Credit Memo Creation - Reducing an Account Balance

A credit memo reduces an account's balance without processing a refund to the customer's payment method. It works like a payment in that it decreases what the account owes, but no money is returned to the customer. Credit memos are used for goodwill adjustments, billing corrections, partial write-offs, and other situations where the account balance should be reduced.

When to Use a Credit Memo

Use a credit memo when:

• A billing error occurred and the customer should not owe the charged amount
• You want to give a goodwill adjustment or courtesy credit
• A service was not delivered as expected and a partial credit is appropriate
• You need to write off a small balance rather than collecting payment

The tool description reads: "Create a new credit memo for an account. A credit memo shows up in the account statement like an invoice, but has negative amount like a payment. Credit Memos decrease the account balance just like a payment. Once created, it should be applied to a charge when the next payment is entered."

Credit Memo vs Refund

• A credit memo reduces the account balance but does not return money to the customer's payment method. The credit sits on the account and is applied during the next payment.
• A refund reverses a specific payment and returns money to the original payment method (credit card, etc.).

Use a credit memo for account-level adjustments. Use a refund when the customer should receive money back on their card or bank account.

Creating a Credit Memo

To create a credit memo:

1. Navigate to Tools > Credit in the Ecommerce portal
2. Select the Account from the dropdown (only open accounts are listed)
3. Enter a Title — this identifies the credit memo in the account's purchase history. If left blank, it defaults to "Misc Credit."
4. Enter the Amount — this is a positive number representing the credit value. The system applies it as a negative charge.
5. Enter a Description (up to 255 characters) — this text appears on the account statement and provides context for the credit.
6. Optionally select a General Ledger # — this assigns the credit to a specific GL account for accounting categorization.
7. Click Create Credit

Validation

The system validates the following before creating the credit:

• An account must be selected
• The selected account must be valid
• The amount must be entered and cannot be zero
• The description cannot exceed 255 characters
• A title must be provided (defaults to "Misc Credit" if left blank)

How the Credit Memo Is Recorded

When a credit memo is created:

• An order is created with a negative charge amount
• An order detail line item is created with the negative amount and description
• A charge transaction with a negative amount is recorded in the account's transaction history
• An account note is added documenting the credit
• The account balance is decreased by the credit amount

Applying Credits to Future Charges

Once created, the credit memo reduces the account's balance. When you next enter a payment for this account using the Payment tool, the reduced balance will be reflected in the outstanding invoices. The credit does not automatically pay off an existing invoice — it reduces the overall account balance, and the next payment entry should account for it.

Tips

• Always include a meaningful description so the reason for the credit is clear in the account's statement and transaction history
• Use the General Ledger # field to categorize credits for accounting purposes — this helps when exporting GL transactions
• After creating a credit, verify the account balance on the Account List or the Transactions tab to confirm the adjustment