AP Debit and Credit Memo Training

Revised 8/13/00

Application: Process: Objectives: Prerequisites:

Accounts Payable Credit Memos, Debit Memos Return to Vendor (RTV) 1. Enter a credit or debit memo to record a credit for goods or services purchased. 1. Invoices entered.

Overview.........................................................................................................................1 Entering Credit/Debit Memos......................................................................................2 Matching Credit/Debit Memos to Purchase Orders and Invoices............................2
Matching options when the original invoice is not purchase order matched (basic invoice)............3 Matching options when the original invoice is purchase order matched............................................3

Matching a credit /debit memo to an invoice, invoice distribution...........................4 Matching a credit /debit memo to a purchase order receipt......................................6 To approve related invoices when entering credit/debit memos:..............................7 Clearing a Credit...........................................................................................................8

Overview Oracle does not provide direct linkage between the Payables and Accounts Receivables applications. When a customer is owed a refund, and a debit memo is created on the Accounts Receivable side there is a need to communicate that information with the Payables accountant It is important to ensure that the transactions are done against a refund clearing account. The Customer-Suppliers Netting Report will assist with reconciliation. Credit/debit memos are netted with basic invoices at payment time. Credit Memo - Negative amount invoice created by a supplier and sent to you to notify you of a credit.

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AP Debit and Credit Memo Training

Revised 8/13/00

Debit Memo - Negative amount invoice created by you and sent to a supplier to notify the supplier of a credit you are recording. Usually sent with a note explaining the debit memo. Entering Credit/Debit Memos In the Invoices Summary enter either the Credit Memo or Debit Memo Invoice Type. Enter a negative invoice amount and all basic invoice information. See: Entering Basic Invoices. Enter Immediate Payment Terms, if appropriate.

Enter distributions automatically in one of the following ways: Manually By entering a Distribution Set Or by matching to the original invoice you entered (See: Matching Credit/Debit Memos to Purchase Orders and Invoices, bellow) Save your work.

Matching Credit/Debit Memos to Purchase Orders and Invoices

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AP Debit and Credit Memo Training

Revised 8/13/00

When you enter a credit/debit memo, you can match it to existing invoice(s) to have Payables automatically copy the accounting information and create invoice distributions for the credit/debit memo. You can match the credit memo to multiple invoices, and at different levels of detail. Your available choices depend on whether the originating invoice was matched to a purchase order or not. For example, if you receive a credit for items you returned to a supplier, you can enter a credit memo and match it to the original invoice you entered to ensure that the credit memo distributes the credit to the same accounts originally charged. Matching options when the original invoice is not purchase order matched (basic invoice) In this case you can choose one of the following: Match to an invoice. Payables prorates your credit amount based on the invoice distribution amounts of the original invoice. Payables automatically creates invoice distributions for the credit/debit memo based on the distributions of the original invoice. Match to specific invoice distributions. You can allocate the credit amount to specific invoice distributions of the original invoice. Payables automatically creates invoice distributions for the credit/debit memo based on the original invoice distribution that you select. For example, you may order three chairs for three different departments and return one. You can match a credit/debit invoice to the original distribution for that department to ensure that the credit matches the charge.

Matching options when the original invoice is purchase order matched In this case you can choose one of the following: Match to specific invoice distributions. You can allocate the credit amount to specific invoice distributions of the original invoice. Payables automatically creates invoice distributions for the credit/debit memo based on the original invoice distributions that you select. Payables updates the quantity billed for each of the originally matched purchase order receipts and their corresponding distributions by the credit quantity you enter. Payables also updates the amount billed on the purchase order distributions. Match to purchase order receipts. Payables prorates, based on the quantity billed, your credit amount across all purchase order distributions associated with the purchase order receipt to which you match the credit/debit memo. Payables automatically creates invoice distributions for the credit/debit memo based on the purchase order distributions associated with the purchase order receipt you match to. Payables updates the quantity billed for each purchase order receipt and its corresponding distributions by the amount of the credit/debit memo. Payables also updates the amount billed on the originally matched purchase order distributions.

