Credit Note & Debit Note

DEFINITION

• Credit & debit memos in SAP enable adjustments to sales and purchasing invoice amounts.

• These documents are used to correct or modify initial invoices because of issues such as incorrect pricing, goods returns, or extra charges.

“Seller issues Credit note to buyer (sales returns).
Buyer issues Debit note to seller (purchase returns).”

Credit Memo / Credit Note

A credit memo is issued when a customer has an overpayment or the invoice amount needs to be corrected. This might happen when:

• The original invoice was overcharged.

• The customer returned the goods.

• Discounts or rebates need to be applied.

• Customer pays less: It decreases the customer’s payable balance or increases the vendor’s receivable balance.

Debit Memo / Debit Note

A debit memo is issued to a customer when further payment is required. This could be due to:

• The original invoice amount was undercharged.

• Further goods or services were delivered beyond the original billing.

• Shipping or additional fees were omitted from the original invoice.

• Customer pays more: It increases the customer’s payable balance or reduces the vendor's receivable balance.

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SCENARIO

Credit Memo / Credit Note

A customer was billed ₹1,000 for 10 units, but they sent back 2 defective units. The seller issues a credit memo for ₹200 to rectify the overbilling.

Debit Memo / Debit Note

A sale of ₹5,000 was made, but ₹500 for delivery charges was not included. To make up for this, a debit memo is sent to the customer, asking for the extra ₹500.

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TRANSACTION CODE

• Sales (SD)

  • Credit Memo Request (VA01)

  • Billing (VF01)

• Purchasing (MM)

  • Vendor credit memo (FB65 / MIRO)

  • Vendor debit memo (FB60 / MIRO)

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Distinctions Between Debit Memo and Credit Memo:

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