Business Practice for Credit Memos

We have been trying to signal out the best way forward with this issue. You advice is appreciated.
Our current sales process entails that we Create a Sales Order, Invoice, and once we receive payments, we fulfill.
When customers don't do a complete payment, and midway through the contract decide to cancel their subscription, at that point, we are required to fulfill for what-ever amount they have paid to-date.
The invoice is already made for the full amount, and for that we issue a credit memo. But we have to change the sales order for it to be fulfilled, to show the right numbers in the Certificate we print (that our product - Certificates).
Now it does not sound like the best of things to do - change the sales order, because we have applied a credit memo to match the excess payment. So going back, you cant see why a credit memo was issued (apart from the invoice showing a higher amt. and the SO showing a lower).    
We are on accrual accounting method, but there could be a time we issue a credit memo.  
Is this a cause for concern? What would be a good process forward?
Thank you.
Noel
Edited by: Noel Sharma on Dec 18, 2009 11:26 PM

You can also try this. See when you enter into contract for subscription for definate period of time you can create vaule contract or quantity contract. You can accrue the revenue on the basis of contract. Thus you will raise 100% debtors and create revenue accrual account (this will be balance sheet account). When you deliver certificates in your case you can create sales order against contract and create inovioce on that basis. It will also solve your revenue recognition problem if any. Also you can specify period of contract thus period gets over contract will expire and if in that case all subscriptions are not availed by customer you can pass reverse entry of the accrual entry and you will be able to clear customer.
Please let me know what do you think about this view or else we can spend some more time on it.

Similar Messages

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    Edited by: Raghu Ram on Jun 23, 2010 6:29 PM
    Edited by: Raghu Ram on Jun 25, 2010 8:30 AM

    Hi suchi,
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  • Regarding rate, sales tax and discounts for credit memo request and returns

    Dear  ALL,
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  • Accounting doucment not get created for Credit Memo

    Hi
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    Hi,
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  • Asset value for Credit memo

    Hi Experts,
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    Hi Mukthar,
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  • Tables for credit Memo and Purchase order

    Hi all,
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    Hi
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  • BOM explosion for credit memo req,free of charge,returns order types

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    Regards,
    Hari Challa.

    Hi,
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  • Need API for Credit Memo creation-R12

    Hi All,
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    Hi,
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    http://easyoracleapps.blogspot.com/2011/08/creating-credit-memos-and-appling-these.html
    http://prasanthapps.blogspot.com/2011/05/credit-memo-creation-via-api.html
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  • DUE DATE FOR CREDIT MEMO

    Hello,
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    Hello
    Check the settings in "Terms of Payment"
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    *assign points if useful

  • What is the application for credit memo in NACE !

    What is the application for credit memo in NACE !

    Pls go through this link
    Re: Need some help in Credit memo !

  • Create payment batches for credit memos

    Hi,
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    Thank you.

    Hi Manish,
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  • Other document type for credit memos in MIRO

    Dear,
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    Leen

    Hi
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    Regards
    Jaswanth

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