How to Create a Credit Memo in NetSuite: Step by Step Guide

If you use NetSuite for your business, you may need to create a credit memo at some point. This article explains how to create a credit memo in NetSuite using simple steps. A credit memo reduces what a customer owes. You can use it when products are returned, discounts are applied, or errors are found in an invoice. We’ll also look at how to apply it to invoices, vendor credits, and more. Whether you are new or experienced, this guide is easy to follow. Let’s get started.

What Is a Credit Memo in NetSuite?

A credit memo is a way to reduce a customer’s balance. In NetSuite, you create it when a customer returns items, gets a discount, or needs an invoice fixed. There are two main types:

• Credit memo from written authorisation: Doesn’t affect inventory.
• Standalone credit memo: Affects inventory by adjusting stock levels.

To use credit memos, you need to enable A/R (Accounts Receivable) in NetSuite. Go to:

• Setup > Company > Enable Features > Accounting tab > Check A/R > Save

This setup allows you to use the credit memo feature in your account.

How to Create a Credit Memo in NetSuite

To start, follow these steps:

1. Go to Transactions > Customers > Issue Credit Memos
2. Choose the right form (especially if you use custom forms)
3. Select your customer
4. Confirm the date and posting period
5. Add the purchase order number (PO#) if needed
6. Fill in the memo field with any notes
7. Select optional fields like Department, Class, or Location
8. Go to the Items tab and choose the item(s)
9. Enter quantity, rate, and price, then click Add
10. Go to the Shipping tab to add shipping costs if needed
11. Click Save to issue the credit memo

This is how to create a credit memo in NetSuite step-by-step. You can also print the credit memo as a PDF. This is helpful for your records or to send to your customer.

How to Create a Credit Memo from an Invoice

Sometimes, you need to create a credit memo directly from an invoice. This saves time and pulls all invoice details automatically. Here’s how:

1. Go to the Invoices page in NetSuite
2. Click View next to the invoice you want to credit
3. At the top, click Credit
4. NetSuite fills in all details from the invoice
5. If you want partial credit, adjust:
   • Quantity
   • Rate
   • Price Level
6. Click Save

This method ensures the credit memo links back to the invoice. You’ll see the original items, total, and customer already filled in. If you change the quantity or price, NetSuite adjusts the total.

How to Apply a Credit Memo to an Invoice

After creating the memo, you can apply it to reduce the customer’s balance. Here’s how:

1. Open the credit memo
2. Click on the Apply tab
3. Choose the invoice(s) you want to apply the memo to
4. NetSuite shows the adjusted amount
5. Click Save

This process connects the credit memo with the invoice. The customer’s total due is updated. You can also track this through the Customer Payment Record.

If the customer has already paid, the memo can be used for future invoices. Just apply it during the next payment cycle.

How to Create a Vendor Credit Memo in NetSuite

You may need to issue a credit memo to a vendor. This is slightly different but just as easy.

1. Go to Transactions > Payables > Enter Vendor Credit
2. Choose the vendor
3. Enter date, memo, and items
4. If it’s a bill credit, add expenses or items to be credited
5. Click Save

This is how to enter a vendor credit memo in NetSuite. You can apply it to future bills or reduce a current vendor bill. Vendor credits help you manage refunds, returned items, or overcharges from your suppliers.

How to Reverse a Credit Memo in NetSuite

Sometimes you need to cancel a credit memo. In NetSuite, this is called reversing a credit memo. Here’s how to do it:

1. Go to the credit memo you want to reverse
2. If it has been applied, remove the application first
3. Create a debit memo to offset the credit
4. Apply the debit memo to the same invoice

This keeps your records accurate and removes the credit from the customer’s account. You should only reverse a memo when it’s issued by mistake or is no longer valid.

Other Credit Memo Options in NetSuite

NetSuite allows you to create a credit memo from a return authorisation. This happens when a customer returns a product. To do this:

1. Go to Transactions > Sales > Enter Return Authorisation
2. Approve the return
3. Receive the items
4. Click Refund or Credit

NetSuite will generate the credit memo based on the return. This ensures the inventory and finance data stay in sync.

You can also create credit memos using NetSuite SuiteApps, like Kolleno, to simplify the process. These tools offer extra options, better reporting, and faster credit management.

FAQs About NetSuite Credit Memos

How do I create a credit memo in NetSuite?

Go to Transactions > Customers > Issue Credit Memos. Fill in the form and click Save.

How to enter a vendor credit memo in NetSuite?

Go to Transactions > Payables > Enter Vendor Credit.

What is the difference between a credit memo and a refund in NetSuite?

A credit memo reduces the balance. A refund returns money to the customer.

How to create a debit memo in NetSuite?

Go to Transactions > Customers > Issue Debit Memo. Enter the amount and details.

How to reverse a credit memo in NetSuite?

Create a debit memo and apply it to cancel the credit.

How to create a credit memo in NetSuite using a return authorisation?

Create a return authorisation, receive items, and click Refund or Credit.

Conclusion

Now you know how to create a credit memo in NetSuite using different methods. You can create it from scratch, from an invoice, or from a return. You can also apply it to invoices or reverse it if needed. Credit memos are useful for keeping your customer records and inventory correct. Whether it’s for a refund, return, or billing mistake, NetSuite gives you the tools to handle it all smoothly.

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