A/R Credit Memo

An A/R Credit Memo (A/R Credit Note) reverses value on an invoice: it credits money back to the customer and unwinds the receivable and revenue the invoice posted. Where the Sales Return handles goods coming back, the credit memo handles the money — it is the accounting counterpart of the return.

Purpose

A credit memo is created when a customer is owed money back — a return with a refund, a billing error, an agreed discount after the fact, or a full cancellation of an invoiced sale. It reduces what the customer owes and reverses the recognised revenue, so the books reflect that part or all of the sale is being undone.

A credit memo can accompany a Sales Return (goods came back and the customer is credited) or stand alone (the customer keeps the goods but is credited for an overcharge). Because value and goods move independently, the credit memo is a separate document from the return.

Position in the document chain

The credit memo reverses an invoice; its optional goods-side sibling is the Sales Return.

flowchart TD
    ARI[A/R Invoice] -->|value credited| CM[A/R Credit Memo]
    DEL[Delivery] -->|goods returned| RET[Sales Return]
    RET -.goods side.- CM

    style ARI fill:#fef9c3,stroke:#ca8a04
    style CM fill:#fee2e2,stroke:#dc2626,stroke-width:3px
    style DEL fill:#dcfce7,stroke:#16a34a
    style RET fill:#fee2e2,stroke:#dc2626

• Copies from: an A/R Invoice (reverses it), or created directly.
• Pairs with: a Sales Return — the credit memo handles value, the return handles goods.

Key fields

The credit memo is a Document entity with DocObjectCode = oCreditNotes.

Header

Lines (DocumentLines)

Stock and G/L effect

Stock effect depends on how it is raised. A credit memo that returns items to stock (raised on item lines without a prior return) does increase inventory. When it follows a Sales Return that already brought the goods back, the credit memo is value-only and does not move stock again. A service credit memo never touches stock.

G/L reversal. The credit memo reverses the invoice’s revenue entry:

DR  Revenue                    1,000   ← income reversed
DR  VAT Payable                  170   ← tax liability reduced
CR      Accounts Receivable          1,170   ← customer no longer owes this

This is the mirror of the A/R Invoice posting. It reduces the receivable and unwinds the revenue and VAT that the invoice recognised.

Service Layer entity

How to create it in Norma

Use the create_credit_memo tool. It needs:

• card_code — the customer’s code (e.g. C001).
• lines — each an item_code + quantity.
• Optionally per line, unit_price — when given it is authoritative (the credited amount); when omitted the line uses the item’s list price. This matters when the credit must match the originally invoiced price rather than the current list price.

Use it when the user wants to credit, refund, or issue a credit note to a customer — not for A/R invoices (use create_invoice) or returns of physical goods (use create_return). Because a credit memo reverses ledger value, the human-review gate is essential: the tool prepares it, the review gate shows customer, lines, prices, VAT, and total, and only on approval does the connector POST it to /b1s/v1/CreditNotes. No approval, no reversal.