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Overage and Debit process

Hi Everyone

Here is the scenario on overage process ,,, Warehouse ships excess products to customer but we have billed them what was initially ordered , we will come to know once the cycle count or customer might them call the company say they have received excess and they want to retain it , now we need to create order without delivery and bill the customers, if anyone has come across the this scenario please let me


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  • Best Answer
    Posted on Nov 11, 2015 at 06:23 AM

    In most companies and business scenarios it is not allowed to take products out of the warehouse unless you have a document stating you have to deliver them somewhere.

    How would you know when the driver takes some goods that they are to be shipped to a customer and are not stolen? This is one of the reasons why people place gate security in the first place.

    Please explain in details your business case.

    There is a process where the driver takes a full truck of products and goes to visit a list of customers (it is possible to use also one-time customers as well) without knowing whether the goods will be purchased or not - this is called van sales/traditional sales. In this case there is a speculative load delivery created for the driver and he is responsible for the products between the timeframe of leaving the plant premises and returning back with products/invoices and he is charged for any discrepancies discovered. Is this what your company does?

    There is another process - a driver goes with presold deliveries for several customers, but the first customer does not accept some of the goods (for example cannot pay) and the driver can offer these excess products to some of the remaining customers for sale.

    Variant 3: you have defined tolerances for overdelivery and deliver more products than the customer requested originally. Then you bill the actual delivered quantity.

    Double-check with your client - the way you describe the situation, it means that they have no control over their sales, their inventory, their finance. Such company would be in need not of mapping the current ways of working in an ERP system, but of business consultants and change management if it aims to stay in the business. I hope that you have omitted some part of this overage process, which is kept on paper at the moment - at least recording the actually loaded products on the truck by the gate security in some book and signing an acceptance protocol form both by the customer and the driver.

    In the system you can create a debit memo request and bill it of course (would be nice to know what billing date and service render date to use) and you can continue to post inventory losses instead of posting the products as sold and updating the correct accounts, but this hurts the business and could be considered as problematic during an audit.

    In addition: if I am your customer and you call me stating that some products are missing from your warehouse and ask that I pay for them (how would the price be calculated by the way) without presenting any documents signed by me proving that these goods were shipped to my company and we have not agreed at that time on the product prices .... can you predict what would be the result? 😈

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    • Having the products for free on stock without the proper certificate just means that they cannot be sold legally.

      Product recall from market in case of a problematic production run is going to be a challenge as well - you wait until/if somebody discovers the physical location of your missing products and tries to sell them instead of checking to whom you sold the goods with a specific lot and contact the customers directly.

  • Posted on Nov 12, 2015 at 08:40 AM
    Warehouse ships excess products to customer but we have billed them what was initially ordered

    I really felt that it is strange system being followed by your client. For any seller, whatever quantity billed, only to those extent, materials are allowed to cross the gate and not sure, knowing such things are happening, whether your client has initiated any action.

    Nevertheless, coming to your requirement, you can create a debit memo request with reference to the parent billing document, based on which, a debit memo can be raised on that customer to the extent of quantity despatched in excess of original invoiced quantity. May be, suitable order reason maintained in debit memo request.

    G. Lakshmipathi

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  • Posted on Nov 12, 2015 at 10:15 AM

    What if customer forgets to update you on the excess qty received??

    When an order with 100 qty-But delivery for 105 Qty-what if drug department stopped the truck on road for verification???(That to Phama drugs like sedatives)

    Also Normally once Under/Over delivery assigned at CMR-with delivery relevant billing-System always copies delivery qty into billing but not Sales order qty--Is this not happening in your case???Have you checked VTFL data transfer routines in your system???

    No company can initiate either Credit/Debit memo based on the ""customer confirmation of additional stocks"""(may be that kind of genuine customers you can find 1 out of 100,000)(Here please don't take my comments to your heart)

    I really feel you are not getting sufficient information from your client/May be your understanding issue.

    Pl involve more & Update us..


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