Credit note

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A credit note or credit memorandum (memo) is a commercial document issued by a seller to a buyer. The seller usually issues a credit memo for the same or lower amount than the invoice, and then repays the money to the buyer or sets it off against a balance due from other transactions.

It can also be a document from a bank to a depositor to indicate the depositor's balance is being in event other than a deposit, such as the collection by the bank of the depositor's note receivable.

Features[edit]

A credit note lists the products, quantities and agreed prices for products or services the seller provided the buyer, but the buyer returned or did not receive. It may be issued in the case of damaged goods, errors or allowances. In respect of the previously issued invoice, a Credit Memo will reduce or eliminate the amount the buyer has to pay. Note: A Credit Memo is not to be substituted as a formal document. The Credit Memo rarely contains: PO #, Date, Billing Address, Shipping Address, Terms of Payment, List of products with quantities and prices. Usually it references the original Invoice and sometimes states the reason for issue.

This is received if the goods are incomplete, damaged, or incorrect; you may also receive one if you have paid too much money, or you have been under charged.

Uses[edit]

From the point of view of a company, credit notes can be classified in two groups:

A credit note sent to clients is considered as a sales returned for accounting purposes. A credit note received from suppliers is considered as a purchases returned.

See also[edit]