Use Case: Apply Credit Memos to Invoices
Business Context
Credit memos are used to reduce the amount a customer owes, typically due to returns, pricing disputes, overbilling, or negotiated credits. While most of the time this process is automated, there are several business scenarios where manual application becomes necessary.
- Non-Standard Adjustments: Sometimes, credits need to be applied to invoices that do not match the standard "Bill To" account or billing period. For example, a credit memo generated in January might need to be applied to a March invoice, or a parent account's credit needs to be applied to a child account's invoice. Manual application allows finance teams to handle these exceptions.
- Partial Application of Credits: Analysts may need to apply only a portion of a credit memo to an invoice, leaving the remainder for future use. This is common when the credit memo amount exceeds the invoice balance, or when the business wants to spread credits across multiple invoices.
- Bypassing Automated Pipelines: If the automated credit application was intentionally bypassed (e.g.,
AutoApplyCreditMemo = falseduring invoice creation), but the finance team later decides to apply the credit, manual application is the only way to process this.
Requirement
A finance analyst wants to partially apply credit memos CM-1 and CM-2, both with an unapplied amounts of USD 24,000.00 to an invoice, INV-3 with a due amount of USD 192,000.00. The manual appliaction is followed because the automated pipeline for applying the credit memos to the invoices was bypassed at the time of the invoice creation. The analyst must consider the following preconditions before applying the credit memos to the invoice:
- The invoice and credit memos are in Approved status.
- The credit memo's unapplied balance is greater the USD 0.00.
Overview
This use case describes the work flow to partially apply credit memos to an invoice.
Flow
Send a request to the Apply to Invoices API at the following endpoint: POST: https://<URL_of_the_Instance>/api/invoicing/v1/creditmemos/apply-to-invoices.
Supply the payload shown below as part of the request body
[
{
"CreditMemos": [
{
"CreditMemoId": "CM-1",
"AmountToApply": 10000
},
{
"CreditMemoId": "CM-2",
"AmountToApply": 10000
}
],
"Invoices": [
{
"InvoiceId": "INV-3",
"AmountToApply": 20000
}
]
}
]
The API then returns a success response indicating that the operation is completed successfully.
{
"Summary": "1 of 1 sets succeeded.",
"Results": [
{
"RecordIndex": 0,
"IsSuccess": true,
"Errors": [],
"AppliedInvoices": [
{
"InvoiceId": "INV-3",
"InvoiceNewTotalDueAmount": 172000,
"InvoiceNewPaymentStatus": "Partially Paid"
}
],
"AppliedCreditMemos": [
{
"CreditMemoId": "CM-1",
"AmountApplied": 10000,
"CreditMemoNewUnappliedAmount": 14000,
"CreditMemoNewPaymentStatus": "Partially Credited"
},
{
"CreditMemoId": "CM-2",
"AmountApplied": 10000,
"CreditMemoNewUnappliedAmount": 14000,
"CreditMemoNewPaymentStatus": "Partially Credited"
}
]
}
]
} The credit memos are partially applied to the invoice and related A/R transactions are created for the invoice and credit memos.
Business Values
- Customer Satisfaction: Applying credits promptly and accurately can improve customer relationships, especially in cases of disputes or negotiated settlements.
- Audit Trail: Manual application creates a clear record of who applied the credit, when, and why, supporting compliance and internal controls.