Receivables lets you fully or partially credit your invoices while it automatically creates all the accounting reversal entries for you. You can use the Credit Transactions window or AutoInvoice to create your credit memos. The accounting is always the same whether the credit memo is imported through AutoInvoice or entered manually using the Credit Transactions window.

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.

1. 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.

2. A transaction must be complete before you can create a credit memo against it.

3. 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.
Unit: Choose this option to reverse the revenue for the number of units you specify from an original line of the invoice.

4. 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.

Crediting Transaction Lines
In addition to crediting either part or the entire balance due of a transaction, Receivables lets you credit individual transaction lines. For example, if a transaction has several line items, you can partially or fully credit the amount due for each line or only a single line item.

 

Unapplying Cash when Crediting a Transaction
Receivables lets you unapply cash that was previously applied to a transaction and create a credit memo for that amount. For example, your customer returns a product for which they have already paid in full. You need to unapply the cash for that transaction, then create a credit memo for the full amount.