I was so excited to hear about the new functionality in GP regarding negative cash receipts!  Over the years we have dealt with scenarios whereas the ability to enter a negative cash receipt would make things so much easier.  One scenario I’ve outlined below:

A not-for-profit agency offering services to clients gets paid by a funder.  The funder sends remittances for several clients in one check.  The check includes payments and adjustments.  The adjustments have always been difficult to deal with as they reduce the amount of cash received.  So if you had 3 claims for 3 different clients/customers:

Customer A    $100

Customer B    $200

Customer C      $75

Invoices are created and posted in GP.  You receive a check that includes full payment for Customer A & B, but an adjustment for Customer C for -$75.00.  The net check is now $225 – not enough to clear the balances for Customers A & B without overstating cash.  A credit memo then needs to be created to cover the shortage, which doesn’t properly reflect the series of events, but does get the balances correct.

With negative cash receipts I had anticipated that for this scenario you would enter the check as follows:

Customer A    $100 receipt

Customer B    $200 receipt

Customer C    -$75 receipt

While you CAN enter the payments this way, the application is somewhat restricted.  Even though your payment for Customer C is a negative, it still can only be applied as if it is a cash receipt.

If you try to apply the -$75 to the open invoice for Customer C you receive the error message ‘You may not overapply the document’.  If you create a credit memo to clear the debit balance created by the negative cash receipt, the customer balance is correct, but you cannot apply the two documents.

I had also thought that you might be able to use this functionality for NSF checks.  However, the fully applied invoice will not appear in the ‘apply’ window when entering the negative cash receipt.  As a workaround I attempted to unapply the initial cash receipt, then apply the adjustment, but was back where I started with the error of overapplying.

The scenario where you CAN use negative cash receipts is when an invoice has a partial payment applied.  So if Customer A had an invoice for $100, and a payment of $50 was received and an adjustment of $50 was received you could apply as follows:

Invoice           $100             Invoice balance        $100

Receipt           $50            Invoice balance          $50

Adjustment    -$50            Invoice balance        $100

Net balance of invoice is now $100.  The negative cash receipt increases the debit amount of the initial invoice.

Although Microsoft is headed in the right direction with negative cash receipts they still have some work to do.  It is a brand new type of document in GP 2010.  I have made a product suggestion requesting more flexibility in the application process. 

If this functionality matters to you and your business process I would advise you do the same. The development team at Microsoft reviews these suggestions.  If they get a big response they will take action – but they need to hear from YOU!

Click here to make your suggestion today.