What is a Credit Memo and How Do I Create and Use One?

On This Page

• What is a Credit Memo?
• Creating a Credit Memo
• Applying a Credit Memo

What is a Credit Memo?

A Credit Memo is a document that a seller issues to the buyer, reducing the amount the buyer owes to the seller; this could be used in place of a refund, whether in the event of a pricing dispute or an allowance, for example. It can be used to partially offset an invoice or to offset a future invoice's total amount due.

Most businesses first record the issuing of the Credit Memo and then apply a payment to an Invoice, including the credit in payment.

If the customer would like a check or credit card return, then you would record a refund separately. This can be done by adding a line item (labeled "refund", for example) to the Invoice and logging the price as a negative dollar amount.

Creating a Credit Memo

• Navigate to the Job.
• Open the Payments & Invoices tab.
• Select + Create at the top right and select Create Credit Memos from the dropdown.

This will pull up the following window:

Here, you can:

1. Choose a Design Template you have previously created in the Templates section of your Settings.
2. Choose a Saved Credit Memo you have previously created and saved.
3. Change the date on which the Credit Memo was issued.
4. Add line items.
   1. These options given when you type in an item name are pulled from your Products & Services. If you have not yet added the item to your Products & Services, you can click on "Add New Product", which will pull up a window to create and save the product to your settings. While hovering over the field, the options to delete, add an image, or rearrange an item will appear.
      
5. Add another line item or a new section.
   1. Sections can help you separate your line items into specific groups.
6. Add a Customer Note.
   1. This note will appear at the bottom of your Credit Memo under the Customer Note Title and is visible to your customer.
7. Add an Internal Note.
   1. This note will appear in the Credit Memo description when you view it and is only visible to your team.
8. Save your Credit Memo as a template.
   1. This will allow you to save the Credit Memo, with all of its line items and totals, to be used later. When creating a Saved Credit Memo template, you will be prompted to give the template a name. Then, it will appear in the "Saved Credit Memo" drop-down the next time you need to create the same document.
9. Save your Credit Memo.
   1. This will take you to the document viewer and will record it under the Credit Memos panel within the Financials tab.

Applying a Credit Memo

• To add funds from a Credit Memo to an Invoice, navigate to the Job and select the Payments & Invoices tab.
• Click on the three dots to the right of the Credit Memo.
• Select Use Credit from the dropdown menu.
• Choose which Invoice the Credit Memo should apply to and then click Save payment.