Credits and debits
Credit and debit memos that lower or raise what a customer or supplier owes, without moving cash.
A credit or debit memo changes what someone owes without any money changing hands. A propane office uses one to give a customer an allowance for a short delivery, correct a price after the invoice was posted, or record a credit your supplier gave you for a bad load. The memo is the document; applying it to invoices happens on the payment screen, so all settling happens in one place.
What the two directions mean
| Direction | For a customer | For a supplier |
|---|---|---|
| Credit | Lowers what the customer owes you (an allowance or a correction) | Raises what you owe the supplier |
| Debit | Raises what the customer owes you | Lowers what you owe the supplier (a supplier credit) |
A memo belongs to exactly one customer or one supplier. It is Draft while you enter it, Posted once it counts, and Voided if it was reversed.
How to give a customer an allowance when a delivery or price was wrong
- Open Credits & Debits under Invoicing and choose Add Memo.
- Set Party Type to Customer, pick the customer under Counterparty, and set Direction to Credit.
- Enter the Memo Date, the Amount and the Currency.
- Choose the Reason Account: the ledger account that absorbs the allowance, such as a sales discounts or allowances account. It is the other side of the entry, in place of a bank account.
- Add a Reference and Notes that explain the credit, and attach a supporting Document if you have one.
- Save, then Post.
A posted credit is now available to that customer. To use it against an invoice, open Payments, start a payment for the customer, and choose Apply available credits. A payment can carry no cash at all and only apply the credit. When the credit is applied, the invoice reads Credit Note Issued.
How to record a supplier's credit when they owe you money back
Choose Party Type Supplier and Direction Debit, fill in the amount and the reason account, and post. Apply it to the supplier's open bills from a supplier payment with Apply available credits; the bill then reads Debit Note Issued. If the supplier sends the money back instead, record a payment of type Refund from Supplier and apply it to the memo.
How to see where a memo was used when you open it
A posted memo shows Applied To: every invoice it has been applied to, with the date, the type, the document and the amount. Select a line to open that invoice.
How to correct a memo when it was entered wrong
A draft memo can be changed or deleted. A posted memo cannot be edited: choose Void, which writes a reversing entry and marks it Voided, then enter a new one. Void a memo only after removing it from any payment that applied it.
Where this fits
Memos settle sales invoices and purchase invoices through the application table on Payments. A customer credit you owe back in cash is paid out with a Refund to Customer payment. With accounting on, each posted memo writes its entry against its reason account in the ledger described in Accounting.