Hello,

Can you tell me under what circumstances you would create an adjustment batch in either A/P or A/R and how an adjustment batch differs from doing a debit or credit note in the respective module?

I have looked at the A/R manual but it does not explain in what situations an adjustment batch would be used, only how to create one.

I have always considered an adjustment entry to be used when the date, amount, or GL distribution of a previously posted transaction needed to be corrected, whereas a debit or credit note would typically be used for a separate transaction, for example, if a discount was given after-the-fact or an additional amount needed to be charged for some reason.

Can you clarify the difference between adjustments and dr/cr notes and the impact they have on the GL and subledgers?

Thank you,
Tanja

Hi Tanja

There is very little difference between an adjustment and a dr/cr note.

Adjustments provide more flexibility because you can apply them against credit notes, debit notes, adjustments or payments, whereas dr/cr notes can only be applied against invoices. However, adjustments require more thinking because you have a 50/50 chance of making the adjustment in the wrong direction. You are forced to make a dr/cr note in the right direction once you decide whether you want to enter a debit or a credit note.

Personally, I use adjustments for internal corrections, and dr/cr notes for corrections initiated by the customer/vendor.

Steve

Steve is correct, except for one note in regards to adjustments. He indicated that there was a 50/50 chance of getting the debit/credit amount wrong and that used to be the case in Adagio Payables and Receivables. But adjustment entry has been improved in both AP and AR current versions so that you can see the newly corrected amount of the adjustment document on-screen, before you post. So the odds of getting it right are significantly better than 50/50.

That makes sense and is basically how I view the difference between adjustments and dr/cr notes (though you have worded it much better than me!).

Can you confirm that adjustments can be used to fix GL distributions, dates, and amounts?

Thank you for your assistance.

Tanja

Hi Tanja

I would not make adjustments to fix GL distributions or dates unless the date is in the future. If the vendor/customer balance is correct, make those fixes directly in GL as journal entries. If the vendor/customer balance is incorrect, then of course you need to make an adjustment in the subledger.

Steve