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Sparkrock's Customer Success Center

Working with Payment Tolerance

This topic explains the use of Payment Tolerance as well as how to activate and deactivate this functionality.

When to use Payment Tolerance

There are instances when the amount a customer pays differs slightly, for whatever reason, from the amount invoiced. The difference in payment can be either an underpayment or an overpayment. These amounts may often remain open and eventually have to be canceled out by other means.

Clearing these small amounts can be time consuming and it is possible to setup the system to handle this automatically.

  • Using payment tolerance allows the closing of an entry even if there is a difference between the amount owed and the amount paid.
  • Payment tolerance percentage, payment discount grace period and the maximum payment tolerance amount can be set. It can be set that the user will receive a warning when making an application within the payment tolerance parameters that have been set.
  • These differences can be set to different amounts or percentages, to keep track of amounts and the frequency. Different payment tolerances can be set up for different currencies.
  • Payment tolerances (configured on the General Ledger Setup page) can be set on the receivables side as well as the payables side. Thus, payment tolerance can apply to invoices and payments as well as credit memos and refunds. Customers and vendors can be blocked for payment tolerances.

In NAV, two types of payment tolerance exist:

  • Payment Discount Tolerance – Allowing a customer to take a payment discount even though the payment discount date has passed.
  • Payment Amount Tolerance – Accepting a slightly greater or smaller amount as full settlement of an outstanding invoice. In the program, payment amount tolerance is simply called Payment Tolerance.

Deactivating Payment Tolerance

As a default, payment tolerance is allowed for all customers and vendors. If this should not be allowed, a checkmark in the Block Payment Tolerance field of the customer and vendor cards will disable this feature for that customer or vendor. By repeating this process, it is possible to reactivate tolerance for any previously blocked customer or vendor. In each instance, you will be prompted to choose whether to apply or remove payment tolerance on open entries.

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