When more or less money is received than is currently owed for an invoice, AngelTrack has a set of rules for how the money is applied to the invoice's items.
Underpayment
When a payment is not sufficient to pay every item in an invoice, AngelTrack applies the payment to items in the invoice as far as it will go. Each item is paid in full where possible, with remaining funds applied to the next item in line, and so on.
Any item fully paid is then moved to Finished ; the rest are moved back to Billing office so that they will be picked up by the next generated invoice.
The invoice will then be marked 'Paid', regardless of how many of its items are still unpaid.
Leaving an underpaid invoice open
If you expect another payment against the invoice, you can choose to leave the invoice open by checking ☑ Leave the invoice open, awaiting additional payments or credits. You can then pay the invoice again later.
If you leave an invoice open and then later change your mind and wish to close it, simply pay it again and input a zero for the amount received.
Immediate writeoff / Courtesy discount
A third option for an underpaid invoice is to give the customer a courtesy discount, immediately writing off the balance rather than carrying it forward or sending it to collections. Elect this option by checking the ☑ Write off the balance as a courtesy discount box when closing the invoice. If you choose this option, the customer's ledger will not be adjusted even if the invoice included a ledger debit or credit.
Be careful with discounts given to nursing homes and hospitals. If they refer Medicare or Medicaid patients to you, then a discount on their invoice might violate the Federal Anti-Kickback Statute. Read the Anti-Kickback Statute Primer to learn more.
To learn more about writeoffs, invoices, and tax consequences, read the Collections, Taxes, and Writeoffs Guide.
Overpayment
When processing an overpayment, you direct AngelTrack to do one of the following with the surplus amount:
Ignore the overage
This option instructs AngelTrack to do nothing with the overpayment, on the assumption that you (the Biller) will take care of issuing a refund on your own. AngelTrack will pay all items in the invoice at their correct prices, and ignore the overpayment.
Apply the overage to the ledger
The overpayment is added as a credit on the counterparty's ledger. From there, it can be applied to their future invoices.
Apply the overage to the invoiced items
This option instructs AngelTrack to apply the overpayment by overpaying items in the invoice, causing them to have refunds due, and therefore causing them to show up again in the next invoice.
AngelTrack follows this procedure for consuming the overpayment:
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Check all items in the invoice for prior overpayments (where the sum of amounts received exceeds the price), and if any are found, refund them as necessary. Any such refunds are credited to the payment amount that is to be applied.
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Iterate all items in the invoice, oldest first, applying the payment amount to pay each item at its current price, until the payment amount is exhausted.
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If any payment amount remains (an overpayment), iterate all items in the invoice again, looking for any that were invoiced for an amount higher than their current price. These are the items such as the example given above: invoiced for more than their final price turned out to be. For any such items, the payment amount is applied to overpay them up to their invoiced price. That way, a Biller who later reviews the overpaid items will understand why they were overpaid... and can then easily generate an invoice to refund all such overpayments.
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If any payment amount still remains, apply it all as a lump overpayment to the last (i.e. the youngest) item in the invoice, leaving it with a refund owing. It will then be automatically included as a credit item in the next regular invoice.
Undercredit
Refunds are applied like payments: first, the refund amount is applied to any items that were paid more than the amount invoiced; then, to any items that were paid more than the current price quote; and finally, to any items that were paid at all. A refund will therefore square up all overpaid items first, and will then un-pay items (newest first) until the refund amount is fully applied.
Overcredit
An overcredit occurs when a refund check was issued, but the amount refunded exceeds the refund amount actually due. This situation can occur if there is a time lag between generating a refund invoice versus cutting the check; during that time lag, the price of an underlying item might change, and so when the check is eventually cut, it is cut for too much.
Ignore the overage
As with overpayments, you have the option to tell AngelTrack to ignore the overcredit, to simply apply credits wherever they will fit and then ignore the rest.
Apply the overage to the ledger
The overpayment is added as a credit on the counterparty's ledger. From there, it can be applied to their future invoices.
Apply the overage to the invoiced items
When applying an overcredit, AngelTrack performs the following steps, in order:
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Check all items in the invoice for overpayments (where the sum of amounts received exceeds the price), and if any are found, refund them as necessary. Any such refunds are added to the refund amount that is about to be applied.
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Iterate all items in the invoice, looking for any that have received more money than their invoiced price. For any such items, the refund amount is applied to underpay them down to their invoiced price. That way, a Biller who later reviews the underpaid items will understand why they were underpaid... and can then easily generate an invoice to re-bill all such underpayments.
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If any refund amount still remains, apply it as clawbacks to any items in the invoice that have received any payments whatsoever. The affected items are left with a balance owing; they will then be automatically included as payables in the next regular invoice.
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If any refund amount still remains, apply it all as a lump un-payment to the last (i.e. the youngest) item in the invoice, leaving it with balance owed (possibly a very large balance). It will then be automatically included as a payable in the next regular invoice.