> 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/creating-credit-memo.md). # Creating Credit Memo A credit memo is created for issuing credit to the customer. Depending on whether an invoice exists in the system, you can create an invoice credit memo or credit memo. It's important to note that if the credit memo contains inventory items, they are also credited back into the system. The credit memo process involves various status indicators that indicate whether it is available to be used on an invoice or refunded to the customer. ### Creating Credit Memo When entering a credit memo, you'll begin by entering essential header-level information, such as the store, return type, customer details, account, and reference number. Once the basics are set, you can add item(s) to the memo and proceed with the return process. {% hint style="info" %} To create a credit memo, go to **Menu > Sales > Credit & Deposit > Credit Memo** {% endhint %} #### Credit Memo Header Fields

Section	Field	Description
Main	Select Store	This is the Store from which the Credit is being processed. Any Inventory Items will be Returned to this Store.
Main	Return Type	This lets you choose among 2 types of RMA processes for the returned goods. “Direct” will ask you for a location when you add an item, so you will have to put away the item immediately. “Warehouse” will give you the option of generating an ASN for putting away the goods into the warehouse at a later time. Choose the option which best suits your warehousing workflow.
Main	Select Customer	Type a Name, Phone number, or email here to select a Customer for the Credit Memo. Click on icon for more details on the selected Customer.
Main	Select Account	This fields allows you to select the account from which the credit amount will be credited.
Main	Ref No	This field allows you to assign a unique reference number or identifier to the credit memo for easy tracking and reference purposes.
Main	Date	The date on which the credit memo was created or initiated is captured in this field.
Main	Sales Rep	This is the Sales Rep associated with this credit memo. Once a customer has been selected this field will automatically be filled and will require authorization to edit.
Main	Project/Class	Select a project or class to associate this credit memo.
Main	Link To Invoice	This field allows you to link an invoice with the credit memo.
Main	Third Party Notes	This field displays the third-party notes for the orders created using an integration like Shopify, etc.
Footer	Ship To Address	The "Ship Address" field shows the shipping address for the credit memo. When a customer is selected, this field is automatically filled with the corresponding shipping address. You can choose other addresses from the drop-down menu or edit the address by clicking on it
Footer	Memo	The "Memo" field provides space for writing notes or any additional information related to the credit memo.
Footer	Exchange Rate	If the credit memo is for a foreign customer, the "Exchange Rate" field allows you to specify the conversion rate for currency exchange.

#### Inventory Log The **Inventory Log** tab records all stock movements related to the credit memo.\ It helps users trace how the credit memo has impacted inventory levels.\ The log contains the following columns: | **Column** | **Description** | | ------------------- | ------------------------------------------------------------------- | | **Type** | Indicates the nature of the transaction (e.g., Return, Adjustment). | | **Store Name** | The store or warehouse where the transaction took place. | | **Item #** | The unique item number involved in the credit memo. | | **Description** | A short description of the item. | | **Qty** | Quantity affected by the credit transaction. | | **Location** | Specific location within the store/warehouse. | | **Txn Date** | The date of the transaction. | | **Create Source** | The origin or source of this transaction record. | | **Create Datetime** | The date and time the record was created. | *** #### Custom Fields The **Custom Fields** tab allows you to store additional, user‑defined information for the credit memo.\ In XoroERP, you can configure custom fields for different data types. For Credit Memo, the available custom fields include: | **Field Name** | **Type** | | ------------------------- | -------------------------------------------------------------- | | **CF1‑CreditMemo‑Text** | Text field for additional notes or references. | | **CF2‑CreditMemo‑Number** | Numeric field for storing quantities, codes, or other numbers. | | **CF3‑CreditMemo‑List** | Dropdown list for selecting predefined values. | | **CF4‑CreditMemo‑Date** | Date picker field for recording specific dates. | #### Linked Orders The **Linked Orders** tab displays all **sales orders** that are connected to the current credit memo. This is useful for tracking the origin of the credit and understanding which transactions are impacted. * **Function:** Shows a structured, tabular list of linked sales orders, purchase orders, or other documents related to the credit memo. * **Purpose:** Maintains a clear audit trail between the credit memo and its source transactions. To link a Credit Memo to a Sales Order, refer to the section **“Linking a Credit Memo to a Sales Order.”** #### Adding Item(s) to the Credit Memo After inputting the header-level information in the credit memo, you'll proceed to enter line-level details, which encompass adding the item(s) returned by the customer. In case no product returns are involved, you can add non-inventory or service item(s). In the line-level section, you can add individual items, and specify their quantities, unit cost, and any applicable taxes. **Credit Memo Details Header Fields**

Field	Description
Item Type	Specify the type of item you want to add to the credit memo- Inventory, Non-Inventory, Service or Labor.
Item Number	This field allows you to search for and add the item to the credit memo.
Qty	Enter the quantity of the item that you are adding to the credit memo.
Rate	Enter the price of the item you are adding to the credit memo.
Return Notes	Add any notes or reason for return for the item here. Typically these are notes about the item (damaged, missing parts, etc.).
Tax	Select the tax code of the item you are adding.
Project Class	Select a project or class to associate this credit memo line with.
R Code	Choose the item return code for the item being added. The available options are: CS (Customer Satisfaction), DG (Damaged), ICU (Incomplete Unit), and RC (Recall). This is an editable field, allowing users to update the return reason during processing. If DG (Damaged) is selected, the inventory will be received as “Not Available” in the damaged area.

