A credit memo is a posting transaction which can be applied to a customer's invoice as a payment or reduction, thus decreasing the account balance.

It is typically issued when a customer returns a product back to the seller, thus affecting the inventory count of the said product. If a line item on a credit memo is an inventory item or assembly item (which are the product types in Sweet which inventory is tracked for), then that product’s inventory will be incremented when that credit memo is created. The inventory that has been credited will automatically be assigned to any backorders. Voiding the credit memo or removing the line would remove the item count from inventory.

How to Create a Credit Memo

1. Go to Transactions -> Credit Memos, then click on +New Credit Memo on the top-right corner of the page

2. Choose the customer, add the products and click on Update.

Additional Information

How to Issue Credit Memos For Inventory Items Without Impacting Inventory

There are 2 ways to issue credits without adding the inventory back.

1. Use a non-inventory type item as the line item on a credit memo instead of using the item you sold originally.  This could be a Non-Inventory, Service, or Other Charge item that posts to your sales account.  

2. Issue a credit memo, which puts the item back into inventory and then create an inventory adjustment through Stock Transfer and write-off the inventory.  The advantage of this method is that the sales by item is more accurate since the credit memo would offset the net sales for the specific item rather than just the sales account.  Be aware, however, that the inventory added by the credit memo will automatically be used to fill any backorders you may have.

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