How to 'Unapply' a Credit Note from an Invoice

Problem Details:

A credit note has been applied to an invoice, but the client has paid the invoice on a cheque.  How can the credit note be unapplied from the invoice so that the payment can be appropriately allocated?



There is no 'unapply' function in Sage.  Once a credit note has been applied to an invoice, that action cannot be undone.  However, we can resolve the above situation with a workaround solution.  Let's say that an invoice for $112 has been 'paid' with a credit note for $112.  There are two steps to follow to 'unapply':

Step 1 - enter a debit note for $112.00 (no taxes) and code to a clearing account
Step 2 - enter a credit note for $112.00 (no taxes) and code to the same clearing account as in step 1.

Since 'unapply' is not a function in Sage, we have to re-issue the invoice (debit note) and re-issue the credit notes to simulate this. Putting both these documents to the same GL clearing account ensures no net change in the GL, but allows us to have an outstanding invoice (debit note) and an outstanding credit note.  By entering both a debit note and credit note, the customer's account balance is also not changed.  The debit note can now be paid per the customer's cheque and the credit note is outstanding as well (since they have not been used to pay the invoice) and it can be taken or applied on a future payment from the client.  

Note - the debit note could also be an invoice - both will accomplish the same result.  It will be a good idea to reference the existing invoice / credit note numbers on the new documents for ease of reconciliation.


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