When a contract invoice needs to be corrected, the right way is to credit it from the invoice itself so BlueCollar can trace the correction back to the contract. Doing it correctly keeps your billings, retainage, and revenue recognition in sync. In the default mode, BlueCollar ignores a credit memo that is not created from an invoice, so it never reaches those figures; the optional mode that counts such memos is described under Standalone Credit Memos.
Video walkthrough:
Two settings must both be in place to credit an invoice in a closed accounting period. They work together like two halves of one key:
If either one is missing, the correction won't go through.
This is valuable because crediting from the invoice creates a "Created From" link back through the invoice to the contract — and that link is what lets BlueCollar treat the credit as a billing correction rather than a stray transaction.
A credit memo created from a contract invoice is treated as a negative billing. Because the chain back to the contract exists:
A standalone credit memo is a Credit Memo whose Created From field is empty and that is tagged to a BlueCollar Project, either on the header or on its lines (a line's project wins over the header, and a memo whose lines belong to different projects is split by line). Voided and memorized memos are ignored, and tax, shipping and cost-of-goods lines do not count toward the memo's amounts. No special form is needed: create one from Transactions > Customers > Credit Memos > New rather than with the Credit button on an invoice, sales order or cash sale. Credit memos that the T&M Billing tool creates for returned material also have no Created From, so they count as standalone.
How BlueCollar treats these memos depends on one Global Preference, Enable Standalone Credit Memo Contract and Billings (see Global Preferences). It is off by default.
The Contract, Billing, WIP Report and Revenue Recognition screens ignore standalone credit memos. The memo still posts to the GL (a debit to Sales and a credit to AR), so GL-based Revenue to Date drops while billings and contract values do not, and the revenue recognition figures no longer match the GL. While the option is off, the safe route stays the Credit button on the invoice, or a negative change order when the credit is really a reduction in contract value.
Turn on Enable Standalone Credit Memo Contract and Billings under BlueCollar > Preferences > Global Preferences and every qualifying credit memo counts as a project-level reduction:
The memo also shows up on screen. The project's Billing tab lists one read-only row per standalone credit memo below the contract lines (see Standalone Credit Memo Rows), and the Contract tab shows a matching row with the memo's effect on Current Approved Contract, Projected Contract and Billed Amount (see The Contract Screen).
This mode fits situations where no single invoice is being corrected: T&M material returns, a negative change order on a contract that is already fully billed, a negotiated price reduction, or an owner back-charge. An owner back-charge, for example, no longer needs a placeholder invoice just so there is something to credit.
Worked example. A project has a 100,000 Sales Order, 50,000 billed to date, and a standalone credit memo of 10,000. On the Billing tab the Scheduled Value grand total reads 90,000 and the Previous Applications grand total reads 40,000. On the WIP Report and the Contract tab, Billed to Date reads 40,000.
Because Sales Orders aren't natively aware of credit memos, a few situations call for an alternative:
When a credit memo is applied against an invoice, AIA forms may show the credit as a negative invoice in a future period, because the native Start/End Date fields don't exist on credit memo records. For AIA purposes, treat a credit memo applied against an invoice as belonging to the same period as the original invoice.