A Credit Memo record is a transaction that decreases the amount a customer owes you. It is typically issued when there is a need to provide a refund or credit to the customer. A credit memo can be created from a Return Authorization when a customer returns a product or as a stand-alone record initiated by the business.
When a credit memo is created from a Return Authorization, it does not impact inventory levels. However, if a stand-alone record of a credit memo is generated, it can affect your inventory as it signifies a decrease in the quantity of goods available for sale.
By utilizing credit memos effectively, businesses can streamline their accounting processes and maintain accurate records of customer transactions, ensuring a smooth and efficient financial management system.
In this article, you can learn how to create a credit memo transaction in NetSuite in simple steps!
How to Create a Credit Memo in Netsuite
Issuing a credit memo is a straightforward process that involves several steps to ensure accuracy and completeness.
Here’s a detailed guide to help you navigate through each step:
1. Accessing Credit Memo Section
- Start by navigating to the Transactions menu and selecting Customers. From there, choose the option for issuing Credit Memos.
2. Primary Information
- In the Custom Form field, pick the credit memo form you wish to use. This form helps standardize the information presented.
- Choose the customer you are crediting. Ensure accuracy in customer selection.
- Accept today’s date or manually enter another date if needed.
- If your accounting system uses periods, select the posting period for this credit.
- Enter the customer’s original purchase order number.
- Optionally, add a memo for reference on the Accounts Receivable register.
3. Sales Information
- Adjust the sales effective date if necessary. This date determines the transaction’s relevant commission plan and historical sales team.
- Check the “Exclude Commissions” box to omit this transaction from commission calculations.
4. Classification
- Under the Classification section, associate the credit memo with a specific department, class, and location. If applicable, choose a subsidiary if the customer is shared across multiple subsidiaries.
5. Items Subtab
- Within the Items subtab, provide details about each item being credited. Click “Add” after each entry.
- For serialized items, input the customer’s name and the item number. Click “List” to select the serial number associated with the sale.
6. Billing Subtab
- In the Billing subtab, the default billing address for the selected customer is displayed in the Bill To field. Modify this address if necessary.
7. Shipping Subtab
- Complete the Shipping subtab with relevant details about the shipment for this transaction.
8. Accounting Subtab
- The Accounting subtab is visible if you’re using Multiple Currencies or Revenue Recognition features. Additionally, it appears if you haven’t enabled the Per-Line Taxes preference or have added fields to this subtab.
9. Relationships Subtab
- Provide contact or partner details on the Relationships subtab.
10. Sales Team Subtab
- Select the appropriate Sales Team for this transaction on the Sales Team subtab if Team Selling is used.
11. Communication Subtab
- Input any communication-related information in the Communication subtab.
12. Saving Your Changes
- After completing all necessary details, click “Save” to ensure your credit memo is recorded accurately.
Following these detailed steps, you can issue a credit memo precisely and confidently, maintaining clear transaction records.
Suppose you issue a credit memo after a customer has paid an invoice. No worries! You can still apply this memo to the customer’s open or future invoices. Head to Transactions > Customers > Accept Customer Payments, and choose the right customer.
Crediting an Authorized Customer Return
The process is super simple and efficient when it comes to crediting a customer for an authorized return. Head to the Transactions tab, click Customers and select Issue Return Authorizations.
Once in the list view, click on the authorization you want to credit. Then, just hit the Refund button! A credit memo is automatically generated.
Take a moment to double-check the quantity and amount details for the items on the credit memo. Once everything looks good, save the changes.
Your customer is now correctly credited for the items they returned. This straightforward method ensures a hassle-free and accurate crediting process for authorized returns.
Applying a Credit Memo on the Credit Transaction
To apply a credit memo on a credit transaction:
- Begin by navigating to Transactions > Customers > Issue Credit Memos > List (Administrator).
- Select the desired memo and click Edit.
- On the Items subtab, check the Auto Apply box if you want NetSuite to apply the credit to the oldest invoices or cash sales due.
- Proceed to the Apply subtab to specify the invoices or cash sales to which you want the credit applied.
- Save the changes, and now, when including the credited invoice or cash sale on a customer payment, the balance due will reflect the credit amount.
Applying a Credit Memo on a Customer Payment
For applying a credit memo on a customer payment:
- Go to Transactions > Customers > Accept Customer Payments > List (Administrator).
- Edit the payment where you want to apply the credit or create a new payment.
- Fill in the necessary information and navigate to the Apply subtab.
- Check the box next to each credit memo you want to apply, view the invoices being credited on the Invoices subtab, then save the changes.
Applying a Credit Memo on an Open Invoice
To apply a credit memo on an open invoice:
- Go to Transactions > Sales > Create Invoices > List (Administrator).
- Click View next to the invoice you want to credit, then click Credit.
- Fill in the necessary information for the credit memo.
After applying a credit memo, you can review the application by going to Transactions > Customers > Issue Credit Memos or Transactions > Customers > Accept Customer Payments, depending on whether you want to check it from the credit memo or payment perspective.
Conclusion
That’s all from us. We hope you’ve got the hang of creating a credit memo in NetSuite. If you need more help, feel free to reach out.
Folio3 is a top-notch NetSuite Solution Provider with extensive expertise in handling all NetSuite customization needs. We offer tailored solutions that perfectly fit your unique business requirements, whether customization, integration, or ongoing assistance. We’re committed to delivering nothing but the best!
