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Accounts Receivable

Zuora BillingZuora PaymentsZuora PlatformZuora CPQZephrZuora RevenueAccounts ReceivableZuora AIRelease NotesBasicsEntitlementsSupport and policies
Zuora BillingZuora PaymentsZuora PlatformZuora CPQZephrZuora RevenueAccounts ReceivableZuora AIRelease NotesBasicsEntitlementsSupport and policies

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Cash Application

Adjustments and deductions

This topic defines the adjustments and deductions on how Zuora handles bank charges, withholding taxes, short payments, and other exceptions.

In payment processing, the amount received in a bank account can differ from the invoice amount due. Differences can result from bank charges, withholding taxes, discounts, write-offs, or exchange rate variations.

You can configure Zuora to handle these differences, clear invoices correctly, and maintain accurate accounting entries in your enterprise resource planning (ERP) system.

Types of adjustments

Zuora classifies adjustments into two categories, based on how the net Account receivable is reduced.

  • Invoice adjustments: If the amount owned by the customer is reduced by reducing the Invoice Value, they affect the invoice balance

  • Payment Adjustments: Adjustments rightly reduce the AR balance without affecting the Invoice Value. Reflected as separate ledger entries, not on invoice balance.

Importance of adjustments

Without adjustments, a payment might appear short or over-applied when compared to invoice totals. Zuora ensures that the difference is correctly recognized and booked under the appropriate account.

Example:Invoice Value = $1,000Bank Received = $990Bank Charges = $10.

Zuora reads the $10 as a Payment Adjustment and still clears the invoice for $1,000.

Adjustment processing in Zuora

When the original amount differs from the amount received, Zuora performs the following actions:

  1. Logs it as an Adjustment under the Payment Details section.

  2. Reflects it in the ERP posting through additional journal entries.

Supported adjustment scenarios

Each adjustment scenario is handled slightly differently in Zuora. The upcoming sections will detail each case:

  1. Payment Adjustments:Adjustment type can be configured in Settings > Cash Application > Payment Adjustments.

    1. Bank Charges: how they are detected and posted.

    2. FX Gain / Loss: how Zuora handles currency differences.

    3. Rounding Adjustments: minor decimal mismatches between systems.

  2. Invoice Adjustments:

    1. Withholding Tax / TDS: invoice-level adjustment logic.

    2. Write-offs & Discounts: how small shortfalls are cleared.

    3. Credit Memo: how existing credits are applied

Configurable thresholds

Zuora allows defining tolerance limits to automatically recognize small mismatches as adjustments.

For example:

  • Automatically create a Bank Charge entry for differences ≤ $5.

  • Automatically mark short payments ≤ 0.5% of invoice as Write-off.

  • These limits can be set per currency and per adjustment type.

Last updated: September 23, 2026