Financial Documents

Financial Documents in Business Central

Standalone Invoices vs Invoices from Orders

There are two ways to create an invoice in Business Central:

Standalone invoice — create an invoice directly without an order. Go to Sales Invoices (or Purchase Invoices), click New, and fill in the lines.

Invoice from an order — create a sales or purchase order first, then post it with the Invoice option.

Scenario	Use
Simple one-time sale, no shipping needed	Standalone sales invoice
Goods need to ship before invoicing	Sales order, ship first, invoice later
Service billing with no physical goods	Standalone sales invoice
Multi-step fulfilment with partial shipments	Sales order with partial posting

Sofia uses standalone invoices for consulting fees. For physical goods needing warehouse processing, she always starts with a sales order.

Question

When should you use a standalone sales invoice instead of a sales order?

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Answer

Use standalone invoices for simple transactions without warehouse processing — service billing, one-time charges, or goods already delivered. Use sales orders when you need shipping, warehouse handling, or partial deliveries.

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Credit Memos

A credit memo reduces or reverses what a customer owes you (sales credit memo) or what you owe a vendor (purchase credit memo). When posted, it creates negative ledger entries.

Common reasons: customer returned damaged goods, vendor overcharged, pricing error discovered after posting, or a negotiated discount after the fact.

How credit memos work

When Sofia posts a sales credit memo:

1. A negative customer ledger entry is created (reducing what the customer owes)
2. Revenue G/L accounts are reversed
3. If items are returned, inventory quantities increase back
4. The credit memo can be applied to the original invoice

Linking to the original invoice

Use the Applies-to Doc. No. field on the credit memo to link directly to the original posted invoice. This ensures the credit is matched correctly.

💡 Exam tip: Credit memos create negative entries

Credit memos don’t delete the original invoice. They create negative entries that offset it. Both remain visible in posted documents, preserving the audit trail.

Question

What happens when you post a sales credit memo?

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Answer

A negative customer ledger entry reduces the balance. Revenue G/L accounts are reversed. If items are returned, inventory increases. The original invoice stays unchanged — the credit memo offsets it.

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Combining Shipments into One Invoice

Coastal Traders ships goods to Pacific Imports several times a week. Pacific Imports wants one monthly invoice covering all shipments.

The process

1. Create sales orders for Pacific Imports throughout the month
2. Post each order with Ship only (not Invoice)
3. At month-end, create a new blank Sales Invoice for Pacific Imports
4. On the invoice lines, use Get Shipment Lines
5. Select all uninvoiced shipment lines
6. Post the combined invoice

Automatic combining

Run the Combine Shipments batch job (Tell Me > “Combine Shipments”) to create invoices automatically for all customers with uninvoiced shipments. On the customer card, enable Combine Shipments to include that customer in the batch job.

💡 Exam tip: Combine Shipments checkbox

The Combine Shipments field on the customer card must be enabled for the batch job. The manual Get Shipment Lines method works for any customer regardless of this setting.

Combining Receipts into One Invoice

The same concept works on the purchasing side. Marcus receives goods from Global Parts Ltd multiple times before getting a single consolidated bill.

The process

1. Create purchase orders and post each with Receive only
2. When the vendor’s consolidated bill arrives, create a new Purchase Invoice
3. Use Get Receipt Lines to pull the matching receipt lines
4. Post the combined purchase invoice

Automatic combining

Run the Combine Receipts batch job to automatically create purchase invoices for vendors with uninvoiced receipts. The vendor card has a Combine Receipts checkbox that works the same way as the customer-side setting.

Knowledge Check

Coastal Traders ships to Pacific Imports three times in January. Pacific Imports wants one invoice at month-end. What's the correct process?

ACreate three standalone invoices and manually merge themBPost three sales orders with Ship only, then use Get Shipment Lines on a new invoiceCPost three sales orders with Ship and Invoice, then consolidate with a credit memoDCreate one sales order with all items and ship once

Check Answer

Question

How do you combine multiple purchase receipts into one invoice?

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Answer

Post purchase orders with Receive only. Create a new purchase invoice and use Get Receipt Lines to pull uninvoiced receipts. Automate with the Combine Receipts batch job.

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Correcting Posted Invoices

You cannot edit a posted document in Business Central. Posted documents are permanent ledger entries. Instead, you correct them by creating offsetting entries.

