Creating a Credit Memo
NovaTech's March rent invoice went out $1,200 too high. Here's how Meridian's AR clerk issued the correcting credit — starting from the invoice itself, which is almost always the right place to start.
Access you'll need. Creating, editing, and posting credit memos requires the Accounts Receivable v2 permission set (AR clerks & managers) or Accounting Admin v2 (system administrators). The Accounting Controller v2, Accounts Payable v2, and Read Only v2 sets can view them but not create or post them.
From the invoice being corrected
Open the posted invoice and choose Create Credit Memo
The action lives on the Sales Invoice record page (check the ▼ dropdown if you don't see it as a button). REDA Financials opens a pre-filled credit form.
See what came across — and what flipped
Header details (entity, customer, reference, payment term, dimensions) copy from the invoice; the Invoice Type is set to Credit Memo; today becomes the memo date; the Original Invoice link points back at the source; and every line arrives marked as a credit line, which is what makes the total negative.
Trim the lines to what you're actually crediting
A full copy credits the whole invoice — right for a complete reversal, too much for a $1,200 correction. Delete the lines that were billed correctly, and adjust the remaining line's quantity or price so the memo totals exactly −1,200.00. Add a clear description ("Correction — March 2026 rent metering error"); your customer reads this document.
Save — then let approval run its course
New memos start with Approval Status Pending. Once approved (or if your policy marks them Not Required), post. Posting reverses the revenue and reduces NovaTech's receivable on the spot — see Understanding Credit Memos for the accounting.
What the action copies — and what it sets
Knowing exactly what the pre-fill does saves you from re-checking every field:
| On the new memo | Where it comes from |
|---|---|
| Entity, Customer, Ledger | Copied from the source invoice — a memo always corrects within the same company and customer. |
| Reference, Description, Payment Term, dimensions | Copied, so the memo carries the same context the invoice did. Edit the description to say what's being corrected. |
| Invoice Type | Forced to Credit Memo. |
| Invoice Date | Today — the correction belongs to the period you issue it in, not the period of the original invoice. |
| Status | Draft, with Approval Status Pending — nothing touches the books until approval and posting. |
| Original Invoice | Set to the source invoice. While set, the credit can only be applied to that invoice. |
| Lines | All copied with the credit line flag ticked — quantities and prices stay positive; the flag is what turns the total negative. Tax on the lines reverses with them. |
| Document number | From the entity's own Credit Memo numbering sequence at save (Meridian: MCM001001, MCM001002…) — separate from the invoice sequence. |
From scratch (no source invoice)
A goodwill credit or a negotiated concession may not correct any specific invoice. Create a Sales Invoice by hand, set Invoice Type = Credit Memo, add lines and tick Credit Line on each (quantities and prices stay positive — the flag flips the sign), leave Original Invoice empty so the credit is free to apply anywhere, and post after approval. The document number comes from the entity's own Credit Memo numbering sequence either way.
If posting stops you
- "Credit Memo must have a negative total. Use Credit Line lines to produce a negative total amount." — at least one line isn't marked as a credit line, or a charge line outweighs the credits. (Mixed memos are allowed — a credit with a small restocking charge — as long as the net is negative.)
- "Credit Memo total is zero — nothing to post." — the lines cancel out; check quantities.
- "This document requires approval before posting." — the memo is still Pending; get it approved first.
A few more guards apply because a memo is a Sales Invoice under the hood — the same discipline, the exact messages:
| The message | What to do |
|---|---|
| "Customer must be a Customer or Customer & Vendor account. The selected account is a Vendor — Sales Invoices require customer-class accounts." | Memos, like invoices, need a customer-class account — fix the account's Financial Type or pick the right party. |
| "Invoice Date must fall within the selected Accounting Period date range." | Date and period disagree — usually after editing the date on a draft; let the period re-derive. |
| "Sales Invoice must have at least one line before posting." | You trimmed away every line — a memo needs at least one credit line to say what's being credited. |
| "Posted Sales Invoices cannot be edited. Use the Void action to reverse, or wait for the reverse action." | Once posted, the memo is locked like any invoice. Wrong amount? Void it and issue a fresh one. |
| "Posted Sales Invoices cannot be deleted. Void the invoice instead." | Only drafts delete — a posted credit never disappears silently. |
Common mistakes to avoid
| Mistake | Why it hurts | Do this instead |
|---|---|---|
| Keeping every copied line for a partial correction | The memo credits the whole invoice — NovaTech would get $9,800 back instead of $1,200 | Trim to the lines being corrected and adjust quantity or price to the exact difference |
| Typing a negative price to make the total negative | Fights the design — the credit-line flag is what flips the sign; doubled negatives net back to a charge | Keep quantities and prices positive; tick Credit Line |
| Leaving the copied description untouched | The customer receives a CREDIT MEMO that reads exactly like the invoice — confusion, then a phone call | Say what's corrected: "Correction — March 2026 rent metering error" |
| Backdating the memo to the original invoice's date | The correction lands in a prior — possibly closed — period and distorts reported revenue | Leave the date as today; the correction belongs to the period you found the error in |
| Forgetting the Original Invoice lock on a goodwill credit | Applications to any other invoice are refused until the link is cleared | For free-floating credits, leave (or clear) Original Invoice empty before posting |
Where to go next
- Applying Credit Memos — putting the credit to work.
- Credit Memo Refund — when the customer wants cash instead.
- Understanding Credit Memos — the concepts and the accounting.
Frequently asked questions
Credit the difference when the invoice is mostly right (Meridian's $1,200 on a $9,800 invoice). Credit in full and re-issue when the invoice is structurally wrong — wrong tenant, wrong property, wrong period — so the replacement stands clean on its own.
Two things: it documents why the memo exists, and it restricts application — while set, the credit can only offset that invoice. Clear the field if the credit should be usable against the customer's other invoices.
No — recurring templates generate Invoice and Receipt type documents only. A recurring discount belongs on the recurring invoice (a discounted line), not as a stream of memos.
Yes — issue the memo (clear the Original Invoice link if the paid invoice can't absorb it), then either apply it to their next invoice or refund it in cash. The credit exists either way; only how it's settled differs.
Credit memos draw from their own Credit Memo document sequence on the entity, separate from the invoice sequence — so credits are recognizable at a glance in lists, statements, and audits. The number is assigned when the record saves.
Yes — the copied lines carry their tax treatment, and posting reverses the tax alongside the revenue, keeping your tax return in step with the correction. Credit exactly the taxed line you're correcting and the tax follows the right proportion automatically.
Posted memos are locked like invoices. If no credit has been applied yet, void the memo and issue a corrected one. If some credit was already applied, reverse the applications first — a document with money moving against it can't be voided.
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