If you have purchased certain electronic items on cash payments from the dealer but on receipt of the goods, it is found that, certain pieces of your purchased items were defective, prompting you to return the same, how would you be compensated for the returned electronic goods? The seller or dealer would issue you a Credit Memo for the returned goods, which is a proof of your returned goods, as well as your credit with the seller to be adjusted in your favor.
Credit Memo can be defined as a commercial document issued to a buyer by the seller. Through Credit Memo, the seller repays the money to the buyer or adjust the same against other transaction due balance of the buyer.
Why Credit Memo is issued to the buyer?
Sometimes, the goods dispatched by the seller may be in lower quantity than actually ordered and paid by the buyer and on few occasions, the buyer is charged higher than, the actual selling price of the goods. In some cases, the buyer may have returned the damaged and defective goods and the amount for such returned goods will have to be credited on buyer account. Many a time the Credit Memo is issued for errors and allowances. The Credit Memo also reduces the previously issued Invoice amount to the buyer and buyer now will have to pay the lower amount than required. Thus, this document reduces the liability of the buyer from paying the full amount of the Invoice. This Memo is also essential for accounting purposes to credit the account of the buyer.
On certain occasions, the seller also issues Gift Card, Gift Coupons and Store Credit Card to the buyer, for the equal amount of the returned or damaged goods. Such policy is to facilitate the buyer to purchase the goods in future. This policy is also followed by the seller as a goodwill gesture, when the company has the policy of not accepting the returned goods.
CREDIT MEMO Template
Company Name ________________________
Business Address
_______________________
_______________________
Contact phone number(s) _________________
Email address_________________________
Date __________________
Bill To
Customer Name __________________
Business name__________________
Business Address ________________
Ref Invoice No _____________
date ___________________
Invoice No.____________
Item____________
Quantity____________
Description____________
Price____________
Total____________
Credit Amount $___________________
Name_________________________
Seal of the Company