Returned checks, disputed card payments, and anything else that is a negative payment

[michael21]

So, I have been complaining to my CSM, and a bit on this board, about the fact that the new payment collections module does not support the entry of negative checks.  ST just posted a new Knowledge Base article, "Accounting Process for Bounced Checks: recommended workflow" that discusses this.  In it, they say that if you need to process a negative check you can do so by creating an adjustment invoice and posting it against that invoice.  That's a start, but what if the returned payment is for a deposit or partial payment on a job that is not yet complete, and certainly not ready for export.  Any thoughts from anyone on how that can be handled.  BTW, I have added a requested change in the ideas section of this, COMMUNITY-I-1194, so if you also see this as a problem, please up-vote it.

[plewis · Accepted solution]

Hey @michael21 ,

I'll start with Scenario #2 first.  I believe you are just following an incorrect workflow and if you follow the below steps refunding credits should be a breeze. 

What you will want to do is to refund the customer credit from the Customer Profile (NOT the invoice or anywhere other then the customer profile). 

On the customer profile you will need to scroll down until you see "Available Credits (Unapplied Payments)".
Pic 1 shows the invoice where I collected a $2300 payment on a $2000 invoice leaving me with a $300 credit. 
Pic 2 shows the uanpplied credit on the Customer Profile (Go to the Customer profile and scroll to the bottom to see current credits/unapplied payments for their profile). Click the three dots and select "Refund Payment". 
Pic 3 shows the process of selecting overpayment or duplicate payment.  This will credit the $300 and will create a negative refund payment type you can export to QB. 

1. 

2. 

3.  

For Scenario #1. 

I would recommend reviewing the following workflow as they are our recommended workflows whenever dealing with Finance Companies/fees. 

For this workflow to work, you will need to have the ability to create Adjustment invoices before the original invoice is exported and the ability to change the Bill-to on adjustment invoices.  Your CSM should be able to make sure these configurations are setup for your account. 

You will also need to create some payment types and tasks and ensure they are assigned to the correct GL accounts. 

Here is the link to the workflow in the knowledgebase. https://help.servicetitan.com/recommended-workflow/2eqmw6ibNSBrtOyfcw0fQy

Here is an updated cheat sheet as well for the Financing/Buydown Workflow. 

Here is a loom video going over the workflow https://www.loom.com/share/88d23684d3fe4bdc96cbc9f07e66d317. 

[michael21]

Hi @plewis.  Maybe this should be the start of a new thread, but I have done a bunch of testing in payment collections and have encountered 2 problems that I don't see any way to get around at this point.

1. In discussing negative checks for finance company payments, scenario 4, your are right, it is a nightmare and, as best I can tell, not possible without way more work and confusion than should be necessary.  I have a job with 2 payments against it, see Pic 1.  Then, on another payment, Costco deducts their fee for this job.  Pic 2 shows the adjustment invoice used to create this negative payment.  When looking at Pic 1, you can see that the balance on the job is $4,236.50.  I then get a manufacturer's rebate payment for $1,779.33.  When I try to apply that, I get the application shown in Pic 3.  Notice that the balance on the invoice does not include the negative payment so I can't apply this payment, I can only put it on account.  Once its on account, I still can't apply it because the system is showing a lower balance that doesn't include the negative payment. Of course, I guess I could create an adjustment invoice for each subsequent payment, but this seems like a lot of extra work.  Seems like the job balance should be the same on both the job screen and the application screen.

2. Customer overpayments.  I have a job for $10,386 with a gross margin of $5,742.97 or 55.83%.  The customer accidently sends in a check for $10,886, or an overpayment of $600.  When I apply this payment, I apply $10,386 to the open invoice and put the $600 on account because the system won't let me apply more than the invoice amount.  Following the instructions in the Knowledge Base article, I then create an adjustment invoice and add the refund task item for $600.  I then go back to the original invoice and post the $600 payment.  At this point, my A/R is correct, the exports to QB are good, and the customer has his refund but my job now shows that it was for $10,886 and it has a margin of 58.27.  So, when looking at the job to see how we did or to calculate comfort advisor commissions, the job is over-stated by $600 and its margin is over-stated by 2.44 percentage points. 

You've done great so far @plewis, so I'm hoping you'll have answers for these too.