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AP Debit and Credit Memo Training

Revised 8/13/00

Record a Price Correction. Use a price correction when a supplier sends an invoice for a change in unit price for an invoice you have matched to a purchase order. You can record a price correction by checking Price Correction when you match a credit/debit memo to a purchase order receipt or purchase order matched invoice distribution. When you record a price correction for a credit/debit memo, you are recording a price decrease from the original invoice. Payables updates the invoiced unit price of previously matched purchase order receipt or distributions without adjusting the quantity billed so you can track price variances; Payables also updates the amount billed on the originally matched purchase order distributions. Matching a credit /debit memo to an invoice, invoice distribution Enter a Credit Memo or Debit Memo type invoice. Enter a negative invoice amount and all basic invoice information but do not manually enter the distributions. At the pop-up list to the right of the Match button, choose Invoice, and then choose the Match button.

In the Find Invoices to Match window, query the invoices you want to match and choose Find. If the credit/debit memo pertains to an invoice matched to a certain purchase order, query by purchase order number to see all invoices matched to that purchase order. Payables navigates to the Match to Invoice window. Optionally choose the Invoice Overview button to review more information about an invoice.
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AP Debit and Credit Memo Training

Revised 8/13/00

Create invoice distributions by matching to one or more invoices. If you are matching to a nonpurchase order matched (basic) invoice, select the invoice and enter a Credit Amount.

If you want to match in further detail, continue the match at the invoice distribution level: To match to invoice distributions, at the Match to Invoices form check the Match check box of the invoice you want to match and enter the Credit Amount. Then choose the Distribute button.

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AP Debit and Credit Memo Training

Revised 8/13/00

For each invoice distribution you want to match to, select the distribution and enter a Credit Amount. Choose the Match button to create invoice distributions for the credit/debit memo based on the matches you made. To review the new invoice distributions, choose the Distributions button from the Invoices Summary. Matching a credit /debit memo to a purchase order receipt Enter a Credit Memo or Debit Memo type invoice. Enter a negative invoice amount and all basic invoice information but do not manually enter the distributions. At the pop-up list to the right of the Match button, choose Purchase Order or Receipt, and then choose the Match button. At the Find Purchase Orders for Matching form: If you want to record a Return to vendor - Enter PO search criteria If you want to record a price correction Check the Price Correction checkbox and choose the invoice number for which you want to correct the price. Choose the Find button

For each line you want to match to, select the line by checking the Match checkbox and enter either a Quantity Invoiced or Match Amount. Payables automatically calculates the remaining field (Quantity
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AP Debit and Credit Memo Training

Revised 8/13/00

Invoiced x Unit Price = Match Amount). You can optionally change the Unit Price, which defaults from the purchase order.

To approve related invoices when entering credit/debit memos: In the Invoices Summary choose the Actions button. Check Approve Related Invoices, and choose OK to have Payables automatically initiate Approval for any invoices associated with a credit/debit memo.

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AP Debit and Credit Memo Training

Revised 8/13/00

Clearing a Credit You can clear a credit or debit memo you have entered and no longer need. For example, a supplier sends you cash in lieu of sending you a credit invoice, and you have already entered a debit memo. You can enter a positive amount invoice to balance out the impact of the credit/debit memo. Enter a Standard type invoice for the positive amount of the credit/debit memo. For example, if you entered a credit for -$10, enter a new invoice for $10. Other than the invoice amount and invoice number, enter all of the same basic invoice information you entered on the credit/debit memo. You may want to enter a cash or accounts receivable clearing account on the distribution to which you will post the cash. If you matched the credit/debit memo to a purchase order, match the new invoice to the purchase order to correct the purchase order information.

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AP Debit and Credit Memo Training

Revised 8/13/00

Create a zero amount payment at payment time to net the new invoice with the credit/debit and clear both from your Invoice Aging. CREDIT/DEBIT MEMO RESTRICTIONS: INVOICE AMOUNT = DISTRIBUTION TOTAL. When you are in the Match to Invoice window, the Invoice Amount and the Distribution Total must be equal before you can save.

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