There are situations where you have an open Vendor Invoice in Accounts Payable that needs to be removed or closed. Some examples might be a Vendor sends a refund check for an open credit, an invoice in a prior posting period needs to be canceled or you need to apply a credit to open invoices so the invoices do not come up for payment. We refer to this as clearing an invoice by entering a Zero Check or Z Check.
You will enter a check in Enter & Edit AP Checks and instead of using a normal check number you will enter Z and the + at the Check Number prompt. The system will generate the next alpha-numerical check beginning with the letter Z. Below is the menu path.
Accounts Payable System
Check Routines & Reconciliation
Process Individual Checks
Enter & Edit AP Checks
Once in Enter & Edit AP checks you will enter or click on New Line where you will get to the entry screen like the one below. Notice the check number begins with a Z so it will not interfere with the normal check number sequence. After selecting the Vendor the last question Include in Print Batch can be set to No since this will not be printed.
The next screen below is where the system will show all of the open invoices for the vendor we chose. In our example below all we have open is a credit invoice for 145.25. In this scenario the Vendor sent a refund check, so we are removing the credit by paying the credit along with and Invoice we will add “on the fly”. ON the screen below you will clicking on New Line to enter the invoice that will cancel the credit.
The Invoice that you put in will be coded to the same General Ledger Account that was chosen when the check was deposited in the Cash Receipts System. There will be no effect to the General Ledger since the check that was deposited and this invoice will both be posted to the same account and cancel each other out. The account used in this case if often an inventory adjustment account.
The screen below is the Invoice we are entering to cancel the open credit. When you do not have an actual invoice number when entering an invoice on the fly (during check entry) you can press Enter and the system will generate a generic invoice number prefixed with a C like the one you see below. Alternatively you could make up a different invoice number if you would like. You might refer to the original with REFUND for example.
The Amount entered is the positive value of the credit we want to cancel and the Distribution Account chosen is Inventory Adjustments. Also notice we entered a comment on the invoice in case there is some question in the future as to what this invoice was for. Press Esc or click Ok when you are done entering the Invoice.
When an invoice is entered on the fly the system automatically assumes you are paying it. You can now pay the open credit by highlighting it and clicking on Pay Line. On the Heading of the screen the Check Total should be zero like you see below. Press Esc or Click Ok to exit the check.
If you do not have any more entries you can press Esc or Click Ok to exit Enter & Edit AP Checks and you will be prompted to Update. Answer Yes to Update.
The In-process report will show the check detail that will be updated. The Check Value will be zero as shown below, this is important to verify since there is no cash transaction here.
The system will again ask you to Update, if the In-process report was correct you can answer Yes and Update the Z check. The Vendor Credit will no longer show as open.