[plewis]

Hey @michael21,  

I would check with your CSM to see if you have the setting turned on in the back end that will allow you to create adjustment invoices on invoices that are still in a pending status.  

With that setting on, you would still be able to follow the workflow outlined in the article you referenced as you will be able to create an adjustment invoice to add the negative payment before the invoice is in an exported status. 

[michael21]

Great suggestion @plewis , my CSM was able to turn this option on and it does appear to work.  Its seems an overly complicated way to post these transactions, but at least it doesn't leave them unable to be processed at all, a concern I had when this didn't seem possible and the older payment method that worked was to be sunseted.

[plewis]

Hey @michael21,

I have been with ST for a bit and was here before Payment Collections was even a feature.  In my opinion Payment Collections is far superior then our original process with the caveat being that the Automated Refunds workflow in Payment Collections should be setup. https://help.servicetitan.com/how-to/set-up-automated-refund-workflow.

When you setup the Automated Refunds workflow, refunding/correcting overpayments, bounced checks, duplicate payments becomes extremely easy to do.

Technically, you can turn of Payment Collections completely and use just the old process for payments, but I do not recommend this as you lose a ton of functionality including the ability to have credits on a customer's account, collect payments/deposits on sold estimates.

Also with payment collections (If you have Quickbooks Desktop Integration) you can collect deposits without decreasing your AR and post these deposits into liability account until they are applied to the install invoice (see the Deposit workflow which would need to be setup first https://help.servicetitan.com/how-to/how-to-payment-collection-deposit).  

[michael21]

Hi @plewis 

While I don’t disagree that there are significant improvements in the payment collections process, I also believe that the elimination of capabilities that already existed are serious.  A good example of an improved workflow is the example of a refund issued to grant a concession.  The fact that the system will create the task to reduce the job’s price and the negative payment to reflect the refund is a great improvement.  The ability to handle deposits is also a great improvement.  Unfortunately, these new processes do not make handling bounced checks, disputed credit cards, or negative offsets easier, but rather, seems to make them harder.  Take the bounced check or disputed credit card as an example.  If a check bounces, I just want the negative payment.  I am not reducing the price on the job or the revenue I recognize from this job, so I certainly don’t need a negative task that would do both of those things.  If the customer asks for another copy of the invoice, I certainly do not want “bounced check”, or anything like it, to appear on the customer's new invoice so I don’t even want a $0 task, not that that’s an option since the negative task and negative payment will be posted for the same amount.

Nor does the new process make handling customer overpayments any easier.  If the customer accidentally sends me a check for $1,100 on a $1,000 job, handling that is more complicated.  I haven’t seen this on the mobile ap yet, so if the check is taken in the field, I’m not sure how it will be processed.  But in the office system, the new process will not allow me to enter an application to the invoice that is larger than the total invoice, so I will only be able to apply the $1,000.  The extra $100 will be put on account.  Unfortunately, once the $100 goes on account, it seems to become invisible.  It does not appear on the accounts receivable reports, I can’t find a report of unapplied cash, and the amount doesn’t show when the customer is identified for a new job.  Also, I don’t see the unapplied section of the customer record that the Knowledge Base article suggests, but that may be because the official release isn’t until tomorrow.  In any event, if I don’t immediately issue the refund, it would appear that I am at risk of losing track of it until the customer calls to complain.  It is true that the refund process against unapplied amounts itself is good, but the loss of this overpayment visibility is scarry.

An even bigger problem for us, and I suspect many other contractors, occurs when finance companies or warehouse store customers have both payments and fees and the payments and fees for any given job are not always on the same check.  For example, say I have job A for $100 with a $10 fee, B for $200 with a $20 fee and C for $300 with a $30 fee.  Each of these jobs is for a different customer, but all will be paid by the finance company or warehouse store.  Then, I receive a payment of $260, representing $90 for job A, $200 for B, and -30 for C.  They paid the net on job A, made the payment but didn’t deduct the fee on job B, and deducted the fee but didn’t make the payment on job C.  Then the next payment is for $280, representing the fee for job B and the payment for job C.  The new system has no way to handle those negative payments except by putting them on an adjustment invoice.  While that works from an accounting standpoint, I lose the ability to simply look at the job and see all of the payment activity, so the job of determining if all elements of the payment have been completed is made more difficult.