From a Posted Sales Invoice or Posted Purchase Invoice, you have two options:

Correcting posted invoices

Feature	Create Corrective Credit Memo	Cancel Invoice
What it does	Creates a draft credit memo you can edit before posting	Creates and posts a full reversal automatically
Editable?	Yes — change amounts, remove lines	No — posts immediately
Best for	Partial corrections, price adjustments	Complete reversal of entire invoice
Original invoice	Remains as-is	Marked as Cancelled
Re-invoice?	Create a new invoice manually	BC offers to create a corrected invoice

⚠️ Warning: Cancellation has limits

You cannot cancel a posted invoice if it has been paid, inventory has been adjusted, or the fiscal period is closed. Use Create Corrective Credit Memo in those cases.

Release and Reopen

Every sales and purchase document has a Status field: Open or Released.

What does Release do?

Releasing locks a document from editing and signals it’s ready for the next step:

Status	Can edit?	Can post?	Warehouse?
Open	Yes	Yes	No
Released	No	Yes	Yes

When Olivia releases a sales order, the warehouse team can start picking. Nobody can accidentally change quantities or prices.

When do you reopen?

If a change is needed after release, Reopen the document to set it back to Open. Edit it, then release again. Common reasons: customer changed quantities, wrong item added, or price update needed.

💡 Exam tip: Release vs Post

Releasing does NOT post the document. It only locks editing and enables warehouse processing. Posting creates ledger entries. You can release without posting.

Question

What does releasing a document do?

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Answer

Locks the document from editing and enables warehouse processing. Does NOT post or create ledger entries. To edit after release, you must Reopen first.

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Knowledge Check

A released sales order needs one more item added. What should you do?

AEdit the order directly — released orders allow adding linesBDelete the order and create a new oneCReopen the order, add the item, then release againDCreate a separate order for the additional item

Check Answer

Prepayment Invoices

Some transactions need money upfront. Coastal Traders requires 30 percent from new customers on large orders. Their supplier Global Parts Ltd asks for 50 percent on custom-manufactured components.

Setting up prepayment percentages

You can set prepayment percentages at multiple levels. The most specific wins:

Level	Where	Example
Customer/Vendor card	Prepayment percent field	All orders require 30 percent
Item card	Sales/Purchase Prepayment percent	This item always requires 50 percent
Sales/Purchase line	Prepayment percent on the line	This line overridden to 25 percent

Line level overrides Item level overrides Customer/Vendor level.

The prepayment workflow

Here is how a prepayment works for a 10,000 dollar order with 30 percent prepayment:

Step 1 — Create the sales order. The customer card shows 30 percent prepayment required.

Step 2 — Post the prepayment invoice. Use Posting > Prepayment > Post Prepayment Invoice. BC generates an invoice for 3,000 dollars (30 percent of 10,000).

Step 3 — Receive the prepayment. When the customer pays, Sofia records a payment in the cash receipt journal and applies it to the prepayment invoice.

Step 4 — Ship and invoice the order. Post the sales order with Ship and Invoice. BC automatically deducts the 3,000 dollar prepayment from the final invoice. The customer only owes 7,000 dollars.

Prepayment accounts

Prepayments post to a special Prepayment G/L Account (set up in General Posting Setup). This is a liability account — the money is not yet earned revenue. When the final invoice posts, the prepayment moves from the liability account to the revenue account.

💡 Exam tip: Prepayment VAT

Prepayment invoices include VAT just like regular invoices. When the final invoice posts, the prepayment VAT is reversed so it’s not double-counted.

Prepayment credit memos

If a prepayment needs to be reversed (customer cancels before the order ships), post a Prepayment Credit Memo from the sales order to reverse the prepayment entries.

Question

How does BC apply prepayment percentage levels?

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Answer

Line level overrides Item level overrides Customer/Vendor level. If a line says 25 percent, the item says 50 percent, and the customer says 30 percent — the line-level 25 percent wins.

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Putting it all together

Every financial document follows the same lifecycle: create, release, post — and if needed, correct with credit memos.

Knowledge Check

A posted purchase invoice for 5,000 dollars should have been 4,200 dollars. It has not been paid. What's the best approach?

ACancel the invoice and re-create it for 4,200 dollarsBCreate a corrective credit memo for 800 dollarsCEdit the posted purchase invoice amountDDelete the posted purchase invoice

Check Answer

🎬 Video coming soon

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Next up: With financial documents mastered, let’s explore how to apply payments and manage customer and vendor ledger entries — the final step in closing the financial loop.