Enable or disable auto-apply inline credits—Accounts Receivable

By default, new companies are set up to automatically apply inline credits to invoices in Accounts Receivable. This setting is a convenience that enables you to:

• Maintain accurate aging reports and reconciliations by correctly reflecting transactions where credits are applied.
• Save time and reduce human error by eliminating the need for manual credit application.

You can choose to disable the automatic application of inline credits. However, this setting is highly recommended to increase accuracy and efficiency.

To see configuration differences for multi-entity companies, see Using Accounts Receivable with a multi-entity shared company.

How the auto-application of inline credits works

Occasionally, an invoice includes both negative and positive line items. If you enable automatic inline credit in your configuration, any negative line item automatically offsets positive line items until the credit is fully consumed within that invoice. Any remaining credits can be applied to future invoices.

For example, consider an invoice with positive line items of 300 and 100, and a negative line item of 20. The total for this invoice is 380. The inline credit is automatically applied when you create and post the invoice.

Invoice

When you receive payment for the invoice, the amount shown for the invoice includes the automatically applied inline credit.

For example, you receive a payment of 500 for three invoices sent to the same customer. The first invoice is for 300, the second invoice is for 160, and the third invoice is for 380, the invoice to which an inline credit of 20 was applied. Select the link for the invoice number to see how the negative line item was automatically applied in the original invoice, resulting in a total amount of 380, instead of 400.

Select invoices for payment

Notice, also, that the received payment is applied to each line item in full until it is consumed, using the waterfall method.

Enable or disable the automatic application of inline credits to invoices

Auto-apply inline credits is turned on by default in newly created companies. You can also select this setting for pre-existing companies.

1. Go to Accounts Receivable >Setup > Configuration.
   Or go to Company > All > More > Subscriptions, then select Subscriptions. Select Accounts Receivable, then select Configure.
2. On the Configure Accounts Receivable page, scroll down to the Credits section.
3. Find the setting Enable inline credits to be automatically applied to invoices.

   To enable the setting, select the checkbox.

   To disable the setting, deselect the checkbox.

4. Select Save.