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Debit and Credit Memo

What is Debit note and Credit note? What is the purpose? How we create?
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
invoices 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or distribute the items of one credit memo request to several billing documents, the assignment is no
longer valid and the system will not process it.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 document 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.

Example take this case


A is customer,
B is vendor or manufacture
Now Manufacturer (B) send finished goods to customer (A) for 2000 Qty, amount 20 lacs rupee.
Customer received the FG, and use some other purpose. But quality of FG is not good (10%). So this 10%
is goods amt bare with A & B
So now the customer rise the debit note to vendor.
That means u detect the some amt for ur invoice bill
are u clear about debit note?
Debit Memo:
If the customer needs to pay an additional amount to the supplier, the supplier will raise a debit memo. The
customer's accounts payables increases. T-Code: VA01
Credit Memo:
The supplier gives a credit to the customer. This means that the amount owed by the customer to the supplier
decreases. This happens if customer is overcharged or customer has returned goods. The customer's
accounts payables decreases. T-Code: FB60/F-27

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