A chargeback occurs when a moving company, acting as an agent of a van line, recognizes an Accounts Receivable that actually belongs to the van line. The moving company then agrees to pay the van line the total amount of the chargeback.
Since this situation may cause entries against an incorrect customer Accounts Receivables, we recommend the following procedures to ensure that the Account Receivables are updated correctly for this type of chargeback situation.
The conditions that warrant the alternate procedure for registered van line orders include the following:
§ Cash on Delivery (COD) orders that the shipper pays the agent (or their driver) directly for services that are owed to the van line.
§ The agents bills their customer directly for the van line, or
§ When an agent’s customer does not pay for the move and the van line charges the agent back for the move or a portion of the move.
The first two conditions may happen prior to revenue posting for the order and typically will be known to the Revenue Entry personnel. The third condition will typically only be seen after revenue posting has occurred on the order and the chargeback is not yet recognized (not known until van line statement processing and/or the van line invoices the customer on a van line order and holds the receivable until non-payment is recognized).
Depending on what state the revenue processing is in when the chargeback is recognized determines which of the following instructions are needed:
§ Processing revenue when the chargeback condition is known
§ Processing revenue after the chargeback has already been entered into the records
Following the procedures for the appropriate chargeback conditions listed above will help you track your customer’s Accounts Receivables.
The procedure for handling Van Line Chargebacks includes the following sections:
Setting up for revenue entries
Processing Revenue for a Known Van Line Chargeback
Processing Revenue for an Unknown Van Line Chargeback
Setting up for revenue entries
Processing Revenue for a Known Van
Line Chargeback