Issue a Credit Memo

Last updated: 2026-07-09 Summary:

• A credit memo reduces what a customer owes — for returned goods, a price correction, an allowance, or a billing error.
• Its life cycle is Draft → Issue → Apply → (optionally) Void; issuing posts the reversing journal entry, applying reduces an invoice’s balance.
• Goods Return restocks inventory and reverses COGS; Price Adjustment never touches inventory. The PDF prints an ORIGINAL and a DUPLICATE.

Create the credit memo

1. Go to Accounts Receivable → Credit Memos → Create Credit Memo.
2. Pick the customer, date, currency, and the AR account, then add lines (product/service, quantity, unit price, and tax).
3. Choose the type:
   • Price Adjustment (default) — allowances, billing errors, or discounts. No inventory movement.
   • Goods Return (restores inventory) — the customer physically returned goods. A product picker appears; tag each returned line to an inventory product so it restocks on issue.
4. Enter a reason and save. A new credit memo starts as Draft.

Price Adjustment is the fail-safe default: eKapital never restocks unless you deliberately switch to Goods Return.

Issue it

Click Issue Credit Memo on the detail page. Issuing:

• Posts the reversing journal entry (credits Accounts Receivable, debits revenue, and reverses output VAT on VAT-able lines).
• For a Goods Return, restocks the tagged inventory and reverses the related cost of goods sold.
• Moves the memo to Issued.

Apply it to an invoice or debit memo

1. On an Issued (or Partially Applied) memo, click Apply to Invoice.
2. In the dialog, select an open invoice or debit memo for the same customer (only documents with a balance appear) and enter the amount to apply — capped at the smaller of the remaining credit and the document’s balance due.
3. Confirm. The target’s balance drops (and flips to Partial or Paid), and the memo becomes Partially Applied or Fully Applied.

Applied credit shows on the invoice’s Payments Applied list as a Credit Memo row. A credit memo cannot be applied into a closed accounting period.

The PDF: ORIGINAL + DUPLICATE

Download PDF produces a two-page document — page 1 ORIGINAL (customer copy) and page 2 DUPLICATE (seller copy) — per RMC 5-2021.

Void it

Void is available on a Draft or Issued memo that has no applications yet; it posts a reversing entry to unwind the GL impact. You cannot void a memo that has already been applied (unapply is not offered), and a Goods Return whose stock was already consumed is blocked from voiding.

Where people get tripped up

• Chose Price Adjustment for a real return. Inventory and COGS won’t move. Use Goods Return and tag the products.
• Trying to void an applied memo. Not allowed — the credit is already sitting on an invoice. Void or adjust the target instead.
• Regulatory discounts. SC/PWD and 5% credits follow their own VAT math — see SC/PWD discount accounting.

See also

• Correct an invoice with a debit memo
• Apply Senior Citizen and PWD discounts
• Invoice document types
• Receive a customer payment