> For the complete documentation index, see [llms.txt](https://docs.xorosoft.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xorosoft.com/xoroerp-1/sales/credit-and-deposit/credit-memo.md). # Credit Memo ### What is a Credit Memo? A Credit Memo is a credit that is given to a Customer. This is usually created when an Item is returned. It can be created on an existing Invoice in the system (Invoice Credit Memo), or it can be created on its own (Credit Memo). A credit memo can be issued to a customer, typically in the scenario of a return or a damaged item. The customer can then use that credit for future orders or request a refund. There are two modules that can be used to create a credit memo: Invoice Credit Memo and Credit Memo. **Credit Memo:** A credit memo is a general term that refers to a document issued by a seller to a buyer, indicating a credit or refund for goods or services previously provided. **Invoice Credit Memo:** An invoice credit memo is a credit memo directly linked to a specific invoice. It is used to correct or reverse charges explicitly associated with that invoice. Once the Credit Memo is created, it can be used in one of two ways: **Applied to a Future Invoice:** The credit amount can be applied to a future purchase by the customer. This reduces the total amount owed on the next invoice. **Refunded to the Customer:** In some cases, the customer may request a refund for the credit amount instead of using it towards future purchases. ### Credit Memo: Types There are 2 types of credit memos: * **Direct:** In the case of a Direct credit memo, inventory can be immediately put away in the warehouse or store. This means the inventory becomes immediately available for resale, and there are no inventory-related issues to address. * **Warehouse:** In the Warehouse credit memo scenario, inventory is received in the **Return** location. You can then **generate an ASN** for putting away the goods into the warehouse at a later time. ### Different Ways to Create a Credit Memo: #### **Create a credit memo from the invoice** If the invoice **already** exists in Xoro and you are returning inventory into stock, then you will want to create an **Invoice Credit Memo** to process your return. #### **Create a new, individual credit memo** If the invoice **does not** exist in Xoro or if you are giving a credit to a customer without returning any inventory into stock, then you will want to use the Credit Memo module. **Add a service type item**, and adjust the credit amount to process the return in this case. Please consult your accounting team when creating the Service type item to ensure the correct accounts are set up. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.xorosoft.com/xoroerp-1/sales/credit-and-deposit/credit-memo.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.