A debit memo (also called a debit memorandum) is a document used to adjust or reduce the amount owed by a customer or to correct an error in the amount billed. In Accounts Payable, a debit memo is issued by a vendor to notify the buyer that the previously issued invoice amount is being reduced, often due to returned goods, overbilling, or adjustments to terms.
Key Uses of a Debit Memo :
Invoice Adjustments :
* When the buyer is overcharged for goods or services.
* When a discount is applied after the original invoice was issued.
Returned Goods : When goods are returned to the supplier or are found to be defective, the supplier issues a debit memo to reflect the reduction in the amount owed.
Pricing Errors : If the original invoice had incorrect pricing or quantity, a debit memo will adjust the balance owed by the buyer.
Account Adjustments : A debit memo can be issued to correct discrepancies in the Accounts Payable balance or to handle credit terms adjustments.
