Credit Memo Invoices
The department of accounting has a significant place in business and organizations and its functions are to be implemented clearly and properly so that there remains no confusion and disturbance.
Credit memo invoice which is basically Credit memorandum invoice is a strong feature of buyer and seller relationship. A memorandum is basically a written message to businesses and invoice is a list of items or goods delivered to the customer along with its exact dues. It is a bill issued by a seller to the buyer of his services and goods. So, credit memorandum invoice has a strong place in dealings and delivery of products and services.
Credit memo invoice is a written document that is sent by a seller to his customer informing him about the reduction in payment they both previously agreed upon.
This invoice let the buyer know that the amount he has to pay to the seller has been reduced. There are many factors for the change in the original and new invoice issued by the seller. For example, the buyer wants to send back the goods and products to the seller because there is some fault in any of his products and he is not ready to take it or replace it with others. Or the invoice may change because the amount they both previously agreed upon doesn’t seem to be fair and there is some pricing dispute between the two.
There are chances that the buyer initially agreed upon the payment and done the agreement with his seller but due to any disturbing circumstances, he won’t be able to give full money so he is backing off. These are few reasons for which a credit memo invoice is prepared by the seller for its buyer. There are cases when the buyer has already paid the full amount as per the initial invoice, in that case, he can use this Credit memo invoice to ask for cash payment or either settle it for future payments. This all can be done between the two parties (buyer and seller) according to their own needs and demands.
When a Credit memo invoice is issued it is recorded as a reduction in accounts receivable balance for the seller and on the other hand, it is recorded as a reduction in accounts payable balance for the buyer of goods and services.
Credit memo invoice is also known as a credit note. The invoice can be smoothly done between a buyer and a seller and this document contains all the details for which it is issued by the seller. A typical and generic Credit memo invoice document includes the following things:
- Its number and Date when it is issued.
- Detailed information from where it is coming (seller reference)
- Detailed information for where it is going (buyer reference)
- Payment terms
- Shipment details
- Invoice number
- Order number
- The salesperson name
- The description of the item, its unit price, quantity, and grand total
- Mention the total of everything after tax as well at the end of the document.
- Give the signature.
These are few things that are mentioned in a credit memo invoice. Professional invoices may include detailed information about related things.