Credit Memo

A Credit Memo (short for "credit memorandum") is a commercial document issued by a seller to a buyer, listing the products, quantities and agreed prices for products or services the seller provided the buyer, but the buyer did not receive or returned. It may be issued in the case of damaged goods, errors or allowances. In respect of the previously issued invoice, a Credit Memo will reduce or eliminate the amount the buyer has to pay.

The Credit Memo usually contains: PO #, Date, Billing Address, Shipping Address, Terms of Payment, List of products with quantities and prices. Usually it references the original Invoice and sometimes states the reason for issue.

Credit Memos are often called Credit Notes or just Credits.

The seller usually issues a Credit Memo for the same or lower amount than the invoice, and then repays the money to the buyer or sets it off against a balance due from other transactions.

The term may also refer to the document provided by a bank to a depositor to indicate the depositor's balance is being increased because of an event other than a deposit, such as the collection by the bank of the depositor's note receivable.