Do you often get stuck with tiny balances remaining on customer accounts after matching their payments against your invoices in the sales ledger in Dynamics GP?
The good news is that there are a few ways to deal with these balances, as well as fix a probable cause.
Most Dynamics GP users (who don't know any better) will do one of two things to get rid of the tiny balances:
Create dummy invoices or credit notes
Depending on which way the balance is out, you can create a dummy invoice or credit note to clear of the balance, because you are not going to be receiving anything more from the customer on this. Unfortunately, this process can be very time consuming, especially if this is happening a lot and you have a large number of clients. So, it is not our recommended process.
Ignore the balances
The problem with this is that your ledger is not clean, and it is harder to see the real balances between all the 'fluff'. Furthermore, this approach will never enable you to move the invoices into history (if it is the invoice that has a remaining balance) so they will forever show on your statements.
Unwanted invoices on statements just raise further queries, taking more time, etc. so ignoring the little balances in Dynamics GP is also not a recommended process as it causes too much 'noise' both on the ledger and from customers.
The good news is that there is a very quick way to get rid of tiny balances on the sales ledger in Dynamics GP:
Menu: Sales >> Routines >> Write Off Documents
This process is by far the quickest (next to solving the cause, which I will get to next...) so I will explain the options here in a little more detail.
Firstly, the Write Off Documents window in Dynamics GP will look like this:
According to Dynamics GP documentation for this window:
Use the Write Off Documents window to write off outstanding credit or debit balance amounts for one or more customers. You can specify a writeoff limit and cutoff date, and whether to create one credit or debit memo for each customer or document. The debit or credit memos that you create will be posted and applied to the documents you’re writing off balances for.
Select Overpayments to write off customer credit balances. Select Underpayments to write off customer debit balances.
Create One Writeoff per
Select whether to create one credit or debit memo per customer or document. If multiple currencies are used, memos will be created for each currency.
Enter or select a range of customers by customer ID, name, class, or user-defined information. Only documents with a document date on or before the date specified in the Cut-off Date field and with an outstanding balance that is less than or equal to the limit amount specified in the Writeoff Limit field will be included in the range. If the parent customer of a national account is included in the range, the child customers for the national account also will be included.
Enter a cutoff date for documents to be included. Documents with a document date on or before the cutoff date you enter will be included.
You can write off customer debit balances for national accounts. Select whether to include the parent or child company of a national account as the customer on the debit memos you’re creating.
Create writeoff from Parent field
Include the parent company of a national account as the customer on the debit memo.
Create writeoff from Child field
Include the child company of a national account as the customer on the debit memo.
You can’t write off customer credit balances for national accounts. If you select Overpayments in the Writeoff Type field to write off customer credit balances, the Create writeoff from Child field will be marked.
Enter the maximum outstanding balance for documents to be included. Documents with an outstanding balance less than or equal to the writeoff limit you enter will be included.
What is very handy about this window is that you can effectively set a limit of a few pennies and run this against the entire customer list in Dynamics GP, and it will very quickly get rid of all the tiny balances that have been so annoying.
To confirm, this process will create debit memos or credit memos and apply them against outstanding balances for you.
So, this means that when you next run the 'Paid Transaction Removal' routine in Dynamics GP to move all sales transactions into history (and off the statements...) these transactions will be gone. Your sales ledger will once again be clean.
There is one more thing that I would like to talk about in this blog, and that is curing a probable cause of these tiny balances, and it is something that I have seen in many clients before:
Incorrect Rounding in Tax Detail Setup
When Tax is automatically calculated, there is often an element of rounding involved. The problem is how that tax rounding is handled.
In the UK, as it is in many parts of the world, tax is usually calculated on the percentage of the sale/purchase, and rounded to the nearest currency decimal digit.
However, when you first setup a tax detail in Dynamics GP, the window defaults to 'Round To The Next Currency Decimal Digit'. What this means is that unless you specifically change the tax rounding, your transactions will often end up rounding up to the next decimal digit, where it should be rounding down.
If you are experiencing volumes of tiny balances, then it might just be the result of a tax detail setting. The rounding can easily and quickly be changed in Dynamics GP here:
Menu: Administration >> Company >> Tax Details
Checking these will take just a minute, but could save hours!
Send me a message and let me know what you think.