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How do I create and record a credit memo for an invoice that I’ve created using Business Finance Assistant?

  • Updated

There are two ways to create a credit memo:

  1. By cancelling an invoice, this will automatically create a credit memo
  2. By locating your customer in the ‘customer’ section and then creating a credit memo

Detailed steps for both of these options are covered below

 

1. Cancelling an invoice to create a credit memo

To create a new credit memo:

  • Go to ‘Invoices’
  • Find the invoice for which you want to create a credit memo
  • Select ‘Cancel’
  • Amend the credit memo as needed
    • For a partial refund, amend the credit memo to ensure that it only contains the amount and goods to be refunded
  • Select ‘Done’

Your credit memo has been raised, you will now need to make the refund payment, if desired. You also have the option of retaining a credit balance for this customer to be applied to a future invoice. Once the refund is paid, you will need to link the transaction to the credit memo so it appears correctly on your VAT return. To do this:

  • Go to ‘Bank Transactions’
  • Select the account where the refund was paid from
  • Find the refund payment 
  • If the credit memo was created before the refund, the system will try to automatically match the refund to the credit memo where the amounts and dates match, but if the system does not do this, then you will need to manually match by following these steps:
    • Press 'Split/Attach' on the bank transaction
    • Press 'Attach/Match Document'
    • Select ‘credit memo’
    • You will now be shown open credit memos that are a possible match
    • Select the correct credit memo, and 'Confirm selection'
    • Press 'Done' > 'Confirm'
    • The credit memo is now linked to the refund transaction

2. Creating a credit memo from the ‘customer’ section

To create a new credit memo:

  • Go to ‘Customers’
  • Select the correct customer by clicking on the customer's name
  • Select ‘New Action’
  • Select ‘New Credit Memo’
  • Populate the details of the credit memo
  • Select ‘Done’

To ensure that your VAT return is accurate, you must then apply an un-refunded credit memo to an unpaid invoice:

  • Go to ‘Invoices’
  • Select the correct invoice
  • Go to page 2 of the invoice
  • Select ‘Use a Credit Note’
  • Select the correct credit note
  • Click ‘Select’
  • Select ‘Done’

Please note that it is the user's responsibility to ensure that all invoices and credit notes issued to customers are compliant with HMRC’s rules on the issuance of invoices and credit notes. For more information, and to familiarise yourself with the latest advice, please refer to the government’s website.

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