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The credit limit includes sales invoice tax and excludes order tax in Sales Order Processing

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This article provides a formula to determine whether a document will put a customer over the credit limit.

Applies to:   Microsoft Dynamics GP
Original KB number:   943960

Symptoms

If you set a credit limit for a customer, and then you have documents held in a batch for an invoice for the customer, Microsoft Dynamics GP includes taxes for the invoice. However, if you set the credit limit for the customer, and then you have documents held in a batch for an order for this customer, Microsoft Dynamics GP excludes taxes for the order.

More information

To determine whether a document will put a customer over the credit limit, Microsoft Dynamics GP uses the following formula for a credit check:

(Current Document Amount + Customer Balance + Unposted Sales Amount + On Order Amount) - Unposted Payments and Deposits

To obtain each amount in this formula, open the Customer Summary window. To open the Customer Summary window, select Cards, point to Sales, and then select Summary.

These amounts are defined as follows.

Amount Definition Notes
Current Document Amount The value that is in the Amount column for the Current period To retrieve information about the customer from the Receivables Transaction Inquiry window, select the Current period, and then select the Amount link.
Customer Balance The value that is in the Balance field
Unposted Sales Amount The value that is in the Sales/Debits field under Unposted
Unposted payments and deposits The value that is in the Cash/Credits field under Unposted

If you have a document held in a batch, orders update the On Order Amount value by using the remaining subtotal that is in the document. This remaining subtotal does not include the following amounts:

  • Trade discount
  • Freight
  • Miscellaneous
  • Tax

If the remaining subtotal did include the amounts that are in this list, the On Order Amount value would be inaccurate. Therefore, Microsoft Dynamics GP does not consider the amounts in this list when the credit check is completed.

Steps to reproduce the behavior

Note

The following steps refer to the Fabrikam company. Fabrikam is a fictitious company name that is used for demonstration in Microsoft Dynamics GP.

  1. Create a customer. To do this, select Cards, select Sales, select Customer, and then specify the following settings:

    • Customer ID: Credit Test
    • Name: Credit Limit Test
    • Address: Primary

  2. Set a credit limit. To do this, select Options in the Customer Maintenance window, and then specify the following setting:

    Credit Limit: Select the Amount option, and then type $106.00 in the field that becomes active.

  3. Select OK.

  4. Select Save. Then, close the Customer Maintenance window.

  5. Create a sales order. To do this, select Transaction, select Sales, select Sales Transaction Entry, and then specify the following settings:

    • Type/Type ID: Order
    • Document No.: This field is populated by the default value.
    • Customer ID: Credit Test
    • Batch ID: SOP ORDERS
    • Currency ID: Z-US$
    • Item Number: 128 SDRAM
    • Unit Price: 100.00
    • Tax: 5.00

  6. In the Sales Tax Summary Entry window, specify the following settings:

    • Tax Detail ID: AUSSTE-PS20N0
    • Tax Amount: $5.00

  7. Select OK.

  8. In the Sales Transaction Entry window, select Save.

  9. Create a sales invoice. To do this, select Transaction, select Sales, select Sales Transaction Entry, and then specify the following settings:

    • Type/Type ID: Invoice
    • Document No.: This field is populated by the default value.
    • Customer ID: Credit Test
    • Batch ID: SOP ORDERS
    • Currency ID: Z-US$
    • Item Number: 128 SDRAM
    • Unit Price: 2.00
    • Tax: 7.00

  10. In the Sales Tax Summary Entry window, specify the following settings:

    • Tax Detail ID: AUSSTE-PS20N0
    • Tax Amount: $7.00
    • Select OK.

  11. In the Sales Transaction Entry window, select Save.

    Note

    In this second credit check, the override credit limit does not appear until after you complete steps 10 and 11. The tax amount on the order is not applied to the credit limit.

  12. Delete the SOP ORDERS batch. To do this, select Sales on the Transaction menu, and then select Sales Batches.

  13. In the Sales Batches Entry window, select SOP ORDERS in the Batch ID field, select Delete, and then close the Sales Batches Entry window.

  14. Create a sales invoice. To do this, select Sales on the Transaction menu, select Sales Transaction Entry, and then specify the following values:

    • Type/Type ID: Invoice
    • Document No.: This field is populated by the default value.
    • Customer ID: Credit Test
    • Batch ID: SOP INVOICES
    • Currency ID: Z-US$
    • Item Number: 128 SDRAM
    • Unit Price: 100.00
    • Tax: 5.00

  15. In the Sales Tax Summary Entry window, specify the following information:

    • Tax Detail ID: AUSSTE-PS20N0
    • Tax Amount: $5.00

  16. Select OK.

  17. In the Sales Transaction Entry window, select Save.

  18. Create a sales invoice. To do this, select Transaction, select Sales, select Sales Transaction Entry, and then specify the following settings:

    • Type/Type ID: Invoice
    • Document No: This field is populated by the default value.
    • Customer ID: Credit Test
    • Batch ID: SOP INVOICES
    • Currency ID: Z-US$
    • Item Number: 128 SDRAM
    • Unit Price: 2.00

    Note

    In this second credit check, the override credit limit appears.