Receivable Debit Memo
Debit memo is similar to Invoice and generally is used when Invoice cannot be issued.
The debit memo is usually issued in the same format used for an invoice. When issued, debit memos typically appear on the monthly statements of outstanding accounts receivable that are sent to customers.
Why Debit Memo
Debit memo is needed in some of the following cases :
Debit Memos may be used in Incremental Billings
This can be an alternative version of an invoice to a customer, and is used when the amount billed on the original invoice was too low. Thus, the debit memo is essentially an incremental billing for the amount that should have been included in the original invoice.
In foundry bean financial system, invoices once delivered cannot be changed .Debit memo is a mechanism of entering incremental invoices though a manual invoice can be generated and delivered to customer.
Debit Memos may be used as Internal Offsets
If there is a small credit balance remaining in a customer account, a debit memo can be generated to offset it, which allows the accounting staff to clear out the balance in the account. This situation can arise when a customer overpays (though such payments should be returned to the customer or forwarded to the applicable state government under escheatment laws), or when an accounting error leaves a residual balance in an account.
Debit memo to offset credit memo
If there is a mistake in creating a credit memo, a debit memo can be used to offset the credit balance.