Dynamics 365 Business Central: Report Sales Credits Accurately

Dynamics 365 Business Central: Report Sales Credits Accurately

Item Charges,  oh boy we ended up going that direction and now we're doing a lot of item charge videos, I was only going to do two but then I was thinking about a scenario that might be very helpful, item charges is a very powerful concept in business central, so why not? why don't we look into that. 

The scenario is that we sell something, let's say its coffee beans and we have a sale for a 100lbs, let's say $10 the unit price, so it's going to be $1,000 total price. That's a sale going out and then the customer calls us and says, hey you know what? 10 pounds of those 100 pounds are bad, they are expired. 

Obviously, we should have been lot tracking everything and making sure we're not sending expired product and all that, but what we're going to tell them is:  hey just throw away those ten pounds and we're going to give you a credit, now the way we do a credit,  you do a credit many ways. But what we would like to do is reduce the price of this product, so I don't want to reduce the quantity that went out, I wanted to show hundred pounds going out, but I want to just reduce the price, just give him a discount, maybe he's going to use those ten pounds, maybe he was able to like make some coffee for the restaurant. That's okay with expired beings. Now who would be that today?  

What we'll do is a creditable with something called item charge, so a sales credit oh and it's going to be for one and it's going to be 10 pounds times 10 so it's $100 so the quantity is 1 and the price or the amount is going to be $100, and we're going to apply it to this sale, what'll happen is, the unit price and the total will go down.  

The unit price will go down to 9 dollars and the total will go down to 900, so this again with timing, this might have happened let's just say 10th of January, 19th this might have happened 19th of January 2019 and so you can see the reduction in price at the correct time, this still happens at the 19th, so that's going to be nice, because if you're running a sales report before this credit happened then you can justify that it was running on a certain day and there was a credit that came in. If you look at T accounts of your accounting centric, you have AR and sales or revenue just going to do that, you have these thousand dollars in AR and the sale of a thousand dollars that's the sale that happens, then you get a credit for a hundred dollars later. It works just fine like that, so accounting-wise comes out great.  

The big deal here is that it's applied after the fact that it lowers the unit price, so it's a good way to give credit and it's reflected in your inventory reports, the credit. If you would have done here something called GL account, done the same thing, It would have shot this to a GL account, then all your inventory reports would have shown $1,000 sale even though you gave a credit on it, and if you'd actually do it towards the GL account on the sales credit memo, we have no idea that it applied to this transaction. Item charge is a really good instrument to make this happen. 

Let's take a look at the system, we're going to go ahead and issue a sales order, just like we talked about in the on the whiteboard. Again, to the Adatum corporation and it's for the coffee beans, it's out of the East location and it's a hundred pounds, ten dollars a pound, thousand dollars, so I'm just going to go ahead and post that and ship that out of the inventory. 

The product now leaves the inventory and is at Adatum’s warehouse and they come back to us and say that 10 pounds were expired, so I think we can give them a credit for the 10 pounds. Instead of giving them a credit straight into a GL, what I'm going to do is go ahead and issue our sales credit memo, just go in here, and go into sales credit memos. I’m using an item charts to apply to, I'm go ahead here into Adatum corporation, coffee beans, change this to item charge, we can call this sales allowance, but we're just going to say it's a sales credit. 

I'll just have quantity one, location doesn't really matter. It's for $100, and here I'm going to go ahead and assign the item charge to the shipment that we just did, here into function, get shipment lines and I have a list of all the shipment lines, right here, there's a way to filter this, but I know it's the last one, I'll just pick that, and I'll assign it. OK and then I'm going to go ahead and post this, so $100 our credit. Post normally right here, that was a new feature I didn't know about, alright now we post that and now its posted. 

If we go ahead into the items, right here and go into my coffee beans, and go into see Navigate, history items, entries, here we go, ledger entries. Now we have all of the transactions for this item and you can see that we sold 100 but the sales amount is 900, right, so we just have two transactions here, first one is positive adjustment which I just positively adjusted inventory into the east location and then we sold it, but we know the sales amount wasn't 900, it was 1000, but there was a credit.  

So, if I click on here, I can see there are two transactions, one of them is the direct sale out for $1000 and the other one is the 100-dollar credit, so that's going to lower our unit price to 9 dollars. So that's how items item charges work as a credit, sales credit, it's very effective because as you can see this happens on the item level and it's in the item ledger entries. If you're reporting out of the item ledger entries, you have full information, you don't need to go into another table or into another list. That's why I would prefer doing it this way.