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Creating Purchase Order Credit Memos

Purchase order credit memos are used to record adjustments to vendor’s accounts, or record corrections to posted purchase order invoices. Purchase order credit memos are associated with inventory receipts and negative receipts generated from purchase orders and RTV (Return to Vendor) orders.

When you create a purchase order invoice, you must have an inventory receipt. This receipt is used to identify the quantity of inventory items received and the cost entered on the purchase order or RTV.

When you create a purchase order invoice, you compare your expected (purchase order or RTV) cost with the actual charges on the invoice. Adjustments are made based on the invoice which ensures e-automate will always have the most recent cost and that your inventory value will reflect the accurate cost paid for inventory items.

Because you must have a receipt when you create an invoice for items coming into your inventory, you must also have a receipt for credits or items leaving your inventory. The receipt for items leaving your inventory generated from a purchase order is called a negative receipt. Negative receipts can also be generated from an RTV order. Purchase order credit memos are based on negative inventory receipts, so in order to create a purchase order credit memo you must have a negative receipt, whether generated from a negative purchase order or an RTV order.

The information from the purchase order credit memo is used to update the vendor's accounts payable account.

Getting to the TransactionGetting to the Transaction

From the Accounting menu, select Accounts Payable > Accounts Payable Invoices to open the Accounts Payable Invoices window.

Click [New] to open the New window.

Basic InformationBasic Information

In the Type field, use the drop-down menu to select Purchase Order Credit Memo. The New Purchase Order Credit Memo window opens.

In the Vendor field, use the lookup to select the vendor associated with the credit memo you received.

In the Receipt field, use the lookup to select the negative receipt associated with the vendor.

Note: You can use the Receipts field Lookup icon to search for your receipt number.

Click [QuickAdd] to add the receipt to the purchase order credit memo.

Note: If you did not select a vendor, when you QuickAdd the receipt, e-automate automatically populates the vendor information.

Complete the following fields as appropriate:

Description: Brief optional description of the credit memo.

Number: Automatically assigned purchase order credit memo number. You may change the number.

Vendor memo: Identification number of the vendor's credit memo.

Invoice date: Date the credit memo was received from the vendor.

Due by: Date credit memo is due. Typically, Due by is not an essential field. Usually the credit memo is open until you use it.

Apply to: Open accounts payable invoice to which you want to apply this credit memo, effectively reducing the open invoice due amount by the amount of this credit memo.

Amount: Amount of credit received.

Receipts TabReceipts Tab

To add an expense item such as restocking fee to the purchase order credit memo, do the following:

Note: You can only add expense items on a purchase order credit memo.

Click [Add] to open the Add Purchase Order Invoice Item window.

Complete the following fields as appropriate:

Item number: Item number of the expense item being added to the credit
memo.

Quantity: Quantity of the item being added to the credit memo.

Cost: Dollar amount of the item being added to the credit memo. Typically you enter the restocking fee here as a negative number. You should always use a restocking fee as opposed to reducing the cost of the item to retain the integrity of your weighted average cost.

Description: e-automate enters a brief description of the item, based on what was entered as the item number.

Department: Department to which the entry will be posted.

Click [OK] to close the window and return to the New Purchase Order Credit Memo window.

Exclude from terms discount: When checked, this item is excluded from the total when e-automate calculates a terms discount.

If there are additional expenses, add expense items as necessary.

Miscellaneous TabMiscellaneous Tab

Click the Miscellaneous tab and verify the information.

Note: Typically you do not have to change information on the Miscellaneous tab; however, you can make special corrections by modifying the fields when needed.

See below for field descriptions.

Accounts payable: The default accounts payable account to which this invoice will be debited. Typically you should not change this account.

Important: Modifying this account causes your Aged Accounts Payable subsidiary report to not match your Balance Sheet.

Terms: Payment terms you receive from the vendor for this invoice. Since the credit memo is not an invoice, this is typically not applicable and should not have a term with any type of discount.

Discount date: If the invoice is paid by the date in this field, E-automate takes the discount identified on your credit.

Tip: Best practice would be to not identify terms discounts on credit memos.

Discount rate: Discount offered to you by the vendor if you pay by the discount date.

On hold code: To place a credit memo on hold, use the lookup to select an On Hold Code approved for use with accounts payable invoices and memos. Credit memos that are on hold do not show up in the Pay Vendors activity to be applied to other invoices unless they are specifically requested or released from hold.

Remarks TabRemarks Tab

To include remarks, click the Remarks tab and enter them.

Completing the TransactionCompleting the Transaction

Click [OK] to apply the purchase order credit memo to the vendor account. For more information on creating purchase order credit memos see Additional Info - Creating an Expense Item to be Used on a Purchase Order Credit Memo.