There are many benefits and features of the credit memo or the credit note. A credit memo can be used as a document which will allow the client to purchase any item from the seller in the future. A credit memo can be considered as a goodwill document which is given by the seller to the customer who wishes to return the previously purchased items. However, the credit memo can only be utilized like that in the event when there no explicit refund polices. At the end of each reporting period a seller must review all of the credit memos so as there aren’t any open credit memos.
A credit memo which is the contraction of the term credit memorandum which is also known as credit note is a type of a commercial document which the seller issues to the buyer. Normally the seller issues the credit memo for lower or for smaller amount than the invoice. The seller than will repay the money to the customer and sets it off against the balance owed to any other transaction. A credit memo can also be that document which is issued by the bank to the depositor indicating their bank balance in the event of other than a deposit. The reason as to why the credit memo or the credit memorandum is being issued is clearly stated in the credit memo.