Business assumptions

Some customers apply a credit restriction markup to a part of the customer base. This means that the invoice is increased by for instance 2% (excl. VAT), expressed in a specific amount. If customers fail to pay within a certain number of days, the customer is deemed to pay the credit restriction fee. If the invoice is paid within the credit restriction period, the credit restriction may be deducted from the total amount. This process is not possible in standard Microsoft Dynamics 365 for Finance and Operations and must be adjusted.

The following principles apply to the customer credit restriction feature:

• The credit restriction is automatically added as a surcharge to sales orders when entering sales orders.
• For free text invoicing to customers, the credit restriction surcharge is automatically added when the invoice is posted.
• Payment discount in the form of a credit restriction excluding VAT. This means that in addition to the goods amount, other surcharges such as freight must also be taken into account.
• It is not possible to use cash discount and credit restriction at the same time for the same customer. Only manually at the order level can you choose either cash discount or credit restriction.
• At the time of invoicing, the amount must be added and booked separately.
• Print separately on the invoice
• Text for cash discount or credit restriction must be printed separately.

Solution direction

This philosophy of this functionality is based on a combination of "Automatic surcharges" and "Cash discounts". The automatic surcharge adds the credit restriction to the sales invoice. The cash discount subtracts the surcharge from the payment (if the customer has paid in time and has not paid the surcharge). The D365 setup will need the following elements to make this work:

1. A "surcharge code" is created. This surcharge code arranges the booking of the credit restriction surcharge.
2. An automatic surcharge is created, this automatic surcharge posts 2% on top of the sales order header. The booking is arranged via "surcharge code". This calculation is different from the from the current functionality.
3. A cash discount "Credit restriction surcharge" must be created for the cash discounts. This cash discount will receive a custom Boolean "Credit restriction Surcharge" Yes or No. If this is set to "Yes", this Boolean arranges a correct calculation of the cash discount, the default calculation is incorrect in this case.
4. It is set on the customer card whether a customer is eligible for a credit restriction surcharge. This is set by linking the customers to a surcharge group.
5. If the customer is linked to a surcharge, then the customer must also be linked to the correct "cash discount". The correct cash discount must therefore be entered on the customer card.

Principle of credit restriction surcharge

A sales order is created for a customer. Goods: EUR 100, surcharge for freight is EUR 10. The credit restriction is 2 %, if payment is made within 8 days, the customer can deduct the credit restriction from the amount to be paid.

Standard D365 calculation method for these surcharges:

Custom calculation method for these surcharges:

 

Based on the surcharge code, the 2.20 credit is booked on account 8150 (turnover credit restriction).

Note: Credit restriction is without VAT but is calculated based on the price of the goods and additional surcharges.

The other calculation method must be activated in "Surcharge code", by means of a Boolean on the surcharge code. This Boolean is called "Credit restriction Surcharge" = "Yes" or "No".

Charge code

Via Accounts receivable > Charges setup > Charges code we can setup the journalizing of the charges.

This surcharge code is linked to the automatic surcharges. The calculation method is determined in the automatic surcharges, but using this boolean on the associated surcharge code, the calculation method for all surcharges associated with surcharge code Kred.Bep must be changed to the calculation described above.

Automatic surcharges

Automatic charges. At the automatic surcharges, the actual calculation is determined.

Characteristics of the credit restriction surcharge:

• This surcharge is automatically set on the sales order header!
• The surcharge is set as the Percentage category
• VAT group remains empty
• Keep field must be checked. This means that in case of multiple invoices on a sales order, the surcharge is kept and applied every time. If the tick is unchecked, the surcharge will disappear from the order after the first invoice.

Settings at the customer card

The cash discount and the surcharge group must be assigned on the customer card. This is completely standard.

 

Mechanism for cash discount

The surcharges are assigned to the invoices. There are two options:

1. The charge is paid;
2. The charge is not paid.

With the first option nothing needs to be done. With the second option , a cash discount must be calculated, so that the credit restriction surcharge can be automatically deducted from the invoice amount.

Standard D365 cash discount calculation:

The cash discount is higher than the calculated credit restriction surcharge. As a result, you make up a loss, as it were. The calculation method must be adapted to:

The cash discount must include a Boolean called "Credit restriction". When this Boolean is set to "Yes", the cash discount must be calculated in the adjusted way.

Scope

The change takes place in the following functionalities:

• Automatic surcharges.
• Surcharge Codes: Add Boolean, which modifies calculation.
• Cash Discounts: Add Boolean, which changes calculation
• Sales orders: The correct calculation must be made on this.
• Invoicing: Final calculation of the surcharge.
• Bank Postings: Correct deduction of the cash discount when posting the payment journals.

Assumptions, constraints, and principals

• The functionality does not take VAT into account for credit restriction surcharge. That should be invoiced separately, if applicable.
• If credit restriction surcharge is applicable for a customer, for this customer should be a setup for credit restriction surcharge and for cash discount.