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Former Member

hi

in which scenario is a credit memo and a debit memo issued

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    Former Member
    Jan 21, 2008 at 06:27 AM

    hello, friend.

    in general, you issue a credit memo to the customer as a result of:

    1. processing a sales return, where a material is physically returned to you

    2. processing a credit memo request, where no physical return is involved

    3. processing an invoice correction, where you have to refund the customer if the original price is in excess of the final price

    4. other situations which involve a reimbursement, refund or return of cash to your customers.

    a debit memo is issued to the customer as a result of:

    1. processing a debit memo request, which raises your customer's payables to you

    2. processing an invoice correction, where the customer is informed he has to pay you an amount because maybe you charged him too low

    3. other situations which involve your customer incurring an additional payable to you.

    regards.

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    Former Member
    Jan 21, 2008 at 06:19 AM

    Hi Priya,

    Credit memo: G2

    1. Credit memo is generally issued in two cases - either when customer returns goods previously purchased and requires a credit or customer is credited without reference to any return of goods when goods sent to him are found to be defective and a return delivery or a repair would exceed the cost. in this case the customer is requested to scrap the material sent and is given an account credit.

    2. Another case is when the customer is over charged for goods he purchased and we only realise that after billing.

    3. when configuring the sales document type “credit memo request” G2 – you can automatically set a billing block that can be released by an authorised person during processing prior to billing.

    4. It is the billing in the finance dept, which in turn is the actual creation of a credit note that is sent to the customer.

    5. It is suggested to make the rejection reason, reference to billing document (invoice) and billing block in credit memo a mandatory field to ensure the traceability.

    6. standard item category used is G2N; order related billing type – G2 (invoice)

    7. Items in contracts and credit memo requests do not have schedule lines as there is no movement of material involved.

    8. Update document flow is activated when using copy control rules for copying from an invoice to a credit memo request.

    Debit memo request: L2

    1. The debit memo process is used when we charge a customer lower than the required amount for the goods sent.

    2. When configuring the sales document type “debit memo request” L2 – you can automatically set a billing block (VOV8) that can be released by an authorised person during processing prior to billing.

    3. It is the billing in the finance dept, which in turn is the actual creation of a debit note that is sent to the customer.

    4. It is suggested to make the order reason and reference to billing document (invoice) and billing block in debit memo a mandatory field to ensure the traceability.

    5. standard item category used is L2N; order related billing type – L2 (invoice); Inter-company billing type - IV

    6. Items in contracts and debit memo requests do not have schedule lines, as there is no movement of material involved.

    REWARD POINTS IF HELPFUL

    Regards

    Sai

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    Former Member
    Jan 21, 2008 at 06:25 AM

    What is Debit note and Credit note? What is the purpose? How we create?

    1. A transaction that reduces Amounts Receivable from a customer is a credit memo. For eg. The customer could return damaged goods. A debit memo is a transaction that reduces Amounts Payable to a vendor because, you send damaged goods back to your vendor.

    2. Credit memo request is a sales document used in complaints processing to request a credit memo for a customer. If the price calculated for the customer is too high, for example, because the wrong scale prices were used or a discount was forgotten, you can create a credit memo request. The credit memo request is blocked for further processing so that it can be checked. If the request is approved, you can remove the block. The system uses the credit memo request to create a credit memo.

    You can use credit memos in Sales and Distribution (SD) for assigning credit memo requests to the open invoices and in Financial Accounting (FI) for assigning credit memos and payments to the open invoices and carry out clearing with them. If you use both Financial Accounting (FI) and Sales and Distribution (SD), there is a 1:1 relationship between the credit memo request and the credit memo item posted in Financial Accounting (FI). As soon as you bill the credit memo request together with other sales orders, or distribute the items of one credit memo request to several billing documents, the assignment is no longer valid and the system will not process it.

    For credit memos, credit memo requests, and payments, you have the following assignment options:

    - Assignment to a single invoice

    - Assignment of a partial amount to an invoice

    - Assignment to several invoices

    When you post credit memos, the payment programme processes them automatically. If the credit memo is specifically related to a particular open invoice item, the payment program automatically attempts to offset the credit memo against the open item. If it is not possible to completely offset the credit memo against an invoice, you can post a debit memo to the vendor, who is to reimburse the amount. Then you can apply a multilevel dunning program.

    3. Debit memo request is a sales document used in complaints processing to request a debit memo for a customer. If the prices calculated for the customer were too low, for example, calculated with the wrong scaled prices, you can create a debit memo request. The debit memo request can be blocked so that it can be checked. When it has been approved, you can remove the block. It is like a standard order. The system uses the debit memo request to create a debit memo.

    4. As mentioned above, creating a credit or debit memo request enables you to create credit or debit memos based on a complaint. For this first create a sales document with the order type for a credit or debit memo request. You can create the debit or credit memo requests in the following ways:

    – Without reference to an order

    – With reference to an existing order

    Here you enter which order the complaint refers to.

    – With reference to an invoice

    Here you enter which invoice the complaint refers to.

    In all cases, you specify the value or quantity that should be in the credit or debit memo

    5. You can block the credit or debit memo request from being billed in Customizing. Go to Sales -> Sales Documents -> Sales document header -> Define sales document type and select the billing block field in the billing section. This request can later be reviewed along with similar ones, - if necessary, by another department. The request for a credit or debit memo can then be approved or rejected.

    Regards,

    Rajesh Banka

    Reward points if helpful

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    Former Member
    Jan 21, 2008 at 05:57 AM

    Hi,

    For credit memo, u can take the scenario of returns process.

    U are sending some qty of materials to the customer. since some goods are damaged, the customer would like to return the material and would like to claim for the returned goods. In such case , first we will create credit memo request with ref. to invoice document. after it is being verified, with ref. to credit memo request, credit memo will be issued to compensate the customer for the damaged goods.

    Debit memo:

    if we charge a customer too low for a particular material for by mistake, we need to get some amt from the customer. For that we will raise a debit memo request and it will be sent to the customer and debit memo will be issued with ref. to debit memo request.

    But this scenario will not occur frequently, the extra amt to be received from the customer will be added to the next invoice with an information.

    Hope it is clear. if u have any queries, please post.

    Do reward points if it is useful.

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    Former Member
    Jan 21, 2008 at 05:58 AM

    Hi,

    In short,

    You may need to create credit memos for various reasons (for example, because of defective goods or because you have overcharged a customer). Similarly, you may need to create a debit memo, if, for example, you have not charged the customer enough.

    Regards

    SD

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