Create Credit Memo by Matching Customer Payment and Credit Note

This instruction explains how you create a credit memo for an outstanding customer invoice. The credit memo is usually used to write off an accepted debit note, that is a deduction of payment made by the customer, by matching it to a credit invoice record.

The matching of payment records for the credit memo closes open transactions. The credit memo itself functions as a receipt informing the customer that specific credit invoice records, debit notes, or on account records have been used to clear certain invoices.


Open customer transactions are closed. A credit memo, an accounting journal, and a customer payments journal are printed.

Send the credit memo to the customer as a confirmation that the deducted amount has been written off.

Accounts receivable and the general ledger are updated. The following account entries are created:

Accounting Rule Account Debit Credit
AR30 – 100 (1) Customer (debit note)   x
(2) Customer x  
  1. Account entry based on the debit note record.

  2. Account entry based on the original customer invoice.

The credit memo is assigned information category number 220. Transaction information for the credit memo can be reviewed in 'Accounts Receivable. Display Additional Information' (ARS250).

Before you start

Follow These Steps

Create Credit Memo

  1. Start 'Payment Received. Record' (ARS110/B).

  2. Select option Open for a detail record under FAM function AR30 to serve as an entry template.

  3. On the E panel, select one of the following alternatives:

    • To create a credit memo without allocating any new payments, enter 0 as the received amount
    • To create a credit memo and record new payments as well, enter the total received amount.
  4. Apply the information in the instructions connected to Recording Customer Payments to enter the other values on the E panel, when required. Press Enter.

  5. On the F panel, select one of the two sorting orders valid for creating credit memos:

    • 1 = Payer
    • 2 = Customer.
  6. Enter the payer/customer in the panel header.

  7. Select option 18 = 'Credit memo' for the invoice or debit note record and the corresponding credit invoice record to activate 'Standard Letter. Print' (ARS115).

    Note that the total amount for the matched records must be 0.

    New debit note records do not update the financial system until the entry program is exited. This means that you cannot match a credit memo to a debit note record created in the same session.

Work with Credit Memo Information

  1. In (ARS115/E), select the standard letter to be used for credit memos.

  2. If you wish, add two lines of additional text for the customer/payer.

  3. If you intend to send the credit memo by fax, select the 'Fax transmission' check box and verify that the fax number proposed from the customer file is correct.

  4. Press Enter to print the credit memo and to return to (ARS110/F).

Finish the Activity

  1. Repeat the steps above until the entire total to be processed is allocated and adjusted.

  2. To end, press F3 to assign a voucher number to the voucher.

  3. Send the credit memo to the customer.

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