debit note and credit note

[lakshmansammeta]

what is the main difference between debit note and credit note

[Willynelly1]

Hi,

a) 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.

b) 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.

c) 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other sales orders, or distribute the items of one credit memo request to several billing documents, the assignment is no longer valid and the system will not process it.

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.

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.

If you need more info. please read oracle user guide, Receivables and Payables.

William.
Kuwait.

[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. In case of sales vise versa.

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