Crdit memo in AP

[amicguys]

Hi,

Can You give me the Example on credit memo in payables

That is in which case we go for credit memo.

I know that it decrese the laibility of supllier and it is a negative value.


But i want an example under which case we go for credit memo\


Thanks
Kishore

[ahmadbilal]

If I have orderd Something to supplier and now I want to take some sort of discount from that supplier in that case I will create a credit memo in AP

If I have no purchasing module implemented and I want to return or reduce some suppliers balances in that case I will also raise CM

[amicguys]

Hi Ahmad,

Thanks a lot.


Thanks
kishore

[seneeraj]

In AP Credit Memo and Debit Memo both are in Negative values. so there is no major diff, you can use any of it.

Neeraj Bhatia

[vvrsankar]

Many people are getting this doubt. The simple way of understanding...

Here there are two parties in Debit/Credit Memo. For convenience let us say one party is Maker and the Second Party is Recipient.


1. Maker- Party which prepares or makes or raises Debit / Credit memo
2.Reciepent - Party which receives Debit/Credit Memo from the Maker

In case of Debit Memo -- The Recipient?s account gets debited in the books of Maker ( obviously Maker's account gets credited in the books of Recipient)

In case of Credit Memo -- The Recipient?s account gets credited in the books of Maker ( obviously Maker's account gets debited in the books of Recipient)

Briefly - Recipient?s account gets Debited ( Debit Memo) , Credited ( Credit Memo) in the books of Maker

But if we think with some logic? in case of purchases? , the buyer raises debit memo to decrease his (buyer) liability to pay , because the memo benefits buyer and he will be in the anxiety to get the benefit of it . Simply, we can say , if this is not raised the looser is buyer , that is why buyer acts quickly. Of course some times even seller may also raise Credit memo.

But in AP module of oracle ?
1.The normal context is , in case of vendors , your organization is liable to pay to vendor
2.But Debit/credit memo (invoice type) purpose is reversing the normal context . That is decreasing the liability to pay to vendor. In brief we can say Debit/Credit Memo (invoice type) in AP module decrease the liability to pay to vendor. Both Debit/Credit Memo (invoice type)serve the same purpose .


From all above , one thing that should be understood is.. Invoice Type in AP module for entering data is different from the document or paper sent to the second party recipient.

The sentence ?Both Debit/Credit Memo (invoice type)serve the same purpose ? is valid only for Invoice Type in AP module for entering data.

Suppose if your company wants to decrease the liability to pay to the vendor , then the name of the document / paper prepared and sent to the vendor is ?DEBIT MEMO?. But while recording this transaction in AP module you can select invoice type either ?DEBIT MEMO? or ?CREDIT MEMO?.


Ravi Sankar

[sivashankar]

DEBIT MEMO-ISSUED BY THE CUSTOMER,if there is a defect in
the goods,then along with the goods customer will send a
debit memo to supplier,so here the supplier balance will
reduce.

CREDIT MEMO-issued by the supplier.suppose there are errors
in the invoice sent to the customer or there is aproblem
with the shipment then this memo will be issued to decrease
the amount specified int he original invoice sent to the
customer.here,the supplier balance will reduce.

Sivashankar.K