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

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

2009/7/8 <csi2000@urbanmarket.com>

From my limited experience in retail, where we tried to keep everything as simple as possible....
A credit note is the equivalent of "cash" - it was issued at a previous time. Say someone bought three things (invoice "a") - and it turns out one is "the wrong size" - and we can't supply a replacement - so we issue a credit note (invoice 'b' as a credit balance - the credit balance includes the taxes paid on the item) and take the one item back. Invoice b and a are now connected.
At some time after, another item is purchased - invoice 'c' say - and the customer pays for it using credit card, cash and a credit note (invoice b). Any current applicable tax is on the item purchased on invoice 'c'). The credit note though is just a cash equivalent and shows up as one of three methods of payment - cash, credit card and credit note (invoice 'b').
Not exactly the same - but the principles would be the same. Using Ken's example - I would issue a credit note for EUR110 total - the line items being EUR100 (the thing you are issuing the credit against with reference to the original Invoice #) plus EUR10 (presumably since the original item was taxable). The notions of allowance/charge didn't seem to me to be relevant to the transaction - but like I said - different domain.
Cheers..Hugh

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Quoting "G. Ken Holman" <gkholman@CraneSoftwrights.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?

>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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