Often companies issue Credit or Debit memos to customers to correct
the already invoiced amount.
Credit Memo
Credit memo is issued to customer when they want to reduce
the invoiced amount.
Ex: Company ABC issued an invoice to customer XYZ with Rs. 1000
for items purchased.
Company ABC wants to apply 2% discount and correct the
invoiced amount. In this case they will be issuing Credit memo with Rs. 20
Now Customer XYZ has to pay Main Invoice amount – Credit Memo
amount i.e 1000-20=Rs.980
Debit Memo
Debit memo is issued to customer when they want to increase
the invoiced amount.
Ex: Company ABC issued an invoice to customer XYZ with Rs. 1000
for items purchased.
Company ABC wants to apply Shipping and Tax of Rs. 100 and
correct the invoiced amount. In this case they will be issuing Debit memo with
Rs. 100
Now Customer XYZ must pay Main Invoice amount + Debit Memo
amount i.e 1000+100=Rs.1100
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