Credit Memo
A credit memo is a document that reduces the amount a customer owes – for example, because of a price correction, a return, a complaint, or a rebate.
Billing
Explanation
Common reasons for credit memos include:
• returns of goods,
• price or quantity corrections,
• service level penalties,
• volume rebates and other incentives,
• goodwill credits.
In SAP SD, credit memos are typically created with reference to a credit memo request, the original sales order, or the original invoice.
Why It Matters
A credit memo is a billing event, but its revenue impact depends on the cause. It may represent variable consideration (such as rebates or returns), a contract modification (such as an agreed price reduction for future services), or the correction of an error. For SAP Revenue Accounting and Reporting (RAR), credit memos should reference the original contract so they can be assigned to the correct performance obligations. Credit memos without a reference are a common cause of reconciliation issues.
Related Terms
Billing Document · Variable Consideration · Contract Modification · Revenue Leakage · Rebate
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