confusion in credit memo

[Former Member]

HI

i have confusion in credit memo. in which business scenario i should use credit memo and cancel invoice.Both have same acc impact.

pls Help

thanks

[former_member187965 · Accepted solution]

Hi Avijit,

Credit memo is required in return to vendor scenario.

For example, you have purchased material and posted the vendor invoice in MIRO. Now after some days you come to know that partial qty of the received material is not ok and you want to return the material to vendor and debit to vendor for this amount.

So in this scenario system will not allow you to post return delivery unless and until you post credit memo for the rejection qty and amount. In this case, it's not standard practice to cancel the invoice.

Cancel option is used when you want to correct a wrong posted invoice.

[Former Member · Accepted solution]

Shailesh is correct - normal practice is to record every invoice you have received; if need to deduct the amount and return goods - credit memo; if just to deduct amount and keep faulty goods (or increase the amount if invoice amount was too low) - then subsequent debit/credit.

Cheers.