You indicate that we can simply continue to use the old method, though you don’t recommend it.  In the announcement of this product, however, it was stated that the old payment method would be sunsetted in the fall.  I believe that to sunset a software product means to discontinue its availability.  Is that not the case here?

@plewis, I am sorry to hit you with such a large post but you are the first person I have been able to talk to who has a good understanding of the new process, my CSM doesn’t.  I hope you can tell me how the transactions above can be easily handled, but if not, I hope you will go back to your development team with the message that eliminating the ability to process net negative payments easily is painful.

[plewis]

Hey @michael21

So above are 4 different Scenarios.

1. Concession/refund on Service- Payment Collections handles this without issue, creating refund payment/negative tasks automatically.
2. Bounced Check/Payment entered in error. Payment Collections also handles this if the automated refunds workflow is setup. https://help.servicetitan.com/how-to/refund-payment-applied-to-invoice 
1. When refunding a payment using the automated refunds feature you have the following options. 
1. Customer Complaint on Completed Job (use for scenario #1). 
2. Billing error on completed job
3. Deposit taken on cancelled job
4. Overpayment or duplicate payment
5. Other
2. When picking either of the last two items (“Overpayment or duplicate payment” & “Other”), it will add the refunded/negative payment directly to the same invoice and show the original payment as refunded.  You can use the memos on the payments to indicate bounced check/correction or payment taken. No negative task will be posted/added to the invoice just the negative payment.
3. The words “Bounced Check” will only show up if you add that to the payment memo or have a payment type called bounced check.  You can always create a “Payment Correction” payment type.  
1. If you don’t want to have the customers see any of this information then you could just skip all of the above steps, delete the payment entirely, and then add a note to the job/customer profile indicating the bounced check.
3. Customer overpayments- Payment collections can handle this relatively easily and you will be able to see any outstanding credits if you use the correct reports. 
1. Reports: Create a report using the “All Payments” report template. Make sure to include the “Credit Remaining” Column and then filter that column to only show totals/amounts greater than zero. 
1. This will show you all payments with outstanding credits (taken between the date range you set). 
2. Guide on how to refund unapplied payments/payment credits https://help.servicetitan.com/how-to/refund-unapplied-payment.
4. Finance Company payments and fees: what you described is a nightmare scenario for accountants but I do know of it being a regular occurrence depending on who you work with and how they pay out/reconcile the fees and payments.
1. With the ability to create an adjustment invoice on an invoice while it is still in a pending status, you will be able to account for all of this activity correctly however it would be across the original and adjustment invoice.
2. Your idea to have it all show on the original invoice screen so you can see all activity at once is a great idea and I highly recommend submitting it as an Idea on the community portal (reserved for ST customers). 

Regarding the deprecation of the old payment feature, I personally do not have knowledge of if/when this is happening but would assume that you were given the correct information about its deprecation.

[michael21]

Very helpful, @plewis I appreciate it.  I'm obviously missing stuff since I have no "All Payments" template in reports, but I will push my CSM to get that.  As long as the overpayments are visible on that report this shouldn't be a big problem.  As to the payment/credit issue, you are right, that's an accountant's nightmare, but unfortunately, a common one.  I've already put "allow negative payments in the new payment collection system" suggestion in the ideas section.  I have also added a suggestion to allow a single payment to apply to multiple customer's invoices.  Either of these would solve this problem, the second by allowing the check amount to be positive but applications within that payment to be negative.  I do appreciate your help with this.  The new process does offer some great features that I am looking forward to using, I just need to make sure we know how to process all of our transactions.

[plewis]

Thanks for the Kudos Mike. 

Just as a heads up. In order to access the "All Payments" report template, Payment collections does need to be on first otherwise it will not show as the report and the payment collections feature are connected. 

Also, make sure that your profile has access to the reporting template as well by going to Settings> Operations> Reporting Settings> Reporting Permissions. 

I definitely recommend setting Payment Collections and the Automated Refunds workflow up in your practice account (log into practice.servicetitan.com with your current account (any activity at practice.servicetitan.com will not affect your real data)) and playing around with the settings/feature so you can get a better feel of it's capabilities. 

The only scenario where it doesn't really shine is the last scenario/scenario 4.  Technically you can account for all of the payments and fees using adjustment invoices, however I understand that it isn't currently the best user experience to do so.  I'll be sure to relay the feedback you given on that instance to the team when I get a chance!