Use the Application Rules Sets window to review existing and define new application rule sets. Application rule sets specify the default payment steps for your receipt applications and how discounts affect the open balance for each type of associated charges. By defining your own application rule set, you can determine how Receivables reduces the balance due for a transaction’s line, tax, freight, and finance charges.
Receivables provides the following application rules:
- Line First – Tax After: Apply to the open line item amount first. Apply any remaining amount in the following order: tax, freight, and then finance charges.
- Line First – Tax Prorate: Apply a proportionate amount to the open line item amount and the open tax amount for each line. Apply any remaining amount to freight and then to finance charges.
- Prorate All: Apply a proportionate amount to the line, tax, freight, and finance charges.
Navigate to the Application Rule Sets window and Enter a Name and Description for this rule set.
1. Enter the Sequence number for this application rule. Receivables applies payments in this sequence, beginning with the lowest sequence number.
Note: You cannot enter a sequence number for the Overapplication rule. By default, this rule is last in the
sequence for each application rule set.
2. Enter an application Rule. Each rule will correspond to a line type (for example, lines, freight, or charges), so you should give your rule a descriptive name. Each rule set must have at least one application rule.
Attention: Receivables automatically assigns the Overapplication rule to each application rule set. You cannot delete this rule. The Overapplication rule applies any remaining amount after the balance due for each item has been reduced to zero. If the transaction type of the debit item allows overapplication, this rule prorates the remaining amount between each line and its associated tax amount, making these amounts negative. If the transaction type does not allow overapplication, you can either place the remaining amount on–account or leave it ’Unapplied’.
3. Enter Rule Details for this application rule. This section indicates the type of charges and the tax handling for this rule. Choose a Type of Line, Freight, or Charges. You need to enter at least one type for your rule set.
4. If you chose a Type of ’Line’, choose a Tax Treatment. Choose one of the following:
- Prorate: Choose this option to proportionately reduce the net amount of the line and associated tax amounts.
- Before: Choose this option to first reduce the open tax amount, then apply any remaining amount to the line.
- After: Choose this option to reduce the open line amount, then apply any remaining amount to the associated tax.
Note: The default Tax Treatment for your Freight and Charges types is None. This option ignores tax, since you cannot tax freight and charges in Receivables. You cannot choose None for your Line type.
When an amount is prorated among several line types, Receivables must use one of the line types to account for the rounding adjustment. Each application rule set must have one and only one rounding correction line type.
Suggestion: Assign the Rounding Correction to the line type that is usually the largest portion of your invoices. By doing
this, the rounding correction will have the least effect on the overall remaining and applied amounts for this line type.
6. Repeat the previous steps for each rule you want to add to this rule set. Save your work.
7. When you are satisfied with this rule set definition, check the Freeze box. Receivables verifies that your application rule set is defined properly and that it does not violate any basic application guidelines. If this rule set fails validation, Receivables displays an error message. In this case, modify your rule set definition, then check the Freeze box again to revalidate it.
Attention: A rule set must be ’frozen’ before you can assign it to a transaction type or use it as your default rule it in the
System Options window. Additionally, after you freeze an application rule set, you cannot update or delete it.