Creating and Applying Credit Memos
Credit memos can be used to credit a client, meaning you can create a credit memo for a set amount to be used later. Most often this is done to credit an invoice reducing the due amount for a client and the sales amount in the general ledger. When a customer has a credit memo on their account, you can use credit memo option on the add payment screen as one of the payment methods.
FIrst, you'll need to create a template for your credit memos, by navigating to Settings > Templates > Credit Memos. You can start with a pre-built template and just edit and make the needed changes, or start from a blank template and build it from scratch.
Go the quick add option to create your credit memo or the invoice page. You can note on the credit memo what it's for, how much the credit is for, debits, and the balance, just in case the credit memo created can be used across multiple invoices.
The required fields are in bold. You need the company name, the rep, the "invoice template," which is the credit memo template you just created, invoice date, which would be the credited date, the invoice due date, and the amount of credit. The other fields that can be used here are the publication drop-down if you wanted to tie the credit memo to a specific one, the credit type, like using a credit memo for a refund, or a no-charge option or the standard credit option. If you need a reference number to tag the credit memo with, there is the External Reference # field.
The notes field is what can show on the credit memo, so typically this field is used for putting the reason for the credit. The internal memo, of course, is an internal memo field, only seen by an internal user and no one on the client-side.
Once you have the credit memo created and you need to apply it to an invoice. Go to the
Plus Sign again and Add Payment.You can search by the company name in the Company field or by their ID.. The open invoices tab should show the invoice you need to apply the credit memo to.
Use the checkbox to the right side to check the needed invoice. Near the bottom, your Payment Method to select is Credit Memo, just below that is the drop-down field for the Credit Memo Details, so you can select the credit memo, just in case a company has multiple credit memos created you can select and apply the needed one.
The Apply To should be to the Selected invoices, the total amount should reflect the credit memo amount to be used, meaning the full amount or possibly a partial amount. Payment Date is the date for this payment being applied.
Now, if you need to make any notes about this credit memo being applied please feel free to use the memo field for that. But once you have everything needed, use the Record Payment button. Your credit memo has now been applied. This will either close out the invoice if the credit memo was for the full amount or adjust the amount due of the invoice.