Credit Memos

This article explains how to create and manage credit memos!

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Written by Aspire Software
Updated over a week ago

Table of Contents


Purpose

Aspire allows you to create credit memos that represent credits your company wishes to provide to your customers.


Requirements

✅ Add Credit Memo must be added to your user role. When assigned you can initiate creation of credit memos from the Quick Menu, to a Division, to an Expense, or to an Invoice.


Creating a Credit Memo

Select the Quick Menu icon in the blue side menu and then choose New Credit Memo from the option list.

  • A dialog window will appear and prompt you to enter a company or contact to whom the credit will apply. Select the company, or contact, and click Apply.

To determine whether to choose company or a contact, consider who has long term responsibility for payment on the account.

Consider the following:

  • For property owners (especially residential) if it is your practice to set up companies in Aspire associated with residential properties, select the appropriate residential company.

    • If you do not set up companies in Aspire for residential properties, then specify the individual contact.

  • If the financial contact works for a larger company (like a commercial company) then it is recommended to tie the credit memo to a company, because the contact may leave the company and someone else might take their place.

You are then taken to the Payments tab, in the Invoicing module to finish Credit Memo creation.

📌 If you choose to not use the quick menu, you can access the Payments tab by navigating directly to the Payments tab in the Invoicing module.

  • The Credit Memo screen will be displayed.


Deciding When to Use the Credit as Expense Checkbox

There are two types of credit memos you can apply. Options when making your credit memo differ when the Credit as Expense checkbox is checked or left unchecked.

The following list describes situations in which you might want to use the Credit as Expense checkbox:

  • If you want to show a trade with the customer for advertising expense when you do not want the debit to revenue, but rather to your advertising expense account.

  • If you want to show accounts receivable credits from a prior system (you could record the credit to display something like Credit Memo - A/R Old System)

  • If you need discounts to show on the profit and loss separately.

  • If you want to provide damage discounts to your customers.

📌 Note: When you check the Credit as Expense box, the field in the Credit Amount section changes from Division to accept an Expense Payment Category.

🧠 Options available in the drop-down for the Expense field are set up in Administration ▶️ Lists ▶️Payment Categories.

You can create your own categories here, but some common examples might include Bad Debt, Barter, Balance A/R or Advertising.

You can select New to create your own Payment Category if necessary.

  • The Payment Category detail screen appears for you to enter in the following information:

  • Enter the Payment Category Name.

  • Choose the Sort Order of the category, which organizes the payment categories by numerical order.

  • Add the Account Number. This is an optional note field that if entered, is visible on the End of Month export.

    • When you add the Account Number in this field, this can assist you when you are making your EOM Journal Entry.

      • It can help tell you where to code the entry so you do not have to look up the Account Number every time!

After your Payment Category has been saved, when creating Credit Memos and using the Credit as Expense check box the new categories will be included in your list of options!

Checked: Creating a Credit Memo as an Expense

If the box is checked, the Credit Memo is applied as an expense. This option allows you to separate the credit from your divisions on the End of Month Report.

  • Check the Credit as Expense checkbox.

  • Set the Billing Contact.

    • The Billing Address fields will fill in automatically if the billing contact has an address in their contact record.

  • Select the Credit Date from the calendar picker.

  • Enter the branch in the Branch drop down.

  • Select the Property/Opportunity to which the credit memo should be applied.

  • Select the expense type that applies to the credit.

  • Enter the sale amount to be credited.

  • If applicable, enter the tax amount to be credited. This is for the Tax Entity Report which shows the gross amount to be credited from taxable sales.

  • If applicable, enter the taxable amount on which the tax amount is based. The taxable amount may be different from the sales amount.

    • You should only specify the portion of the sale amount that is subject to sales tax.

  • Enter any notes you want recorded on the credit memo.

  • Click Save.


Unchecked: Creating a Credit Memo to a Division

If the box is unchecked, the Credit Memo is applied as revenue to one of your company divisions (like Maintenance, Enhancement, Irrigation, etc.)

  • Make sure the Credit as Expense checkbox remains unchecked.

  • Set the Billing Contact.

    • The Billing Address fields will fill in automatically if the billing contact has an address in their contact record.

  • Select the Credit Date from the calendar picker.

  • Enter the branch in the Branch drop down.

  • Select the Property/Opportunity to which the credit memo should be applied.

  • The Division field will automatically be selected for the chosen opportunity. You can choose a division if you need to make changes to this field.

  • Enter the sale amount to be credited.

  • Enter the tax amount to be credited. This is optional and for the Tax Entity Report which shows the gross amount to be credited from taxable sales.

  • If applicable, enter the taxable amount on which the tax amount is based. The taxable amount may be different from the sales amount.

    • You should only specify the portion of the sale amount that is subject to sales tax.

  • Enter any notes you want recorded on the credit memo.

  • Click Save.

Now, that your Credit Memo has been added to Aspire, you can use it in the future or immediately apply it to an invoice!


Applying a Credit Memo to an Invoice

A credit memo can be applied to an invoice from the Payment screen when applying other payments.

An example of when to apply a credit memo would be: Work has been done for your customer. An invoice was disputed and you have agreed to provide a credit to the disputed invoice. You have created the credit memo and want to apply it to the invoice so your customer remains happy and that the credit memo amount is removed from their invoice before they make their payment.

  • To apply the credit, select New Payment from the Quick Menu.

  • The Select Payment Account screen appears.

  • Select the company and then click Apply.

Aspire then displays the Payment screen.

Enter the following information:

  • Regarding- Select the relevant Property or Opportunity to help you search for outstanding invoices if not displayed below in the Invoices section of the Payment screen.

  • Branch – Since you are applying the credit memo to a specific invoice, you do not need to specify the branch.

    • In cases where specific invoice was not yet available (like if a client wanted to make a down-payment) this field allows you to tie the payment to your appropriate branch.

  • Payment Method – Specify Check.

  • Payment Date – Enter the date you want the Credit Memo applied to the invoice.

  • Reference Number – Commonly used to enter the check number for checks, enter your desired reference in this field to help you identify the credit memo application.

Payments Section

  • Payment – Since you are applying a credit and not a payment, leave the payment amount zero ($0).

  • Invoices Checkbox – Since you are applying the credit to an invoice, check the checkbox in front of the invoice that you want to receive the credit memo.

⚠️ When this checkbox is selected, Aspire automatically zeros out Payment field, since you are applying the amount of a credit memo and not a payment.

Credits Section

  • Credits Checkbox – Since you are going to apply the credit memo to the invoice, select the checkbox next to the credit memo you want to apply.

    • If there were multiple open credit memos for the company making the payment, they would be displayed in this section.

  • Payment – Enter the amount from the credit memo being applied to the invoice.

  • Credit Amount Column – This amount represents the total amount the credit memo can allocate to an invoice. If you save the payment, Aspire will keep track of that credit if you choose not to use the full amount and allow you to apply it to another invoice at a later time.

In the payment summary column, once you have assigned the credit memo amount to your invoice, the payment total should reflect zero. You can Save to finish the application of the Credit Memo to the Invoice. Then, when your customer reviews the invoice, the credit memo is recorded and they would only have to pay the difference!


Credit Memo Video

In the below video, we will be talking about creating and applying credit memos.

Sections

0:00 Intro

0:25 What Are Credit Memos?

1:20 Creating a Credit Memo

4:07 Using Credit as Expense

5:16 Creating Credit Memos Without an Invoice

6:54 Review

Training Video

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