The purpose of the Credit Note and the Benefits Behind It

A credit memo is a file that can provide a reduction in accounts receivable. That is because of returning merchandise or falling prices due to damage or incompatibility of the quality of the goods ordered.

Credit notes are usually created and signed by the seller. Similar to debit notes, credit notes generally consist of at least two sheets. The first sheet is the original document given to the buyer, while the second sheet is usually kept by the seller.

Debit notes and credit notes are interrelated, namely when there is a revision or decrease in nominal sales price and when there is a purchase return or return of goods. When a purchase return occurs, the buyer must issue a debit memorandum and purchase return to the seller. After that the seller will issue a credit note he has.

Then when revising or lowering the nominal sales price in the invoice due to cancellation, inappropriate items, or other reasons, the buyer will issue a debit memorandum and the seller will issue a credit note. The seller must also issue a tax invoice in lieu of the problem at hand.


Format and Examples of Credit Notes

credit loans

The following is an explanation of the format and examples of credit notes so that you know credit notes well.

1. Credit memo format

Each company usually has its own credit memo format according to their individual needs. Even so, the contents were not much different as their form was generally supplemented with a product information column, the amount, the price returned, and clearly agreed by both parties.

Then the credit note must have an order number for tracking purposes (tracking), the credit note there is also a date, invoices, and shipping address. Not only that, in the credit memorandum there is also a payment mechanism that is clearly stated, in order to avoid problems in the future.


2. Examples of credit notes

For those of you who are still confused with credit notes, here are examples of credit notes in general that can be used by companies and businesses.


The Purpose of Making a Credit Note

Credit Note

In the business world, you must record all transactions that have been and are in progress. Not like invoices or greeting cards, credit notes are made so that they can correct and correct any mistakes that occur during the sales process, such as the advantages and disadvantages of sending goods to the buyer, and damage to goods when it reaches the buyer.

The existence of a credit note can explain all the mistakes made by the seller. By using credit notes, it is expected that business accounting records can be clean of all errors and financial statements that do not make sense.

With a credit note as well, you can show buyers that your business is fully responsible for all errors that occur.


Benefits of Using a Credit Note

Credit Note

The purpose of issuing credit notes is to help your business check for any mistakes that occur during transactions. There are at least three benefits that can be obtained from credit notes.

1. Business is maintained well with clients

By using credit notes properly, you can monitor the quality of transactions directly and can maintain harmonious relationships with clients and customers.

2. Business operational performance can improve

Credit notes can correct any mistakes made while managing a business. The positive impact on business operational performance as the quality of work will be improved continuously.

3. Save the business from conflict

If you use a credit note, your business can be saved from possible conflicts or technical problems. Because, businesses are prone to errors in income or expenditure figures.

Hopefully the above review provides a good understanding of you regarding the understanding, format, purpose, and benefits of credit notes. In general, companies or business institutions that use debit or credit notes can be said to have a healthy money financial management system.