DBD: Credit Memo Information

We recommend that if you require the entry of a credit memo to the customer for an invoice entered in error, then you should use a new invoice number, then offset the credit memo against the original invoice through Cash Receipts.

Credit Memo – Direct Entry

Go to Accounts Receivable, Invoice Entry.
Assign the next invoice number. Do Not use the same invoice number as the original invoice that is being credited.
Enter your customer number and ship-to information on this first screen for the credit. Set the invoice type to ‘Credit Memo’. You may be prompted to add additional Credit Memo information. This is optional—it is accessible through ODBC and is the AT1 file: Credit Memo Information. You can use this if you wish to compile information at a later date for credits.
Summary Bill flag. Verify the settings for this flag. Do you wish to have this credit memo appear on the Summary Bill for this client?
Proceed to the line detail. Enter the line type needed. If this will be an internal credit, then non-stock gives you the greatest flexibility to enter your data. Use the same product code used for the original invoice. At the quantity ordered, enter a negative one (-1), then enter the total Sell and cost. If you will be sending this credit memo to the customer, then you will need to be more selective during your entry. Also enter a memo line indicating which invoice will be credited.
Verify the tax code and commission settings are correct for this line.
Verify totals on the invoice.
Print the invoice and update the Sales Journal.

Procedure to offset a credit memo against an invoice in Cash Receipts

Go to Accounts Receivable, Cash Receipts.
This can be done as part of the daily cash receipts, or by itself as a zero deposit.
Enter any reference number.
The check amount should be zero.
Go to the next screen that allows you to enter your invoice numbers.
Always enter the invoice number for the credit memo first. This will give you an amount to distribute. Your action will be normal.
Select the positive invoice and use an action of normal.
Exit out of your Cash Receipts, print your journal, and update.

Note: This method for entering your credit memo will post an entry to your open invoice file, the sales tax file, and the commission pending/payable file, depending on the parameter settings, as well as to the Sales Analysis for both customer and salesperson statistics, and the E/I numbers for billings.

If you wish to have this credit memo also posted to order history, then you can follow these additional steps. This can be a good option if the vendor will also issue a credit.

Credit Order

This will be entered through Order Processing and Order Entry. The order lines will then be entered with a credit quantity. This procedure would not be used for items coming into inventory. If you choose to use the same order number for the credit as a previously entered order, you may wish to enter these lines outside of your prior entry lines to avoid confusion.

You can then process this through Purchase Order Receiving and create the credit for the customer.

You can leave the PO receiving open until you receive the invoice from your vendor. However, if you are running the Open Purchase Order report, this will serve as a reminder that this is due to you. You may alternatively choose to process through Purchase Order Receiving and, at the same time, create the credit memo in Accounts Payable.

Please review the notes above on how to create the credit memo for your customer.

Some important points to remember when entering a credit memo:

Complete Credit.

Make sure the cost and sell are the same as the original invoice. Verify that the totals match before updating your credit memo.

Partial Credit

If you are crediting only a portion of the invoice that was billed in error, be sure to enter the appropriate cost and sell for that line.