Set up payment tolerances
Sometimes, a customer can underpay or overpay an invoice amount. When this situation occurs, the following two options are available:
Post the payments with a remaining amount. With this option, you must close the remaining amount by using other methods, such as posting an adjustment and/or by contacting the customer for additional payment.
Set up payment tolerances to close entries where there is a difference between the amount owed and the amount paid. With this option, parameters of acceptable differences are used to post the amounts to G/L accounts.
Business Central offers two types of payment tolerance:
Payment Discount Tolerance - This type takes a payment discount even if the payment discount date has passed.
Payment Tolerance - This type accepts a slightly larger or smaller amount as full settlement of an outstanding invoice.
This unit focuses on the payment tolerance. To set up tolerance, you must set up various tolerance accounts, specify both payment discount tolerance and payment tolerance posting methods, and then run the Change Payment Tolerance batch job.
To set up payment tolerances, follow these steps:
Select the Search for Page icon in the top-right corner of the page, enter general ledger setup, and then select the related link.
Expand the Application FastTab.
Payment Tolerance Warning - If this field is selected, the system generates a warning message when an application is made and a balance is within the allowed payment tolerance amount. You can accept or decline the payment tolerance. If payment tolerances are usually allowed, clear this option. Business Central will then automatically post the application as a payment tolerance.
Payment Tolerance Posting - Identifies the G/L accounts to post a payment tolerance. The two selections for posting are:
Payment Tolerance Accounts - The payment tolerance is posted to a special G/L account that is set up for a payment tolerance.
Payment Discount Accounts - The payment tolerance is posted as a payment discount.
The Payment Tolerance Percentage and Maximum Payment Tolerance Amount fields cannot be edited, and they can only be changed through the Change Payment Tolerance batch job.
To change the payment tolerance, follow these steps:
On the action menu, select Actions > Functions > Change Payment Tolerance.
Select the All Currencies option, if the Payment Tolerance Percentage and Max. Payment Tolerance Amount apply for all currencies.
If the All Currencies option is clear, you can indicate a specific currency in the Currency Code field for which the Payment Tolerance Percentage and Max. Payment Tolerance Amount is applicable. If you leave this field blank, the parameters are applicable for the local currency.
Payment Tolerance Percentage - Determines the percentage that the payment or refund can differ from the amount on the invoice or credit memo.
Max. Payment Tolerance Amount - Specifies the maximum allowed amount that the payment or refund can differ from the amount on the invoice or credit memo.
Select OK to close the Change Payment Tolerance page.
You will receive a message that asks you to change all open entries for all customers and vendors that are not blocked. (Where the Block Payment Tolerance check box is clear.) Select from one of the following options that apply.
Yes - The Max. Payment Tolerance field on all applicable open customer and vendor entries is updated. The payment tolerance percentage is calculated and taken as the payment tolerance amount, unless the maximum payment tolerance amount is a reduced amount.
No - The payment discount tolerance will only be calculated for future customer and vendor entries.
After the payment tolerance is set up for the local currency, the Payment Tolerance Percentage and Max. Payment Tolerance Amount will appear on the General Ledger Setup page.
The General Ledger Setup page only displays the payment tolerance parameters that are set up for the local currency. The payment tolerance parameters that are set up for the foreign currencies can be viewed on the Currencies page.
To access the Currencies page, select the Search for Page icon in the top-right corner of the page, enter currencies, and then select the related link. The Payment Tolerance % and Max. Payment Tolerance Amount fields are available, but you can only edit these fields through the Change Payment Tolerance batch job that you can access on the action menu.
The payment tolerance is now set up for every non-blocked customer and vendor. However, to disallow a certain customer or vendor payment tolerance, you need to block the tolerance on the respective customer or vendor card. The following steps outline how to block the tolerance for a customer. The steps are similar for a vendor.
Select the Search for Page icon in the top-right corner of the page, enter customers, and then select the related link.
On the Payments FastTab, select the Block Payment Tolerance check box.