You can use Customer Payment Create to create deductions. The process is similar to the process for creating prepayments. However, unlike prepayments, you can enter many deductions for a single payment transaction.

When you add a deduction to a payment, the system creates two postings when the payment is saved. One posting is recorded in the customer payments daybook and the second posting is recorded in the customer deductions daybook. A customer invoice of type Deduction is created when you save the payment. The customer deduction invoice uses the daybook linked to the bank GL account for the second posting (deductions daybook).

The system uses the Deduction Suspense system type account to transfer the balance from the payment posting to the deduction posting.

If the deduction category allows automatic write-offs, the system automatically writes off any standard deduction within the specified deduction limits to the account associated with the deduction category. If you do not want to write off all or part of the deduction, use another category without automatic write-off.

In Customer Payment–Allocate, click the Deduction button. The Customer Payment–Deduction screen opens.

When you click OK in the Customer Payment–Deduction screen, the system adds a new line to the grid with allocated invoices.

The new line is a customer invoice of type Deduction. The grid lines contain fields that display the deduction category and the status. You can create more deductions by clicking on the Deductions button.

Use the Deduction Details screen to create deductions that have more than one detail line. To access the Deduction Details screen, right-click on the deduction in the grid and choose Deduction Details from the context menu.

To create multiple detail lines, right-click in the grid and insert more detail lines. You can then specify other categories on the lines. You can also specify the same deduction categories on multiple deduction detail lines for the same payment if each line is linked to a different invoice. The total amount must equal the total deduction amount of the deduction invoice. You can only save the payment when the line total is equal to the deduction total.

If the deduction category allows automatic write-off and if the deduction amount is below the automatic write-off limit, the status of the line is Auto Write-Off. If the category does not allow automatic write-off, the status of the line is Pending. For a single customer payment, you can have multiple deduction lines, some with the status Pending and others with the status Auto Write-Off.

You can also use the Deduction Details screen to modify deduction details without creating additional deduction lines. You can modify the deduction category associated with any line. You can also delete lines.

For each detail line, you can specify a customer invoice to link to. This step is optional and the invoice is used for information purposes only. The lookup button in the Voucher field opens a list of invoices allocated to the current payment. The lookup in the All Invoice fields lets you search for any invoice in the system, open or closed.

At any stage before you save a customer payment, you can reopen the Deduction Details window and modify the details. In Customer Payment Modify (27.6.4.2) and Customer Payment View (27.6.4.3), you can open the Deduction Details screen in read-only mode.

When you save the customer payment, a new open item is created in the entity associated with the GL bank account. In Deduction Review, you can manually allocate the deduction invoice to one or more entities.

The fields in the grid are:

This field displays the deduction status, as determined by the system, and is read only.

You can use Banking Entry Create to create deductions for payments from customers. You create deductions using the same process described in Creating Deductions in Customer Payment Create.

If automatic write-off is enabled for a standard deduction category and the amount is less than or equal to the deduction limit, the system automatically writes off the deduction when you record it.

The deduction is always created as a new open item (Pending status), which is immediately written off according to the write-off amount (totally or partially). The deduction is debited from the expense account associated with the deduction category, and the posting is recorded in the entity of the bank account.

If the payment is recorded in an entity other than the invoicing entity and you want to allocate the expense in the invoicing entity, select a deduction category that causes the posting to remain in the Pending status. You can then allocate the deduction expense to the invoicing entity using Deduction Review.

If the payment is not in base currency, the system converts the deduction amount to the base currency in order to compare it to the write-off limit for the deduction category. This step is required because the write-off limit is always defined in the base currency of the domain. When it converts the deduction amount to base currency, the system uses the exchange rate that applies on the posting date of the payment.

The status of these deduction lines is Auto Write-Off.

In this example, the deduction of $2 has one detail line with a category that allows automatic write-offs up to a limit of $2.50.

The deduction posting is:

In this example, you can only automatically write off part of the deduction. The invoice amount is $150, the payment amount is $90, and the deduction amount is $60. You can automatically write off $10 immediately.

The deduction posting is:

Use Customer Opening Balance Create (27.1.10) to manually create a deduction invoice open item in the sales sub-ledger, and generate postings for customer control accounts.

The activity lets you transfer the outstanding open items for a specific customer in detail from an external system to your QAD application. See Customer Opening Balance.