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Support for Credit notes (or negative invoices)

The current version of GnuCash doesn't have a paradigm for Credit notes.

For clarity: with a credit note, I mean the opposite of an invoice, or a
"negative" invoice, depending on the view you prefer.

This report is created as a follow-up to the mailing list thread called "GDA:
status", although most of this thread deals with GDA and not Credit notes. The
relevant part of this thread starts May, 27th 2008.

According to Derek, it's not possible to simply remove the negative totals
error check. The internal logic relies on value+accounttype to determine
whether a transaction is an invoice or a payment.

Reworking the internal logic would be the first step to solve the CN issue.
Once the internal logic no longer depends on value+accounttype, the restriction
could be removed and a basic form of credit notes are possible.

In the longer run there would be some "nice to have's" of course:
* separate and combined reporting in invoices and credit notes
* different wordings on printed invoices and credit notes (required by Belgian
law by the way: invoices need to state clearly: Invoice, while credit notes
need to state: Credit note)

Finally more obvious GUI hints to the creation of credit notes would be helpful
as well. I am thinking of
* the business menus would have to mention Bill/CN and Invoice/CN, or broaden
the term to "Sales documents" and "Purchase documents"... I know these aren't
very nice for menus, but they just serve as suggestions. Someone else may think
of better words.
* Inside the "New invoice/bill" dialog (which may also have to be renamed), an
option could be added to specify whether the new document will be an invoice or
a credit note.
* The dialog in which the actual invoice/CN transactions are entered could then
continue to use positive values at all times. The internal logic can determine
the real sense of the final transaction based on A/P vs A/R together with the
document being invoice or CN
* A slight variation on the last suggestion is that even an invoice or a CN can
be positive or negative. The sense of the final transaction then simply depends
on three parameters: AP vs AR, invoice vs CN and sign of document total. Note
that although a negative invoice and a positive credit note have the same
mathematical effect, but Belgian law doesn't consider them the same (although I
personally consider this pure nitpicking).

* Instead of renaming the current menu items, it is also possible to add
another (set of) menu items specifically for CN's (New CN, Search CN,...). This
would eliminate the need for additions to the two dialogs that follow (some
name mangling not considered here).

Final note: until this would be implemented, Derek suggests a (somewhat awkward
but working) work around:
A Process Payment gives you that "Negative" number. What you would
do is Process Payment to, say, your checking account. Then after
the transaction gets posted you can go in and change it from Checking
to Income. Make sure you only change the account, not the AMOUNT.
Changing the amount will throw off all the numbers.

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    Geert JanssensGeert Janssens shared this idea  ·   ·  Flag idea as inappropriate…  ·  Admin →

    3 comments

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      • Gijs van HaastrechtGijs van Haastrecht commented  ·   ·  Flag as inappropriate

        To post a n (incoming) credit note, I did the following - quick and dirty but it worked:
        I posted the original wrong invoice from the vendor twice. The second with the invoice number of the vendor's credit note.
        After posting, I went into the xml file and changed the signs of the amounts belonging to the billing document, and the signs of the amounts allocated to the accounts.

      • AndersAnders commented  ·   ·  Flag as inappropriate

        On the other side, please add "Debit Notes" capability so when processing a return to a vendor, it can be processed via the Vendor function. Currently, I have to setup a Vendor as a Customer to make a return, resulting in twice the amount of entries.

        To accomplish, I process a return to the Vendor as a negative Bill, but since bills can't post with a net negative balance, I created a liability account "Misc AP" to hold the "Debit" balance created by the return. I clear the debit entry in the "Misc AP" account by processing a Customer Invoice against the "Misc AP" account to create a credit entry to offset the debit entry created by the Vendor Bill for the return. Then I process a payment against the Customer Invoice to the account from where the funds are deposited (i.e. bank account, credit card account, etc.).

        I have to process it this way because if I try to process a vendor return as a Customer Invoice, I can't make entries to accounts that are setup as "Expense" accounts. When processing returns, I want it to be back against the original account where the expense was recorded.

        I run this process in the reverse if I need to create a "Credit Note" as described above.

        Following is the accounting:
        1) Create Vendor "Bill" to process return:
        CR - Expense Account: 100
        DR - Misc AP: 100
        Post Vendor Bill (Note: no payment needs to be processed as the Bill is "0.00")
        2) Create Customer Invoice to process payment return:
        CR - Misc AP: 100
        DR - A/R: 100
        Post Customer Invoice
        3) Process Payment from Customer(Vendor) against the Customer Invoice:
        CR - A/R: 100
        DR - Checking (or Credit Card) Account: 100

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