Credit that you issue to a customer may take one of several forms.  One form is the credit that you issue for damaged or returned items. Damaged or returned items are coded with "D" or "R" under the "S" column ("S" means "Sale Type").  The S-column is located just before the ITEM column in the middle of the Invoice Screen.  The code "D" or "R" triggers a negative number to appear under price which means a credited amount. (See Sale Type Codes for a list of the codes.)

Sales codes are entered in the "S" column in the Item Area. The "S" sales code , above, means regular sale. Several additional codes are available for issuing credits to customers. These include "R," "D," and "M." An "R" code means Returned Item. The "D" code means Damaged Item. The "M" sales code means "Credit Memo" and is used for issuing a general credit which doesn't involved returned or damaged items.

For instance, let's say that a customer returns 5 books entitled "Ski Resorts of the West."  To process the invoice, you would click on the "Add" button at the top of the Item Area.  From the list of products that appear, pick "Ski Resorts of the West."  Once you pick from the list, the catalog number, item name and price will all be printed automatically.  In the Quan column, type in "5."  And in the S-Column, type in "R" for return.  The amount shown will be a negative amount for a credit.

You may also issue a credit to a customer for other reasons.  You might have found an error in a previous billing or you might be trying to balance out a small difference between the customer's account and yours.  In such cases and others, you would issue a Credit Memorandum or a Credit Memo.  Credit Memorandums are done using an invoice.  Here are the steps you should follow:

1. In the Item Area on the Invoice Screen, type in the word "Credit" under the ITEM column and indicate the amount of the credit under the PRICE column.

2. In the Item Area, type in the code "M" (for "Credit Memorandum") in the S-Column.  Be sure to indicate a quantity of 1 in the "Quan" column.  The program always multiples the quantity and price to arrive at a total.

3. Finally, type in "Credit Memorandum" in the PO Number blank. If you use Paste from Item S-Code List, the program will automatically enter "Credit Memorandum" in the PO Number blank and "Credit Issued" in ITEM.  Whatever is in the PO Number blank will also appear on billing statements. Thus, in this case, "Credit Memorandum" will appear on the customer's billing statement. making it easy for you and the customer to identify the credit.  You don't have to use the term "Credit Memorandum," and you are free to use other terminology.

4. It is recommended that a credit memorandum be done only on its own invoice.  Primarily that's done for clarity on billing statements as mentioned above.  If need be, however, it is possible to use the invoice for other purposes.  More information follows.

Exception to #4. From a clarity standpoint, it's best to use the "M" code on its own invoice.  However, sometimes it's more expedient to include a credit on a regular invoice.  It is entirely possible to use the "M" code along with other products in the item area.  If you mix the "M" code along with other codes, there are a couple of things to keep in mind.  First, if you are using an overall discount, you need to change the discount of the "M" code item to 0% discount.  (That's done by clicking on the right arrow button in the upper right hand corner of the Item Area so that the "Disc" (Discount) column shows.  Enter a 0 in this column.)  Secondly, don't use the S-code pop-up list to paste the "M" code in place; rather, just type in "M" in the S-code column.  The S-code pop-up list automatically inserts "Credit Memo" in the PO Number and you'll not want to use that notation.

When you use the "M" code, it causes a negative amount to appear.  Negative amounts are always considered credits.

Once a credit invoice (an invoice with a negative amount in the total due) has been created, there are two ways to balance out the customer's credit:

Refund. The first way is to issue a refund check.  Once you have given the customer a refund check for the credit, use the Mark Paid feature to indicate that the refund check has been issued.  To access Mark Paid select INVOICE TOOLS and MARK INVOICE PAID from the Menu Bar.  Or it can be accessed by clicking the word: "Payments."  After using Mark Paid, "REFUND ISSUED" will appear in the Payment Box in the lower right-hand part of the Invoice Screen.

Apply Credit to Future Purchases. The other way to balance out the credit, is not to issue a refund check, but rather apply the credit to the customer's account.  If that's the case, then leave the invoice as it is.  Later, the customer will make a payment which will take the credit into account.

When the payment is made, the Mark Paid feature will allow you to put a notation on the invoice that the credit has been accounted for. The notation is "CREDIT (Covered)" and it will appear under PAYMENTS in the lower right-hand part of the Invoice Screen. "CREDIT (Covered)" means that the credit has been covered by a customer's payment made on another invoice.  The number of the invoice on which the payment was made will be printed in NOTES on the bottom of the screen.  (For more information, see "One Payment for Two or More Invoices: Dealing With Credits" in under the Mark Paid topic.)