Table of Contents

Overview

Payoff documents are a feature that allows generation of either a credit or debit memo on which to post the balance of a check.  The decision to use a payoff document instead of a discount or allowance will vary depending on your business practices.  The most common use of payoff documents is to generate a debit memo when a customer over pays an invoice by a small amount or is paying a finance charge.  Use the debit memo payoff document to post the extra cash instead of leaving it as unapplied cash, which creates a credit balance on the customer’s account.  By creating a debit memo and having the overage applied to the debit memo, there is no balance left on the customer’s account.

Note:  If the customer is paying finance charge and you are creating a debit memo via the payoff document feature, be sure to click the F/C checkbox for the payoff document.  This will mark the debit memo as a finance charge and reports such as the Interest and Discounts report will display the amount accordingly. 

Detail

Another use of payoff documents is when the customer under pays by a significant amount.  Again the use of payoff documents vs. discounts or allowances depends on company business practices.  By using a document, the audit trail of the customer’s account will be better.  Usually, a threshold amount is used to determine whether a payoff document is used.  If the check is less than the invoices(s) being paid, create a credit memo payoff document that is then applied to one of the invoices being paid.  The amount of the credit memo is the difference between the cash applied to the invoice and the amount of the invoice.  This has the effect have paying the invoice in full.

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AR > Cash Receipts > Enter Cash Receipts

1. To use the payoff function of the cash receipts screen you will have to enter your cash receipt as normal, making sure there is a check amount applied to the check amount box.  Continue as normal until you get to the “Apply to” field in the middle of the screen.

2. You can either double click on the invoice from the open invoice section of the screen or type in the invoice and all of its information will populate in automatically.  It will also apply the full amount to the check and leave the remaining in the unapplied balance field for later use or editing. 

3. Click on the Payoff tab and click on the $.  This defaults in the difference between the amount of the check and the amount of the document being applied to.  Tab to the next field.  You will notice in the “type” field a DBM or CRM was created and your cursor will be in the G/L Account field.

4. Enter the G/L account you would like the revenue to go to or press F9 to search for the account. 

   1. When using the Pay Off feature the Cash Applied and Total Applied fields will keep the amounts of the document being paid.  

As a separate transaction, you will see the Payoff Amount, Document Type and G/L Account revenue being applied to.  Cash receipt processing and posting below. 

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     5.  After you have finished with this cash receipt click on the Save icon  and enter the next cash receipt or click the red door  to exit the screen.  Process and post at your convenience.