Customer credit memos are the second side of Accounts Receivable document generation.  Invoices are also known as debit memos.  Credit memos are documents used to credit any amount due to a customer due to over charging for freight, sales tax, price and for return of merchandise. 

There are two credit memo types set up in the EZZ system.  They are the X and the Y credit memo.  The X credit memo is used for any credit due a customer that does not involve return of inventory items.  The Y credit memo is used for any credit due a customer for return of merchandise that is inventory in nature.  Return of merchandise that is on a Drop-Ship or Co-op order type can be credited back to the customer using the X credit memo because the items found on a D or a C order type are non-inventory items and therefore do not need to have inventory adjustments made.

This brings us to the differences between the X and the Y credit memos.  The X is fairly self-explanatory.  The X is for any non-inventory item that needs to be credited back to the customer, such as, sales tax, freight, overcharged price, etc.  The Y is different only in that it makes the manual adjustment of inventory due to return of merchandise obsolete.  The Y credit memo adjusts the on hand and the BQOH for every return of program sales merchandise.  The major difference between the X and the Y is that the Y credit memo has a special order type set up in the SEO menu under Order Type Code Maintenance, usually the code F-Fulfillment, that the X does not have.  This is the entry for this particular order type code that causes inventory to be adjusted automatically.

Order Entry

The X and Y credit memos are entered into Order Entry on the OP1 menu as any other order would be except for the following differences:

The quantities are always negative.  If positive numbers are entered into the quantity column, the system will prompt a message that states the maximum acceptable value is 0, although we all know that zero quantity line items should never be entered on any order.

The order number for all credit memos will be prefixed with a X whether the order is a X or a Y credit memo.  EXAMPLE:   X00001

In the line item itself, only price displays.  If this is a Y credit memo, or a X credit memo for a commissionable line item, the cost must be entered so that the system can calculate the commissions adjustment correctly.  From the options window, select F3-Item Detail.  Then select P-Post Commissions.  Enter a salesman's cost.  This will give the system the information necessary to calculate the commission adjustment for salesmen paid based on GP.  If the salesman is paid commissions based on sale, no entry of salesman's cost is necessary.

NOTE:  IF ANY OF YOUR SALESPERSONS ARE PAID ON PAID, THE X AND THE Y CREDIT MEMOS MUST BE SET TO NON-COMMISSIONABLE ON THE SEO MENU UNDER ORDER TYPE CODE MAINTENANCE.  CREDIT MEMO MAY CREATE ERRONEOUS ADJUSTING ENTRIES TO COMMISSION RECORDS OF THE SALESMAN WHO ARE PAID ON PAID.

Order Invoicing

Invoicing the credit memos is slightly different from other order types.  The screen for the credit memo invoicing is smaller than the usual invoicing windows and is located toward the top of the screen.  The screen is labeled Credit Memo Processing.  Ensure that the Tax Authority is correct.  Select I=Invoice to invoice the credit memo.

Sales Tax/Freight Credit Memos

Credit memos for sales tax and freight are constructed a little differently than usual credit memos.  The line items on sales tax and freight credit memos are comment lines and not actual item number line items.  To credit a customer for sales tax and/or freight, enter a comment line under item number.  Under description, tell the customer what order they are being credited for.  The quantity, price and extension are left blank.  In the invoicing window, enter the sales amount that the sales tax is to be figured on.  This amount is entered as a negative.  If the Tax Authority is correct, the system will figure the sales tax and this amount will be included on the Sales Tax Report and the Sales Tax Audit.  For freight, simply enter the amount of freight charges to be credited back in the appropriate line as a negative number.  Select I-Invoice.  Print the register and update as usual.