**Credit Memo Details Line Fields**

Field	Description
Amount	Displays the calculated amount, which is the result of (Unit Price * Qty+Tax Amount).
Description	This is an editable input field that displays the description of the item.
EUP	Indicates the Effective Unit Price for the item.
Item#	The unique identifier for the item.
Item Type	Specifies the type of item, such as inventory, non-inventory, etc.
Project/Class	Allows you to select a project or class to associate with the item line.
Income Return Account	This column allows users to specify the return income account for each line item individually. The default value for this dropdown is set to "Auto Select," which automatically selects the appropriate return income account for the item. However, users can edit this field to select a different return income account as needed.
Qty	This is an editable input field that specifies the quantity of the item.
RCode	This displays the item return code of the item that you are adding.
Re-stocking Fee	This field allows you to add an absolute or percentage re-stocking fee for the item.
Return Note	Add any return notes for the item here. Typically these are notes about the item (damaged, missing parts, etc.).
Tax	This is the tax code of the item you are adding.
Tax Amount	Displays the calculated tax amount for the item.
Unit Cost	This is an editable input field that displays the price of the item.
Uom	Specifies the unit of measure for the item (liter, unit, kilogram, etc.).

After completing the header fields and adding items, click on the **"Save"** button to create a credit memo. {% hint style="info" %} If the app configuration **“**[**Automatically Send Email on Credit Memo Creation**](/xoroerp-1/configuration/application/app-config/sales.md#automatically-send-email-on-credit-memo-creation)**”** is enabled (Menu → App Config → Sales), the system will automatically send an email to the customer’s **Main Email** upon successful creation of the credit memo. {% endhint %} ### Linking a Credit Memo to a Sales Order You can link a Credit Memo to a Sales Order to apply the credit against the order amount. This helps in adjusting customer balances and ensuring accurate financial tracking. 1. Navigate to **Menu → Sales → Credit & Deposit → Credit Memo** and open the required Credit Memo.

2. In the Credit Memo page, go to the **Options** menu and select the **Link Sales Order** option.

3. The **Credit Memo Linking** window will open, where the **Credit Memo#** field will be auto-filled.

4. In the **Sales Order** field, select the order number you want to link. Only the orders with the same **Customer** and **Store** will be available for selection.

5. Enter the **Linked Amount** and ensure it does not exceed the Sales Order total. Click on **"Link"** to create the linkage.

If you want to remove the linking, click on the delete icon next to the linked record.

Once linked, the Credit Memo is associated with the Sales Order and will be applied during invoicing. The linked credit memo is also visible under the **Linked Credits/Deposits** tab in the Sales Order.

To link a Credit Memo from the Sales Order page, refer to the section **“**[**Linking a Sales Order to a Credit Memo**](/xoroerp-1/sales/sales-order/sales-order-activity-and-linked-transactions.md#linking-a-sales-order-to-a-credit-memo)**.”** #### Credit Memo Header Level Options The **Options** menu provides additional actions that can be performed on the Credit Memo after it has been created. 1. **Void:** Voids the Credit Memo and reverses its financial impact. Voided Credit Memos can no longer be used for refunds or invoice applications. 2. **Refund Balance:** Allows users to refund the available credit balance to the customer. 3. **Apply on Invoice:** Applies the Credit Memo amount against one or more customer invoices to reduce the outstanding balance. 4. **Show Applied on Invoice(s):** Displays the list of invoices on which the Credit Memo has been applied. 5. **Show Refund(s) from Credit:** Displays all refund transactions that have been processed against the Credit Memo. 6. **Show Credit Transfers:** Displays any credit transfer transactions associated with the Credit Memo. 7. **Add To Email Queue:** Adds the Credit Memo to the email queue so it can be sent to the customer at a later time. 8. **Show Transactions:** Displays all accounting transactions generated by the Credit Memo. 9. **Show Audit Trail:** Displays the complete audit history of the Credit Memo, including all changes, updates, and user actions performed on the document. 10. **Link Sales Order:** Allows users to link the Credit Memo to a Sales Order. The linked credit can then be applied against the Sales Order during invoicing. 11. **Create Duplicate:** Creates a duplicate of an existing **Warehouse-type Credit Memo**, including its header information, item lines, quantities, return details, and related transaction data. During the duplication process, the system also generates the corresponding inventory transactions and records them in the Inventory Change Log. This option is available only for Credit Memos with the **Warehouse** Return Type and is not available for **Direct** Return Type Credit Memos. 12. **Show Activity:** Displays the activity history associated with the Credit Memo, including user actions and system-generated events. --- # 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/creating-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.