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Cancellation of an Invoice - Concept guide

Invoice Cancellation

Scope and Purpose

The purpose of this document is to provide a conceptual summary of the invoice cancellation.

Its scope extends to across requirements for maintaining data integrity for best historical reporting outcomes.

Highlights

The process to cancel an invoice is the same whether the latter is dated in the current period or a prior closed period.

The user requires security 202 to execute the invoice cancellation as at the current date, as well as additional security options for cancellations in a prior closed month as well as a prior closed year.

It is considered best practice to affect changes to posted invoices already issued and reported-on through credit notes to reduce their balance to meet the client’s expectation or correct an overbilling issue; a supplementary appropriately allocated “No-time” invoice to include an agreed upon premium which was missed, or; a supplementary appropriately allocated “time” invoice to include missed time.

Occasionally there are circumstances where an invoice cancellation is warranted. Whether the posted invoice to be cancelled is dated within the current fiscal period or not the authorized user has the choice of cancellation date.

If the invoice is cancelled with the current date, then all the GL operations for the cancellation are based on the current date. In addition, the historical nature of the reports ensures that the application considers the invoice and its related objects as billed from the date of the invoice until the date of its cancellation leaving a clear audit trail. This includes the Aged WIP report which will include the time and disbursements included in the invoice being cancelled as WIP based on their transaction date (as technically they are WIP).

Users cancel invoices as at the current date, when the posted invoice was accidentally not sent out to the client therefore the credit note, or supplementary invoice corrective options are not relevant. In this case the client should not be receiving an invoice which is already aged, so a current date cancellation and current date new invoice is considered best practice.

On the rare occasion when the purpose of the invoice cancellation is to make internal adjustments which cannot be handled through any other corrective measure or functionality available within the application, the authorized user may opt to cancel the invoice with a cancellation date equal to the original invoice date. This option makes sense when the new invoice is also re-issued as at the same original date, however with all Acumin’s corrective functionality this alternative is often not required nor used.

Limitations

Due to the historical nature of most reports and the imbalances that can occur when not following a natural progression for actions taken, it is not possible to create an invoice that includes entries which were part of a cancelled invoice, with an invoice date that is older than the last cancellation date for the affected entries.

In practice, this means that a user who accidentally posts a post-dated or currently dated invoice, instead of backdating the invoice to its desired date, will only be able to execute the cancellation with a minimum date equal to the invoice date. As a result, the entries which are free for selection into a new invoice, can only be selected if the new invoice is dated on the same date or more in the future than the cancellation date of the original invoice for which they belonged.

Alternatives

If creating the new invoice with a prior date is the only way to move forward, the user has two options:

Option 1:

  • Cancel the invoice on the best possible date;

  • Print the entries affected;

  • Copy the affected entries as unposted entries into the timesheet. Once on the timesheet updated their entry date to reflect the transaction date of the original entry. Do not post them.

  • Reverse the original entries using the reverse option or by creating new negative entries to off-set them. Write-the positive and negative off – impact of 0.00.  

  • Reconcile the unposted time-entries copied onto the timesheet to the printed entries (second bullet) and once confirmed, post.

  • Create the new invoice dated a date prior to the last cancellation date.

Option 2 :

  • Create a “No Time Invoice” dated the date prior to the last cancellation date. The invoice will include presentation only entries (for time and disbursements) or where possible a paragraph cross referring to a supporting document for the entries.

  • Create a second invoice dated the last cancellation with all the entries written down* to 0.00. Generate the entries as the details for the no-time invoice using word or print list view to excel.


* Please note that with option 2, the hours worked will not be impacted, however this option will affect the member’s realization rate, variance and allocation measures. The impact on allocation measures can be mitigated through manual allocation override on the no-time invoice.