Minimum Version Required: 25.01
Pre-Conditions
You have a dedicated customer account for processing samples.
You have a dedicated Accounts Receivable (AR) account for writing off sample invoices.
Steps
1. Remove any existing discounts or promotions that result in a zero dollar value for the sample customer.
Navigate to the Promotions table in Encompass.
Locate the promotion(s) currently applied to the sample customer
Edit the promotion(s) to either remove the sample customer as a qualifier or set an end date for the promotion.
2. Treat the sample customer as a regular customer when creating invoices for samples.
Ensure the customer is tied to a charge area with the proper sales tax
When issuing samples, create a standard sales invoice for the "Samples" customer account.
Ensure all products and quantities for the samples are accurately entered on the invoice.
The system should now calculate the applicable sales tax based on your standard tax settings for this customer.
3. Create a non-inventory product for Accounts Receivable (AR) Write-Offs.
Navigate to the Products table in Encompass.
Create a new non-inventory product (e.g., "A/R Write Off - Samples").
This product will be used to write off the balance of the sample invoices.
-Important: Ensure there is an Income Account Map set up for the Income Area associated with samples. This mapping is crucial for generating the correct entries to your tax liability accounts.
Navigate to Financials > Setup > Income Account Maps.
Identify the Income Area used for sample invoices
Ensure this Income Area is mapped to the appropriate General Ledger Account for tracking sales tax liability. If no mapping exists, create a new one.
4. Write off the Accounts Receivable for the sample invoices.
Navigate to the Accounts Receivable Aging report.
Select the invoice(s) created for the sample customer that need to be written off.
Click on the button Generate AR Write Off Transaction.
Select the non-inventory product created in Step 3.
Process the AR Write Off. This action will remove the outstanding balance of the sample invoice, including the calculated tax, from the AR.
5. If the issue persists after following these steps, please contact Encompass Support and provide the following information for efficient troubleshooting:
Your company name and Encompass system URL.
The dedicated customer account number and name used for samples
The dedicated AR account number and name used for writing off samples * Confirmation that you have removed any zero-value promotions for the sample customer.
An example of an invoice number for a sample where the tax liability entry is not being generated correctly.
Fields And Definitions
Customer Account (for Samples): A specific customer record in Encompass used exclusively for processing sample invoices.
AR Account (for Samples Write-Off): A dedicated Accounts Receivable account used to track and write off the balances of sample invoices.
Promotion: A discount or special offer applied to specific customers or products. In this context, any promotion resulting in a zero dollar value for samples needs to be removed.
Non-Inventory Product (for AR Write-Off): A product record in Encompass that does not affect inventory levels and is used for financial adjustments, such as writing off AR.
Income Area: A categorization within Encompass used to group revenue or other income for financial reporting purposes (e.g., "Samples").
Income Account Map: A configuration in Encompass that links Income Areas to specific General Ledger accounts, ensuring financial transactions are recorded correctly. This is crucial for tracking tax liabilities.
AR Write Off: The process of removing an uncollectible or non-payable balance from the Accounts Receivable ledger. In this case, it's used to offset the charges on sample invoices after tax is calculated.
Tax Liability Account: A General Ledger account used to track the amount of sales tax that your company owes to the relevant tax authorities.
Best Practices
Consistency: Ensure all sample invoices are processed using this method to maintain accurate tax reporting.
Regular Review: Periodically review your Income Account Maps to ensure they are correctly configured for all relevant Income Areas.
Training: Train relevant personnel on this process for handling sample invoices.
Documentation: Maintain clear records of sample invoices and the corresponding AR write-offs.