Deductions, sometimes referred to as short pays, occur when a customer pays less than the amount owed. Reasons for deductions include rounding differences, reductions due to quality issues, perceived entitlements based on commercial agreements, damaged goods, spoilage, improper packaging or labeling, or any other reason for which a customer pays less.

You can record two types of deductions in Financials: standard deductions and promotional deductions. Standard deductions are processed entirely in the Financials module. However, it is recommended that you do not process deductions relating to promotions and claims in Financials, but in a dedicated trade promotion management module. Promotions are agreements with customers to provide discounts for a specified period, and to allocate funds for promotional activities or to offer free goods and services.

Deductions are processed at several different points in QAD Enterprise Applications. You can:

When you record deductions using Customer Payment Create, Banking Entry Create, or Petty Cash Create, you assign characteristics to a deduction using a deduction category. The category designates the type of deduction, the expense account to which the deduction is posted when approved, and whether you can write off low value amounts without review and approval.

See Setting Up Deductions for information on how to create deduction categories and see Creating and Modifying Deductions for information on how to create a deduction.

During the deduction review process, you can approve or reject a pending deduction. You can perform two types of approvals on pending deductions. You can approve a deduction for expense, where the system writes off the deduction to the expense account associated with the deduction category. You can also approve a deduction by making it available for adjustment against a credit note. If you reject a deduction, the deduction becomes a due open item on the customer’s account. See Reviewing Deductions.