Credit Memo Invoice
A credit memo invoice is an abbreviation of term credit memorandum that is a document generated by the seller of services or good to the buyer, making a reduction of an amount that the buyer has to get from seller according to the terms and conditions of some earlier invoice.
The credit memo invoice generally included the details that why exactly the state amount on memo has been issued and later can be used to aggregate the information of credit memos to ascertain that why the selling is generating these invoices.
A credit memo invoice can also be issued if the buyer returns the goods to the seller or there occurs a dispute over pricing or marketing allowance or due to some other reason and that results in a situation that the buyer is not paying the seller the whole amount as per invoice.
The seller considers and records the credit memos as a reduction in the balance of its accounts receivables while on the other hand, the buyer records it as a reduction in the balance of its accounts parables. The seller must always review all of its open credit memo invoices at the closure of each reporting period to assess that whether they are linked to accounts receivables or not. If the buyer is yet to pay to the seller, the buyer should use these memos as a partial offset to its payment to the seller that is invoice based. And if the buyer has paid the whole amount as per memo invoice, the buyer can use the memo to offset an upcoming payment to the seller.
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