Sales and Purchase Credit Memos
Understand credit memos as reversal documents, their ledger and inventory impact, and key table references.
Learning Objectives
- Differentiate sales vs purchase credit memos
- Understand ledger and inventory impact of credit memos
- Know key table IDs and application requirements
Overview
A Credit Memo in Business Central is a reversal document used to correct or refund a previously posted transaction. The key difference is who it applies to — customers (sales) or vendors (purchases).
Sales vs. Purchase Credit Memos
| Aspect | Sales Credit Memo | Purchase Credit Memo |
|---|---|---|
| Purpose | Refund or adjust a sale | Refund or adjust a purchase |
| Affects | Customer Ledger Entries | Vendor Ledger Entries |
| Inventory Impact | Adds stock back (if returned) | Removes stock (if returned) |
| Financial Impact | Reduces revenue | Reduces expenses |
| Linked to | Sales Invoices | Purchase Invoices |
| Key Tables | Sales Cr. Memo Header (6660), Line (6661) | Purch. Cr. Memo Header (6640), Line (6641) |
Creating a Sales Credit Memo
- Navigate to Sales Credit Memos
- Create from scratch or Copy Document from a posted sales invoice
- Enter return quantities and reasons
- Post the credit memo
- Apply the credit memo to the original invoice to close balances
Creating a Purchase Credit Memo
Same workflow on the purchasing side — used when returning goods to vendors or receiving vendor credits.
Application
A credit memo must be applied to the original invoice to close out the balances. Unapplied credit memos remain as open credits on the customer/vendor account.
Return Reasons
Configure Return Reason Codes to track why items are being returned or refunded. This supports quality analysis and vendor performance tracking.
Exact Cost Reversing
When items are returned to inventory, BC can use Exact Cost Reversing to ensure the exact cost of the original shipment is used — critical for accurate inventory valuation.
Exam Tip
Remember the table IDs: Sales Cr. Memo = 6660/6661, Purchase Cr. Memo = 6640/6641. Inventory direction reverses: sales returns add stock, purchase returns remove stock.
Key Revision Points (MB-800)
- Credit memos are reversal documents — they reduce revenue (sales) or expenses (purchase)
- Application to original invoice is required to close balances
- Return reasons and exact cost reversing are important configuration options