Debit Memo and Credit Memo in Oracle Applications Receivables and Payables

Debit Memo and Credit Memo has not much difference in real world but in Oracle it has…

Have a look on below description for DM and CM according to Payables & Receivables Module R12. 

Payables (in AP debit and credit memo both refers to –ve amount to supplier)

Debit Memo: In AP debit memo refers when supplier has supplied any defective goods and customer returns it to the supplier back at that time debit memo is generated indicating the defective goods amount. (ISSUED BY CUSTOMER)

Credit Memo: (Issued by the supplier.)  Suppose there are errors in the invoice sent to the customer or there is a problem with the shipment then this memo will be issued to decrease the amount specified into he original invoice sent to the customer. Here, the supplier balance will reduce.

EXAMPLE

Thus in both cases the supplier balances will reduce. 
Let me give an example. if the invoice amount is 1000$,if supplier raises 100$ credit memo, then it is understood that due to some errors in invoice, he is sending a credit memo ,actual invoice amount is 900$.so the supplier total balances will come from 1000$ to 900$.

Now, let us take the example of debit memo, if there are any defect with goods supplied, say, for 100$ worth, then customer will send debit memo of 100$ to supplier. So in this case also the supplier balances come down from 1000$ to 900$. 

Receivables (In AR Side Debit Memo refers to +ve sign and Credit Memo refers to -ve sign)

unlike AP MODULE where there is no difference between a debit memo and credit memo in AR module we have to enter a - ve amt for credit memo and +ve amt for debit memo debit memo is similar to an invoice and it is just in addition to an original invoice. When we forget to add a fright or other charges to an invoice we later charge it by creating a debit memo. 

In case we charge more than the product value we have to reduce it by creating a credit memo. Or a customer returns some goods we have to reduce receivable by creating a credit memo.