Crediting an InvoiceThe ideal relationship between a client and a performer is simple. You, as an entrepreneur, provide goods and services, and your orderer pays for them on time. No incorrect payments, damage to products, and denial of services in the course of work. In the real world, things are a little more complicated. In this article, we will compare credit memo vs. invoice and show you when to use the first option.
What Is a Credit Note in Accounting?Credit note, invoice, and memo are different terms describing the same document. So, what is a credit invoice? This paper largely repeats other payment forms and is issued to partially or completely cancel a payment in terms of content. It’s especially useful for small businesses, freelancers, vendors, and independent contractors in the following situations:
- you mistakenly provided the wrong products that a customer ordered, and you need to offer a refund;
- if an orderer decides to return part of the goods from the list, you should issue a partial refund;
- a client wants to make an advance payment by consultation, law, or medical invoice to have a positive balance on their account;
- you want to provide an orderer with a discount;
- you are ready to write off the existing debt on the client’s account, for example, if it is too small to collect;
- you issued an invoice by mistake or sent documents to the wrong recipient;
- when drawing up the primary invoice, you made a calculation error.