Credit Memos, Unapplied Payments, and More for AR Settlement in Zuora

By JingJing Xia March 8, 2018

Question: Is the Accounts Receivable process for your neighborhood retail shop similar to that of a subscription or consumption-based business?

Answer: Hardly.

Accounts Receivable refers to “the proceeds or payment which the company will receive from its customers who have purchased its goods and/or services on credit.” While Nordstrom will ask you to pay for a product upfront, subscription or consumption-based businesses provide their customers with a product and service before sending an invoice.

“AR settlement” effectively points to the process of “settling” these credits – and making sure that you get paid.

Unfortunately, for many companies, payment operations and AR management can be a cumbersome, lengthy, and error-prone process. The reason comes down to the manual attention and time it takes to effectively “settle” Accounts Receivable.

For example, sometimes you might need to:

  • Apply a single customer payment across multiple invoices over different periods of service
  • Reapply a previously applied payment from a closed accounting period to a new invoice
  • Manually divide an overpayment and figure out how to accurately allocate the cash

Each of these use cases is specific in its own way. For many finance teams, the only system “flexible enough” to handle each one of these one-offs is the handy dandy Microsoft Excel. However, that means AR data is limited and siloed in multiple sources – it will be almost impossible to scale as a company grows.

That’s why we’re excited to add 3 new features to Zuora’s AR Settlement capabilities this Spring.

In addition to invoicing, payment operations, and collections, we are adding 3 new capabilities that take AR settlement in Zuora to the next level:

  1. Unapplied Payments
    • Customers can now create payments for unknown billing accounts, overpaid invoices, or unbilled transactions
    • Gain full traceability of any payment back to the original transaction
  2. Credit / Debit Memos
    • Customers can now create credit and debit memos in Zuora and gain greater flexibility to adjust and manage customer balances
    • This also reduces the complexity to integrate with an existing General Ledger
  3. Invoice Item Settlement
    • Customers can now apply payments, credit memos, and refunds at the invoice-item level (see demo below).
    • This gives customers much more detailed tracking for how outstanding balances are settled across each billed item

Invoice Item Settlement

We’re excited to announce these new capabilities as part of the Spring ‘18 launch. If you’re a customer and want more information, reach out to your Customer Account Manager.

Not a customer yet? See how you could be running your dynamic order-to-cash process on Zuora Central.