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 increased because of an event other than a deposit, such as the collection by the bank of the depositor's note receivable.
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.
- To allow the buyer to purchase an item or service from that seller on a future date; i.e. a gift card or store card credit. Credit notes may be issued by a seller as a goodwill gesture to a buyer who wishes to return previously purchased merchandise (instead of cash repayment) in circumstances where the original sales agreement did not include an explicit refund policy for returned items. In such circumstances, a credit note of value equal to the price of the returned item is usually issued allowing the buyer to exchange his purchase for other items available with the sale.
- To correct an invoice that has already been processed and sent to the buyer. If you have already sent an invoice to a buyer but now need to provide a credit for that invoice, you would send them a credit note or credit memo. You can think of a credit note as a "negative invoice." It can be used in some Enterprise Resource Planning software.
- For accounting purposes in the case of returned goods. After the sale, if the customer is not happy with the purchased goods for various reasons, such as damage, or if a product has expired (for example, food items), he would return the goods. This transaction has to be reversed for accounting purposes.
There are two types of credit note:
- Credit note sent to consumers and credit note received from suppliers.
- Credit note sent to consumers is considered as a sales returned whereas the other credit note is considered as a purchases returned.
- Credit (finance)
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Look at other dictionaries:
credit note — noun 1. A document issued by a retailer, esp a shop or store, to a customer who has returned goods, which can be used to obtain other goods to the same value 2. An amendment to an invoice (accounting) • • • Main Entry: ↑credit * * * credit note… … Useful english dictionary
credit note — credit notes N COUNT A credit note is a piece of paper that a shop gives you when you return goods that you have bought from it. It states that you are entitled to take goods of the same value without paying for them. [BRIT] (in AM, use credit… … English dictionary
credit note — index letter of credit Burton s Legal Thesaurus. William C. Burton. 2006 … Law dictionary
credit note — n BrE a document given to a customer who is owed money, for example because they have returned goods … Dictionary of contemporary English
credit note — A document that a supplier issues to a customer, following a genuine mistake or overcharge, or an agreed change in the value of supply. HM Customs & Revenue Glossary * * * credit note credit note ➔ note1 * * * credit note UK US noun [C] UK (US… … Financial and business terms
credit note — UK / US noun [countable] Word forms credit note : singular credit note plural credit notes a document that a shop gives you when you return goods allowing you to buy other goods of the same value from the shop … English dictionary
credit note — / kredɪt nəυt/ noun a note showing that money is owed to a customer ● The company sent the wrong order and so had to issue a credit note. Abbr C/N … Marketing dictionary in english
credit note — / kredɪt nəυt/ noun a note showing that money is owed to a customer ● The company sent the wrong order and so had to issue a credit note. Abbreviation C/N … Dictionary of banking and finance
credit note — A document expressing the indebtedness of the organization issuing it, usually to a customer. When goods are supplied to a customer an invoice is issued; if the customer returns all or part of the goods the invoice is wholly or partially… … Accounting dictionary
credit note — A document expressing the indebtedness of the organization issuing it, usually to a customer. When goods are supplied to a customer an invoice is issued; if the customer returns all or part of the goods the invoice is wholly or partially… … Big dictionary of business and management