In Oracle Apps or similar accounts payable systems, if a supplier has received an excess payment and you do not want to adjust any existing invoice, what procedure is normally followed so that the supplier returns the excess amount and the excess is recorded correctly?

Introduction / Context:
In accounts payable and Oracle Apps or similar ERP systems, situations may arise where a supplier has been paid more than the amount due. The question specifically asks about the procedure to handle such excess payment when you do not want to adjust it against an invoice. Understanding how to recover and record such excess amounts is important for maintaining accurate supplier balances and good internal control.

Given Data / Assumptions:

• A supplier has been paid an amount greater than what is actually owed.
• The organisation does not want to adjust the excess against existing or future invoices.
• The goal is for the supplier to return the excess money.
• The accounting or ERP system is Oracle Apps or a comparable accounts payable module.

Concept / Approach:
When an excess payment has been made and no adjustment against invoices is desired, the correct approach is to request a refund from the supplier. Once the supplier returns the excess amount, the payment must be recorded properly in the system. In Oracle Apps, this is typically done by creating a supplier refund transaction or by recording a bank receipt and applying it to the suppliers account, so that the debit or credit balance created by the excess payment is cleared. This maintains a clean supplier ledger and ensures that the bank and accounts payable records are accurate. Ignoring the excess, writing it off without justification, or transferring it to another supplier would not meet good accounting practice.

Step-by-Step Solution:
Step 1: Identify that a genuine excess payment has occurred, leading to a debit or credit balance in the supplier account that cannot be justified by invoices.Step 2: Communicate with the supplier and request a refund of the excess amount, providing supporting documentation if needed.Step 3: Once the supplier returns the excess funds, record the receipt in the ERP system as a bank receipt or a supplier refund transaction.Step 4: Apply this receipt to the supplier account so that the excess payment balance is cleared and the supplier account returns to the correct balance.Step 5: Ensure that all entries are documented and approved according to internal control procedures.

Verification / Alternative check:
From an audit and internal control perspective, leaving an excess payment unresolved or writing it off without attempting recovery would be unacceptable. Oracle Apps and similar systems provide specific functionality to record supplier refunds and match them against existing balances. The combination of requesting a refund and recording a proper receipt transaction is the only approach that fully resolves the issue and keeps both bank and supplier ledgers correct. This confirms that option A describes the correct procedure.

Why Other Options Are Wrong:
Option B suggests doing nothing and waiting for the balance to disappear, which is not possible and would leave a misleading balance in the supplier account. Option C writes off the excess as an expense without contacting the supplier, which could cause financial loss and may violate prudence and internal control policies. Option D recommends transferring the excess payment to another supplier account without documentation, which would distort records and could be considered a serious control breach. Therefore, these options do not represent acceptable accounting practice.

Common Pitfalls:
Some users of ERP systems try to fix excess payments by forced journal entries or by adjusting unrelated invoices, which can complicate audits and reconciliation. Others ignore small excess balances and allow them to remain for long periods. To avoid such pitfalls, always use the proper refund and receipt functionality in the accounts payable module and keep supplier balances accurate and fully explained.

Final Answer:
The normal procedure is to ask the supplier to refund the excess payment and then record this in the system as a supplier refund or bank receipt applied to the supplier account, so that the excess payment balance is cleared.