Re: [ubl-dev] Invoices, Credit notes, charges, allowances, oh my!

[Stephen Green <stephengreenubl@gmail.com>]

I sense a danger of making it needlessly complicated. It's
important that the accountants and, more-so, the business
users and the external tax auditors be able to understand
the bsuiness rules you apply. In general most people make

credit notes easy to understand but also compliant with tax
rules (which have to be straight-forward to be enforceable).
What happens when it is the charge itself that is being
credited, say? It just appears as a line on the credit note

with a prose description to say what it is. There may be tax
for it, there may not be - depends whether tax was paid to 
the tax authority which might be claimed back. I think most
would be happy to either quote back exactly what appeared

on invoice or the effective total calcluated for an invoice line
and not worry about such questions as long as the total
credited and the tax are correct. Then the details can be
gotten by an auditor or whatever by referring back to the 

invoice if it is available. If there is no invoice (say an invoice
payment was made in error when no invoice existed - say
payment was made on a quote or payment went to the
wrong company) then a prose description is enough and

there was probably no tax issue to sort out so it is just
a matter of quoting the total paid as the total of the credit.
Whether that total included allowances or charges is
irrelevant. It is clear that the total is 'credit' because it is

a credit note (on paper it would typically be in red). By the
way it is usual for a misunderstanding to be made and for
the credit note to be paid instead of credited - resulting in
the need for yet another credit note! But putting the amounts

as negative and making up rules about allowances and
charges that complicate the established practices only, in
my view, makes mistakes more likely. Leave the complexities
to the accountants and accounting associations and just

'keep it simple'  - omitting allowances/charges and just
inlcuding them in the total implicitly if that is what is needed
to keep it simple - that's my opinion and recollection of
normal accounting practice. I know Ken wants to get it

'right' but in accounts there is no 'right', there is only
'generally accepted' and maybe 'expedient', the rest is
dictated by tax requirements and the auditors - both are
sometimes a law unto themselves :-)

---
Stephen D Green
Document Engineering Services Ltd

2009/7/8 Roberto Cisternino <roberto@javest.com>

> At 2009-07-08 15:42 +0200, Roberto Cisternino wrote:
>> > As I understand it, charges on an invoice increase the amount of the
>> > invoice, and allowances on an invoice decrease the amount of the
>> invoice.
>> >
>> > When a credit note is issued against the invoice, are charges on the
>> > credit note increasing the amount of the credit note (and allowances
>> > decreasing the amount of the credit note), or because it is a credit
>> > note should the use of the two concepts be reversed?
>>
>>absolutely not, Allowance/Charge are a stable meaning
>
> So, then, an allowance is *always* a decrease and a charge is
> *always* an increase in whatever document it is being used?
>
>> > The issue is that cac:AllowanceCharge is context free, and the
>> > definitions are not biasing one way or the other:
>> >
>> >    "An association to Allowances and Charges that apply to the Credit
>> Note
>> >     as a whole."
>> >    "An association to Allowances and Charges that apply to the Invoice
>> as
>> >     a whole."
>> >
>> > My answer was "it can be either way because a community gets to
>> > define which way the allowances and charges are expected for any of
>> > the documents".
>> >
>> > Is there a "best practice" for which way to go on credit notes?
>>
>>I think Allowance / Charges are just used into a classic Invoice.
>
> But what about this scenario:
>
>    I issue an invoice for EUR1000 with a 10% charge which adds EUR100
>    for a total of EUR1100.
>
>    I issue a credit note for EUR100 and need to accommodate the 10% so
>    that the total is EUR110.  Is the EUR10 considered (a) a line item in
>    the credit note, (b) a charge in the credit note, or (c) an allowance
>    in the credit note?

Allowance Charges are details you want show to your Customer as a
justification for a given Amount.

A charge for late payment
A discount

.. but the line item total that is used to calculate taxes (taxable) is
probably including all of these (except in the case there are non-taxable
parts)

basically you show the base (price * quantity) + any variation derived by
business issues, but the total is one... and the Credit Note is a fiscal
document that is not interested into the "details".  You need to indicate
the amount you give back (refund) to your Customer.
Wehn you make a Credit Note you do not apply any discount or charge,
otherwise you may go to visit the County Jail :)
You just need to mention which Invoice Items, their part, or the whole
invoice/es you are going to correct, but referred to totals
(LineExtensionAmount)

As you can note the CreditNote do not have Allowance/Charges at line level
like into the Invoice.

The Allowance/Charge in the root of the CreditNote is a dark side for my
knowledge.

You need to fill up the Line items of the Credit Notes and specify the
LineExtensionAmount and fill a DiscrepancyResponse which is connected to
the UBL-ApplicationResponse -> cac:DocumentResponse to explain the reason
and discrepancy notified to the Seller

>
>>A Credit Note is precisely referred to Amounts specified into one or more
>>Invoices (or part of these) that your business previously issued with
>> some
>>mistakes on amounts or even with no reference to the actual PO received
>> by
>>your Customer.
>>
>>The Credit Note is not referred to a precise Allowance / Charge on a
>> given
>>item but usually is referred to a Line Item total Amount.
>>
>>The important part is to reference exaclty which part of an Invoice is
>>corrected by a Credit Note.
>
> So you think it is (a) in my scenario and that AllowanceCharge should
> not be used in the credit note even though it is available to be used
> in the structures?
>
> Any other opinions from UBL-Dev members?
>
> Thanks for your guidance.
>
> . . . . . . . . . . Ken
>
> --
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>
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--
* JAVEST by Roberto Cisternino
*
* Document Engineering Services Ltd. - Alliance Member
* UBL Italian Localization SubCommittee (ITLSC), co-Chair
* UBL Online Community editorial board member (ubl.xml.org)
* Italian UBL Advisor

 Roberto Cisternino

 mobile: +39 328 2148123
 skype:  roberto.cisternino.ubl-itlsc

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