- Credit memo is a commercial document issued by the seller to the buyer(customer).
- Credit memo consists the lower or same amount than the invoice,and repays the money to the buyer or sets it off against a balance due from other transactions.
- Credit memo also called as "Credit note" or "Credit memorandum".
When Credit Memo Is Issued By The Seller :
- Return the goods due to the either of the following reasons
- Damaged goods or expired goods.
- Received more than ordered.
- Not according to the specifications mentioned in the order.
- Any changes in quantity of items in previously placed order.
- Mistake in invoice document
- Any arithmetic mistake.
- Misapplication of the discount rate.
- Current discount is not applied.
- Misapplication of the sales tax requirements.
- Cancellation of the order.
Fields Of Credit Memo :
- Credit memo details like : Credit memo id, Date of credit memo issued.
- Addresses and contact details of both "seller" and "buyer".
- Purchase order id.
- Invoice id.
- Payment terms.
- Date of Shipping goods.
- Quantity of returned the goods.
- Description to return the goods.
- Refundable payment.
Why We Need To Provide The Credit Memo or Advantages of credit memo :
- To allow the users to buy or to purchase an item or service from the seller on a future date.
- A credit note can correct an invoice that has already processed and sent to the buyer. This type of credit note can be thought as being the "negative invoice".
Examples :
