What is the difference between credit memo and debit memo in AR and AP?

What is the difference between credit memo and debit memo in AR and AP?

In this post , we will be discuss about the credit and debit memo for AR and AP in oracle apps r12. Credit and Debit memo are the types of Invoices which we do create in Both Payables (AP) and Receivables (AR) in oracle apps. Both Credit and Debit memo behave differently in AP and AR. Basically in AP there is no difference between the credit and debt memo but in Receivables there is difference between credit and debit memo.Here below I will try to explain the difference between credit memo and debit memo in both AP and AR.

 

Working Difference between credit memo and debit memo in AP and AR

Working of Credit and Debit Memo in AP :-

In Payables (AP) , Supplier sends the Credit memo , if they found any kind of discrepancies in the Invoice amount and want to reduce the final Bill amount. We do create the Credit memo in Oracle Payables , to reduce the final bill amount which we have to pay to the supplier. Debit memo , We do create in Payables  , if we want to reduce the bill amount for the supplier due to damage items received from supplier or defaulted items or wrong services. But both working at the end to reduce the final AP bill amount in oracle apps.

 

 

 

In Receivables (AR) , We do enter the credit memo , if We want to reduce our customer liability for an AR invoice.  For example , We have send one AR invoice for our customer , but after that we realized that , We generated this amount for an wrong amount and now I want to reduce the amount for that invoice so for this , I can create the Credit memo in AR and send this to the customer , so the final Pay amount have to pay by customer is Main Invoice- Credit Memo.

 

But Debit Memo , we do create in AR Amount , if we want to Increase the Customer Liability for an AR invoice. For example , We have send one AR invoice for our customer , but after that we realized that we forgot to send the tax or freight amount in that invoice and now I want to add that amount for that invoice so for this , I will be create one Debit memo in AR and send this to the customer , so that final Pay amount have to pay by the customer is Main Invoice + Debit Memo.