Handling returned direct debits
When a direct debit payment is returned by the bank after initial processing it must be identified, matched, and handled appropriately in the system. Continia Banking lets you process returned direct debits after they have been identified and matched, and offers configuration settings that control how these transactions are handled automatically or manually.
To set up the handling of returned direct debits
To enable handling of returned direct debits:
On the Continia Feature Management page, enable Direct Debit Return.
On the Banking Import Setup page, in the Direct Debit Return FastTab, enable Direct Debit Return Matching.
In the Default Direct Debit Return Processing field, select on of the following options to process matched returned direct debits:
- Apply to original payment - unapply the original invoice and payment, then apply the open payment to the return direct debit transaction in the reconciliation. Optionally, set the invoice On Hold using the configured setting in Banking Import Setup.
- Reverse original payment - reverse the full payment using either the original posting date or the bank statement date. The reversed entry is automatically posted in the reconciliation.
- Apply to account - leave the original transaction unchanged and post the return direct debit as an on-account entry.
Under Direct Debit Return Mode, select Manual or Automatic. If set to Automatic, return direct debit processing is fully automated during the regular matching routine.
Use the On Hold field to automatically place the invoice on hold if the invoice is reopened due to the return. This applies when using the Apply to original payment or Reverse original payment options.
If you selected Reverse original payment, you can use the Reverse Posting Date field to determine the date used for the reversal. Options are: Statement Date and Posting Date.
To handle return direct debits
Once a return direct debit has been identified and matched, you can process it using one of the available methods. The processing behavior follows the default method defined in the Banking Import Setup and can be initiated from several locations:
- Payment Application Review Page - on this page the Direct Debit Return Entries section lists the returned entries for you displaying the Return Reason Code and Return Reason Description. You can select a pending return direct debit and on the action bar, select Process Direct Debit Return to process it.
- Payment Reconciliation Journal - select the line or multiple lines with status Direct Debit Return and Apply Automatically. The status now changes to Pending Direct Debit Return. On the action bar, select Direct Debit Return Processing.
- Bank Account Reconciliation: select the line or multiple lines and select Direct Debit Return Processing.
After processing, the status of the line will change based on the chosen processing method:
- If reversed, the line status changes to Complete.
- If reapplied or unchanged:
- In Bank Account Reconciliation, the status may change to Pending Cash Receipt Journal, indicating that the return has been processed but further action is needed to close the transaction.
- In the Payment Reconciliation Journal, the line status changes directly to Completed, regardless of the processing type.