What is Debit note and Credit note

What is Debit note and Credit note

What is Debit note and Credit note? What is the purpose? How we create?

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1. A transaction that reduces Amounts Receivable from a customer is a credit memo.

For eg. The customer could return damaged goods. A debit memo is a transaction that
reduces Amounts Payable to a vendor because, you send damaged goods back to your
vendor.

2. Credit memo request is a sales document used in complaints processing to request a

credit memo for a customer. If the price calculated for the customer is too high, for
example, because the wrong scale prices were used or a discount was forgotten, you can
create a credit memo request. The credit memo request is blocked for further processing
so that it can be checked. If the request is approved, you can remove the block. The
system uses the credit memo request to create a credit memo.

You can use credit memos in Sales and Distribution (SD) for assigning credit memo
requests to the open invoice and in Financial Accounting (FI) for assigning credit
memos and payments

to the open invoices and carry out clearing with them. If you use both Financial
Accounting (FI) and Sales and Distribution (SD), there is a 1:1 relationship between the
credit memo request and the credit memo item posted in Financial Accounting (FI). As
soon as you bill the credit memo request together with other sales orders, or distribute the
items of one credit memo request to several billing documents, the assignment is no
longer valid and the system will not process it.

For credit memos, credit memo requests, and payments, you have the following
assignment options:
- Assignment to a single invoice
- Assignment of a partial amount to an invoice
- Assignment to several invoices

When you post credit memos, the payment programme processes them automatically. If
the credit memo is specifically related to a particular open invoice item, the payment
program automatically attempts to offset the credit memo against the open item. If it is
not possible to completely offset the credit memo against an invoice, you can post a debit
memo to the vendor, who is to reimburse the amount. Then you can apply a multilevel
dunning program
.

3. Debit memo request is a sales document used in complaints processing to request a

debit memo for a customer. If the prices calculated for the customer were too low, for
example, calculated with the wrong scaled prices, you can create a debit memo request.
The debit memo request can be blocked so that it can be checked. When it has been
approved, you can remove the block. It is like a standard order. The system uses the
debit memo request to create a debit memo.

4. As mentioned above, creating a credit or debit memo request enables you to create
credit or debit memos based on a complaint. For this first create a sales document with
the order type for a credit or debit memo request. You can create the debit or credit
memo requests in the following ways:
– Without reference to an order
– With reference to an existing order
Here you enter which order the complaint refers to.
– With reference to an invoice
Here you enter which invoice the complaint refers to.
In all cases, you specify the value or quantity that should be in the credit or debit memo

5. You can block the credit or debit memo request from being billed in Customizing. Go
to Sales -> Sales Documents -> Sales document header -> Define sales documents type
and select the billing block field in the billing section. This request can later be reviewed
along with similar ones, - if necessary, by another department. The request for a credit or
debit memo can then be approved or rejected.