When to issue a credit memo
- Returned goods
- Pricing or quantity error on the original invoice
- Post-invoice discount or goodwill credit
- Cancelled portion of work
INVOICING
Credit Memo
DEFINITION
A credit memo (or credit note) is a document a seller issues to reduce the amount a buyer owes on a previously issued invoice — for returns, overcharges, discounts applied after billing, or cancelled work. It is the accounting reverse of an invoice.
More in Invoicing
Net 30 Payment Terms
Net 30 means the full invoice amount is due 30 calendar days after the invoice date. It is the most common B2B payment term worldwide and signals normal credit terms — not '30 days from delivery' or '30 days from receipt' unless explicitly stated.
Proforma Invoice
A proforma invoice is a preliminary bill of sale sent to a buyer before goods or services are delivered. It is not a legal demand for payment and not used for accounting — it confirms price, terms, and quantities so the buyer can issue a purchase order or arrange financing/customs.
Commercial Invoice
A commercial invoice is the legally binding bill issued by a seller to a buyer after goods or services have been delivered. It is recorded in both parties' accounting systems, used for tax and customs, and serves as the formal demand for payment.
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