Background:

Currently, reversing a Free Text Invoice (FTI) in D365 Finance requires a manual workaround due to limitations in the reversal functionality. The reversal process does not generate a legally compliant credit note, particularly in terms of invoice numbering, referencing the original FTI and the reason for the reversal . This has led to increased manual effort, risk of human error, and non-compliance with EU invoicing regulations.

Customer Feedback Summary:

• The reversal function does not issue a legally correct invoice.
• Manual creation of credit notes is required, which is error-prone.
• Credit notes must have a unique invoice ID, as per EU law.
• Settlement between the original invoice and the credit note is not automatic.
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Proposed Enhancement:

Introduce a fully automated process for reversing Free Text Invoices that includes:

Legally Compliant Credit Note Generation:

• Ensure the credit note has a unique invoice ID.
• Maintain a clear reference to the original invoice.
• Automatically settle the credit note against the original invoice in the General Ledger.
• Eliminate the need for manual matching and reduce reconciliation errors.
• Provide a one-click reversal option that handles both document creation and settlement.
• Include audit trail and traceability between the original and credit note invoices.