Dynamics 365 Business Central – Use Payment Tolerance to Write Off Amounts

Introduction

There might be occasions when you wish to write off the amount of an invoice. For example if a customer has underpaid and you don’t wish to leave the balance on the invoice. You can achieve this using a payment tolerance.

Scenario

In this scenario I have a posted invoice for £101.00 and the customer has sent a payment of £100.00. Instead of applying the payment and leaving a balance on the invoice of £1.00, we’ll write off the £1.00 using a payment tolerance.

Below is the invoice for £101.00 as shown in the Customer Ledger Entries page:

I’ll now go to a Cash Receipts Journal and raise the payment below and click “Apply Entries” to apply this to the Invoice (* Please note you can also post the payment for £100.00 and apply afterwards using the same technique)

Once in the “Apply Customer Entries” page I first change the “Pmt. Disc. Tolerance Date” so its after the posting date of the invoice, then I’ll add a “Max. Payment Tolerance” of £1.00 and finally enter £100.00 in the “Amount to Apply” as per below

Now, back in the Cash Receipt Journal window I’ll select “Preview Postings” so I can double check this is going to work as intended prior to clicking “Post”. I can check this by viewing the “Detailed Ledger Entries” and in this scenario everything seems to be fine as I have a “Payment Tolerance” entry type in the Detailed Ledger Entries.

As everything is fine I’ll now post this transaction, which will close the Invoice as fully applied:

After posting the Payment the remaining amount on the Payment and Invoice are both £0.00. If I click “Remaining amount” on the Payment I can see the “Payment Tolerance” in the Detailed Ledger Entries.

I hope you find this useful.

Thanks for reading!

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