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A customer credit memo is a reverse invoice used either when a customer returns items or when a customer is given a credit on their balance, possibly if they are dissatisfied with their purchase (or to make them pay the remaining balance).
Sample Customer Credit Memo
You should note the following:
- The postings of a credit memo are reverse of an invoice. That also means that inventory items will be taken back and added to inventory if they appear on the customer credit memo.
- A credit memo can also be created directly from an invoice (by clicking Create credit memo on the Actions menu of the invoice).
- If you want to credit the customer, but not take items back in inventory, you should use a non-inventory item or a financial account.
- Credit memos are listed on the invoice list.
- A credit memo can be settled with (paid to) the customer in three ways:
- By creating it from an invoice, thus reversing the invoice
- By issuing a refund (a payment to the customer)
- By applying it to one or more existing invoices on the customer payment form.
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