A credit memo template is a commercial document may cover financial details with sales return and / or undelivered materials’ amount for credit in customer’s ledger. Practically, seller is preparing this document and send to buyer as “credit note” in terms of reduction in sales figures.

The Credit memo’s full form is “Credit Memorandum”, however, short form is much popular in businesses. Actually, this is understanding between both the parties i.e. seller and buyer for sales returns or undelivered materials transactions.

In short Credit Memo is:

• A contraction of the term – Credit Memorandum
• Used as reducing the amount – as terms of invoice of supplier
• Prepared by seller, and send to buyer.
• Aggregate information – Why seller is issuing it? What amount will be reducing, and against which invoice.

There are actually two reasons behind raises of “Credit Memo”:

1. First is If buyer return the materials, and
2. Second is Invoice is already issued, but Materials had not delivered to customer’s premises.

What Type of Information can include Credit Memo?

A credit memo practically may contain financial details and business transactions such as:  Supplier name and address, customer name and address, job details, credit no and date, customer specific ID, Invoice number, quantity, item name and description, unit price, and total amount. Even under which terms the amount is going to deduct can also needs to describe.

There also some important information can include, such as why this credit memo issued, against which invoice, details of amount, etc. This details are helpful to seller as well buyer to keep track the records of transactions occurring between said both parties.

Free printable Credit memo template

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The credit memo template is unique commercial format that typically issued by the seller of products or services to the customer. It will be describing – reducing the figures that the customers owe to the seller. Usually, the template may include company basic information, customer details, date of memo, quantity of the product, product unique identification number, brief description, unit price, and total amount.

Details may include in this credit memo are:

• Enter the customer basic information, date of the memo, Unique invoice number / bill number, credit memo number.
• In the second section you can include product related details such as – product ID, product description, quantity of the product, reason for credit, total price and amount.
• You can also describe taxes details.

Why credit Memo is important?

The credit memo is much important in the business transactions due to following reasons:

• This is actually acceptance from the supplier. The supplier may show its acceptance of the supplied materials are either returned – or not delivered yet.
• This is actually “receipt of the returned materials” or ” acknowledgment with credit figures against undelivered materials.
• This is commercial document that through supplier can credit the amount against raised invoice(s).

Practically, the financial / accounting departments of seller can be using this “credit Memo”. This generic structure may help to managing accounting figures against the raising invoices.

Sample Credit Memo template

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This is actually maintaining the financial as well business records that directly attached with sales and accounting department. Once the sales team conform the full or partial amount needs to credit in the favor of buyer, the accounting team generates this document to maintain the credit entry with credit memo. As results the credit memo is document that generate transactions for reducing the total balance of a buyer’s account.

The key elements to makes an effective Credit Memo

When you are going to create a basic formation of the credit memo, you have to keep essentials elements that makes your document more perfect as well much effective.

• At the top of the format, you have to describe the title of this document i.e. “Credit Memo”
• Under the heading you can describe unique reference number of the credit memo with date of issue of this credit memo.
• Reference code from customers – this can be basic communication reference code for particular inquiry, sales contract or any “unique code”, which is accepts by both parties.
• Obviously there are you have to describe company details as well as customer details (General information)
• Description of the goods. Herein this section, you have to describe some important information such as product description, prices and associated specific details.
• Prices & Amount of this goods which were sold to customer.
• Name of the party – Who is liable to pay – Taxes & Duties and other charges such as transportations, insurance, packing & forwarding etc.
• Total amount along with “unit price” and net amount.
• Describe the payment methods – such as cash, cheque, RTGS, Wire transfer etc.
• At the bottom, you have to describe – total due amount – mean “remain amounts”. Which may be total numbers of invoices which are already generates and acceptance of materials copy receive by customer.