You can use customer allowances to track special allowances for your customers. For example, if you give a specific customer a 2% discount to account for damaged goods, you can set up a customer allowance to track this discount.
To track customer allowances, you must set up customer allowance rules, which control the percentage of the allowance for each invoice line item. If an invoice line item qualifies for customer allowances based on multiple rules, a customer allowance amount is recorded based on the customer allowance hierarchy set up in Customer Service Control Maintenance.
To use customer allowances:
In Customer Service Control Maintenance, set up a hierarchy for customer allowance rules.
In Customer Allowance Type Maintenance, set up customer allowance types for different types of allowances, such as breakage, advertising, etc.
In Customer Allowance Type Group Maintenance, set up groups of customer allowance types.
In Customer Allowance Group Maintenance, set up customer allowance groups.
In Customer Allowance Rule Maintenance, set up customer allowance rules for combinations of customers, order classes, and sales locations.
Process orders, as normal. When invoices are posted, the customer allowances are posted. The allowance account is credited and the allowance offset account is debited.
In Invoice Entry, create credit memos for the customer allowances.
Customer allowances can affect your profitability and therefore are tracked in the Profitability Scorecards module. Profitability data for customer allowances is recorded when invoices are posted that include allowances. The following table summarizes how the customer allowances affect profitability data for each profit type:
|
Profit Type |
Effect |
|
Customer |
The customer allowance percentage is used to create profitability data for the customer being invoiced. |
|
Product |
The customer allowance percentage is used to create profitability data for every product on the invoice. |
|
Supplier |
The customer allowance percentage is used to create profitability data for the primary supplier of every product on the invoice. |
Example Customer A orders product B, for which supplier C is the primary supplier. The invoice is for $1000 and a 2% customer allowance is set up for customer A. A $20 debit is added to the profitability data for customer A, product B, and supplier C.
You can import adjustments to customer allowances or initial customer allowance amounts in Customer Allowance Adjustment Import. The import affects profitability as if invoices were posted. However, it does not impact the general ledger. As a result, you must manually make journal entries for the allowance and allowance offset accounts.