In AR, refund is a transaction in which the company needs to pay back to his customer due to an overpayment or discount given on the payment.
Usually in lot of companies the refund process will happen manually. Meaning, the AR teams tell manually to AP team to do the refund payment to the customer.
As the refund transactions are less, companies will follow the above route.
If the refunds are more and users want to have a control audit on the refunds, it’s better to implement “Processing AR refunds through PeopleSoft system to AP for payments to customers”
Step1:- Before starting the transactions, lets lookup the main setup that is required for processing.
For processing the AR refund in AP(i.e. Payables) , we need to have a vendor. So there must be a link between vendor and customer.
Following is the navigation, on how to link vendor to customer & customer to a vendor.
a. Linking customer to a vendor
Navigation :- Vendors –> Vendor information –> Add/Update –> Vendor
In the Identify information tab, Additional id numbers.
b. Linking vendor to a customer
Navigation :- Customers –> Customer Information –> General information
In the Miscellaneous General Info page.
Now the Vendor & customer id’s are linked. The next step is to link the AR business unit & AP business unit.
Navigation :- Set Up Financials/Supply Chain –> Business Unit Related –> Receivables –> Receivables Definition
Accounting Options 2(Page), Maint Worksheet Processing
Note:- Please make sure that the AR & AP business unit that are linked, must share the same GL business unit.
Step 2:- Performing the actual refund transactions.
Let’s take for example, we have raised an invoice to a customer for 1000$, keeping in mind that if he pays within 10 days, he will get 2% discount.
We received the payment 1000$ from the customer.
When applying the payment, noticed that he is eligible of getting 2% discount(as he paid within 10 days) the . So 20$ we need to refund him back.
Now after applying the 1000$ payment to the Item, We will have -20 as an on-account for that customer
a. Create the Maintenance worksheet to knock-off the on account as refund.
Navigation :- Accounts Receivable –> Receivables Maintenance –> Maintenance Worksheet –> Create Worksheet
b. Change the worksheet action to “Batch Standard” and run the AR update.
c. After the On-account item is closed, need to run the process to push the data to AP(Payables)
Navigation :- Accounts Receivable –> Receivables Maintenance –> Refunds –> Request Refund Item
d. Now the refund data is present in the AP staging tables and ready to get created as voucher.
Run the Voucher build process to create the voucher.
Accounts Payable –> Batch Processes –> Vouchers –> Voucher Build
e. After the voucher build process ran to Success. The voucher will be created
Once the voucher is created in AP, AP team can make a refund payment to the customer.
By: Sudheer Reddy
