Purpose of Credit Memo in SAP MM:
A transaction that reduces the amounts owed from a client is a credit memo. For eg. The customer could return damaged goods. A debit memo may be a transaction that reduces Amounts collectible to a seller because; you send the broken products back to your seller.
A credit memo request may be a sales document employed in the complaints process to request a credit memo for a client. If the value calculated for the client is just 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 any process in order that it may be checked. If the request is approved, you can remove the block. The system uses the credit memorandum request to form a credit memorandum.
You can use credit memos in Sales and Distribution (SD) for assignment credit memo requests to the open invoices and in monetary Accounting (FI) for assignment credit memos and payments to the open invoices and carry out clearing with them. If you utilize each 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 presently as you bill the credit memo request alongside alternative sales orders, or distribute the items of one credit memo request to several billing documents, the assignment is no longer valid and therefore the system won't method it.
For credit memos, credit memo requests, and payments, you have the following assignment options:
- Assignment to a single invoice
- Assignment of a partial quantity to an invoice
- Assignment to several invoices
When you post credit memos, the payment program processes them mechanically. If the credit memo is specifically associated with a selected open invoice item, the payment program mechanically tries to offset the credit memo against the open item. If it's impractical to fully 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 for a multilevel dunning program.
When the purchaser returns the goods to the seller the Purchaser sends a Debit Note to the seller (ie. the client debits the vendor in his books id est. Purchasers Books) and the Seller sends a Credit Note to the purchaser (ie. the seller credits the client in his Books id est. Sellers Books).
Following are the JVs to be passed:-
Sales Return inward A/c Dr.
To Debtor A/c
(Being goods returned by the customer)
Creditor A/c Dr.
To Goods Return A/c
(Being goods sent back to the seller)