Crediting Transactions
Use the Credit Transactions window to enter, update, and review credit memos against specific invoices, debit memos, or commitments. You create credit memos to reduce the balance due for a transaction. When you credit a transaction, Receivables creates the appropriate accounting entries and reverses any sales credit assigned to your salespeople.
Receivables lets you credit an entire invoice or specific invoice lines. You can also credit freight for an entire invoice or only for specific invoice lines.
You can delete an incomplete credit memo if the system option Allow Invoice Deletion is set to Yes. See: Defining Receivables System Options.
Note: The 'Line' fields show amounts without tax, even if the transaction you are crediting is tax inclusive. These include the Amount, Original, and Balance Due fields. See: Tax Inclusive.
Prerequisites
To create a credit memo against a transaction:
1. Navigate to the Transactions Summary or the Credit Transactions window.
2. Query the transaction to credit.
3. If you are in the Transactions Summary window, select the transaction, then choose Credit.
5. Enter the batch Source for this credit memo. The default is the batch source of the transaction you are crediting, but you can change it.
6. Enter the Date of this credit memo. Receivables prints this date on your credit memo.
If this credit memo is part of a batch, the default is the batch date. If there is no batch information, or if the batch date is before the date of the credited transaction, the default is the current date. If the date of the invoice you are crediting is later than the credit memo date, the default is the invoice date.
7. If your batch source does not use Automatic Transaction Numbering, enter a credit memo Number; otherwise, Receivables assigns a number when you save. See: Implementing Document Sequences.
8. Enter a transaction Type for this credit memo. The batch source provides the default type, but you can change it. If this is a credit memo against an invoice or commitment, the default is the transaction type assigned to the invoice or commitment. You can choose any transaction type with a class of Credit Memo.
9. If the Post to GL option of your credit memo's transaction type is Yes, enter the GL Date for this credit memo. This date must be in an open or future enterable accounting period and must be equal to or later than the GL date of the credited transaction. If this credit memo is part of a batch, the default is the batch GL date.
10. If you are crediting a transaction that uses invoicing and accounting rules, choose one of the following Rules Methods:
Last In First Out (LIFO): Choose this option to back out revenue starting with the last general ledger period and reverse all prior periods until it has used up the credit memo.
Prorate: Choose this option to credit an equal percentage to all account assignments for this invoice.
rUnit: Choose this option to reverse the revenue for the number of units you specify from an original line of the invoice.
11. Enter the Currency for this credit memo. If this credit memo is part of a batch, the default is the batch currency; otherwise, the default is your functional currency. If you are applying this credit memo to a transaction, the credit memo currency must be the same as the transaction currency. If you enter a currency other than your functional currency, enter exchange rate information. See: Foreign Currency Transactions.
12. If you are crediting a transaction that has multiple installments, choose one of the following Split Term Methods:
First in First Out (FIFO): This method credits the first installment first.
Last In First Out (LIFO): This method credits the last installment first.
Prorate: This method credits the installments of the credited transaction and prorates them based on the amount remaining for each installment.
13. If you are not using Automatic Sequence Numbering, open the More alternative region, then enter a unique Document Number for this credit memo. Otherwise, Receivables assigns a number when you complete this credit memo. See: Implementing Document Sequences.
14. To credit only part of the balance due for this transaction, enter the percentage or Amount of Line, Tax, or Freight charges to credit. To credit a specific portion of the charges, enter a negative number in the Amount field (for example, enter -50 to decrease the balance due by 50 dollars). If you enter a percentage, Receivables calculates the amount, and vice versa.
Percentages are based on the original balance of the transaction you are crediting. Receivables updates the Balance Due for each type of charges that you credit and creates all of the accounting reversal entries for you. Receivables also reverses this percentage of the sales revenue and non-revenue credit assigned to your salespersons.
Note: You cannot enter an amount that would overapply the transaction unless the Allow Overapplication flag of the credited transaction's transaction type is set to Yes. To overapply a transaction, choose Credit Lines, then specify which lines to credit in the Lines window.
15. To credit the entire balance due for this transaction, choose Credit Balance. Receivables reduces the Balance Due for this transaction to zero for each type of charges.
Note: For invoices against deposits, the Balance Due is the amount available to credit, this amount includes the deposit amount used by the invoice.
17. Save your work. Receivables creates all the accounting reversal entries and reverses the amount of sales revenue and non-revenue credit assigned to your salespersons.
See Also
Crediting Transaction Lines
Updating Credit Memo Installments
Batching Credit Memos
Creating On-Account Credits
Importing Credit Memos
Accounting for Credit Memos
Credit Transactions Field Reference
Define credit memo sources