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SAP Credit Memo vs Subsequent Credit

1) A credit memo reduces both the quantity and value to be paid to the vendor, by returning goods and reducing the payment amount. 2) A subsequent credit only reduces the value owed to the vendor by negotiating a discount, without changing the quantity. It generates an internal invoice document. 3) In accounting, a credit memo debits the vendor and credits goods receipt/invoice, while a subsequent credit debits the vendor and credits the stock account, reducing the stock value. The key difference is that a subsequent credit does not change the total stock quantity.

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Mohit Dudhmogre
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255 views29 pages

SAP Credit Memo vs Subsequent Credit

1) A credit memo reduces both the quantity and value to be paid to the vendor, by returning goods and reducing the payment amount. 2) A subsequent credit only reduces the value owed to the vendor by negotiating a discount, without changing the quantity. It generates an internal invoice document. 3) In accounting, a credit memo debits the vendor and credits goods receipt/invoice, while a subsequent credit debits the vendor and credits the stock account, reducing the stock value. The key difference is that a subsequent credit does not change the total stock quantity.

Uploaded by

Mohit Dudhmogre
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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SAP Material Management

Invoice Verification

CREDIT MEMO
vs
Subsequent CREDIT
CREDIT MEMO
Reduces both Qty and VALUE to be Paid to Vendor.

SUBSEQUENT MEMO
Only Reduces VALUE to be Paid to Vendor but NOT
Reduce the QTY.

Look at the following example to see the Posting


differences.
A PO of 100 pc @ $10 / pc
Goods Receipt 100 x $10 = $1000
Invoice 100 x $10 = $1000
This is the current MAP,
Total Stock and Total
Stock Value after the
GR and Invoice of the
PO in the previous
slide.

“V” Price Control


MAP $10
Total Stock 1000
Total Value $10,000
Perform
CREDIT MEMO

In this example, 20 pcs of the 100 pcs send


to us was NOT GOOD, we return the 20 pcs
to the supplier and Request for a CREDIT
MEMO
You have to do a separate Return Delivery of
the 20 pcs using MIGO. In this case, the PO
will still be having a oustanding of 20 pcs
System proprose
full invoice qty and
full invoice value
to for credit memo
processing

Total Invoice QTY


until now

Total Invoice
VALUE until now
We will return 20 pcs
with value
20 x $ 10 = $200
to the vendor (and Credit memo 20 pcs
expect to reduce
payment by $200
Credit memo $200 in
VALUE
Amount of $200 as
CREDIT MEMO
SAVE. (invoice match)
Credit Memo
Posted
Qty 20-
Value $200-
Credit Memo

Total Invoice Qty Total Invoice Value


REDUCE 20 REDUCE $200
Check Accounting
Document of
CREDIT MEMO
Debit Vendor $200 (reduce amount to pay to vendor)
Credit GR/IR $200 (reverse GR/IR)

CREDIT MEMO for this case do not impact the Stock


Account or the MAP price, unlike Subsequent CREDIT
Goback to check Slide #4 (no change
after CREDIT MEMO)
Total Stock 1400, Total Value $14000
MAP $10/pc
Return delivery of 20
pcs to vendor.
However, if the Vendor
do not wish to have
the “BAD stock”, we
can SCRAP it.
Return Delivery
created a Material
Document
Total Value
$14,000 - $200
= $13,800
(reduce)

Compare to slide#14
MAP $10 (Same, no change)
Total Stock 1400 - 20 = $1380 (reduce)
Return delivery reduce qty 20-
reduce amount $200-
Assume the balance 80 pc valued at $800 we have now in stock (after the
credit memo and return delivery).

The balance 80 pc is also bad quality, but we decide we can use it, but we
don’t like it and we negotiate with the supplier to discount $2/pc ($2 x 80 =
$160 discount), we will keep and use the 80 pc. This is now the case of
SUBSEQUENT CREDIT.
We now perform a
Subsequent
CREDIT
The QTY can be
change to < 80 pc,
eg: we find that from
the balance 80 pc that
50 pc is BAD and we
request 50 x $2 =
$100 discount, then
we change this to 50.
100 - 20 = 80 pc
invoced until now.

In subsequent
credit, this field is
the discounted
amount.
Request $2 x 80 = $160
reduction in payment
SAVE
Subsequent CREDIT
generated an SAP internal
INVOICE document
BUT a -ive would
make it a Subsequent
CREDIT scenario

Note title is
Subsequent DEBIT !!
Check Accounting
Document of
CREDIT MEMO
Debit VENDOR Acccount $160
(reduce payment to Vendor)
Credit STOCK Account $160
(reduce stock value)
Credit STOCK Account if MAP price
Credit Price difference Account if STD price
Very IMPORTANT !
in Subsequent CREDIT,
Total Stock QTY
NEVER CHANGE

After Before
Subsequent DEBIT Subsequent DEBIT
Discounted $160
$ 13,800 - $ 160 = $ 13, 640

After Before
Subsequent DEBIT Subsequent DEBIT
$13,800 - $160 (Value reduce)
--------------------
1380 - 0 (Qty never reduce)
= $ 9.88 (MAP lower)
Price Ctrl MAP have this effect

After Before
Subsequent DEBIT Subsequent DEBIT

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