigating Invoice Discrepancies in Business Central: A Guide to Reconciliation and Closing

 

Managing financial transactions in Microsoft Dynamics 365 Business Central (BC) can sometimes lead to a situation where the invoiced amount and the amount received don't match. This often happens when working with an invoicing factor company that charges a fee for their services. Let's explore how to reconcile these transactions and ensure your sales invoices are closed properly.

Consider an invoice processed to a client for $100. The invoicing factor company takes a $2 fee, so your bank receives $98. To reconcile this in BC:

1. Use Payment Tolerance: BC allows for payment tolerances that can automatically close invoices when the payment received is slightly less than the invoiced amount, accounting for the fee.

2. Credit Memos: Create a credit memo for the $2 difference and apply it against the outstanding invoice. This will adjust your accounts receivable and close the invoice.

3. Pursue the Balance: If your company policy allows, you could pursue the customer for the remaining $2 to fully pay off the invoice.

Bank reconciliation in BC is about matching bank ledger entries against a bank statement. Here's how it applies:

- For a full payment matching the invoiced amount, the bank ledger entry and the bank statement will align, allowing you to post the reconciliation without issue.

- For the reduced payment, the bank ledger entry will show $98, and the bank statement will reflect this as well. You can still reconcile and post the bank rec, as BC recognizes that the invoice has been paid (considering payment tolerance or manual adjustments).

Recommendations for Handling Discrepancies

- Payment Tolerance: This is the most seamless method as it allows for small discrepancies without the need for additional transactions.

- Manual Adjustments: Manually adjust fields in the payment reconciliation journal to account for the discrepancy and close the invoice.

The challenge of invoice discrepancies when dealing with an invoicing factor company is manageable within BC. By understanding the tools at your disposal, such as payment reconciliation journals, credit memos, and payment tolerances, you can maintain accurate books and close out invoices efficiently.

Remember, it's crucial to distinguish between the bank reconciliation process and the closing of sales invoices. Each has its procedures, but both contribute to the overall integrity of your financial reporting.