Credit memo and Debit memo in Oracle

      What is Credit memo and debit memo in oracle Accounts payable

First of all We will see what is credit memo in oracle and debit memo in oracle payables.

Credit memo and debit memo in oracle both are used to reduce buyer liability in Payable . Therefore both are negative in amount .

Credit memo in oracle payables is generate by supplier . It will be in negative amount .

Debit memo in oracle payables is generated by buyer it will also be in negative amount.

Consider the following example

Suppose we have purchased 5 items from a supplier of 100$ .Now 3 items we received are in damaged state. Now if supplier sends you document which will show that some amount will be reduced form original amount as you don’t want damaged products ,that will be credit memo .It will be in negative amount and will be recorded as credit memo in oracle.

If instead of supplier, we are sending a document containing the detail of damaged goods then that will be debit memo in oracle.

In both the case our(buyer) liability will reduce.

What is Credit memo and debit memo in Oracle Account Receivables 

First of all We will see what is credit memo in oracle and debit memo in oracle receivables.

What is credit memo:

The functionality of credit memo will be same here in receivables same as payable. No difference it will in negative amount and will reduce the buyer liability but debit memo will function in opposite way.

What is debit memo:

Debit memo in receivables will increase the liability . It will be in positive amount .

Consider the following example

Suppose we have sold some 5 items of 100$ to some buyer. By mistake we have sent an invoice for 4 items only. Now we want the customer to pay for 5th item also. In that case we will send an Invoice

which will be called as debit memo to buyer. It will be in Positive amount and will be recorded as debit memo in oracle.

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Payment term setup in Account Payables

In this post we will see how we create/setup payment term in oracle payable and receivables.

Payment terms are created to calculate the due date for a invoice.

Steps To Create/setup Payment Terms in payables

Navigation : Responsibility Payables Managers >go to Setup >Invoice >Payment Terms

Now here lets take an Example: 

We created a Payment Term – 15/45 Net 90

Explaining the above payment term : Supplier will offer you 15% of discount and if you pay the invoice in next 45 days. The total invoice amount is due in 90 days. In such case,  payment term will be setup 

as follows.

Payment term setup in Account Receivables

Responsibility: Receivables Manager
 

Navigation: Setup > Transactions > Payment Terms

The setup which is shown below is created for a payment term which has a due date  of 60 days from the transaction date. If the invoice is paid in 10 Days then we will give 2 Percent discount on the Invoice.

Payment Term setup In Payables and Receivables