In the business world, all company financial transactions must be accompanied by evidence so that they can be used as reporting material as well as tracking. Credit notes are one of the important pieces of evidence to keep.
With proof of transactions, it will be easier to manage your business operations.
Errors in operations, especially those related to buying and selling transactions, can also be minimized.
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In this article, we will thoroughly discuss credit notes. Both from the meaning, purpose to function.
Definition of a Credit Note
If interpreted per word, a memorandum is proof of a sale or purchase transaction in cash which usually consists of two copies.
One is for the buyer, while the second note sheet is kept by the seller as an archive which will later be used in compiling books or financial reports.
While credit means in general, namely the ability to provide loans with an agreed time specified for payment.
For the meaning of a credit memo or credit note is a document or file proving that there has been a reduction in accounts receivable.
Where the reduction is due to the activity of returning goods (returns) caused by a decrease in the value or price of the item.
Price reduction can be due to defects or damage to the goods, when sent.
However, a credit note can also be made due to the return of merchandise due to non-sale or the buyer being unable to pay the bill at the specified time.
Credit notes are issued and signed by the seller, to reduce receivables that will be billed to the buyer.
Not unlike a debit note or cash note, a credit note also consists of two copies. One for the buyer and the second sheet for the seller’s archive.
The difference between a debit note and a credit note is in the payment system for the transaction itself. One is cash, while the other is futures.
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From the explanation above, it can be concluded that credit notes are proof of transactions to credit goods returned by the buyer to the seller.
Where the evidence is made by the seller as proof that the goods have been received and the buyer’s receivables are reduced.
Some conditions that can be the reason for the issuance of a credit note from the seller include:
- Return of goods by the buyer because they do not want service from the seller or other reasons
- The amount or type of goods that come does not match the order in the PO (Purchasing Order)
- There is an error in the price stated on the original invoice
- There is an overpayment of the original invoice
- There was damage to the goods in transit
The Purpose of Making a Credit Note is
In general, the purpose of the seller is to create a credit note for the buyer for the following reasons:
- Documents that can be traced and used as legal evidence. So when one day there is a debt problem, this document will prove it.
- A credit note is proof of a specific transaction that explains the return of goods, price corrections or the amount of goods that must be agreed upon by the seller and the buyer before being issued.
- Serve as proof of the responsibility of the seller to the buyer, as agreed at the beginning of the transaction
- This note is also used as a supporting document that is attached when a revision of the books is needed. In addition to minimizing errors, the report is also clean from streaks.
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Functions or Benefits of Issuing Credit Notes are
There are quite a number of credit note functions. Both for the seller and the buyer. The functions or benefits include:
1. Minimizing Errors in the Field
The benefit or function of the first credit note is to minimize the occurrence of technical errors in the field.
That’s because in general credit notes are not just one sheet. So the expedition will bring a copy to make sure everything is correct.
As explained in its purpose, credit notes can also be used to make corrections.
That way errors can be minimized, business operations will also run smoothly, especially when assisted by an online bookkeeping application for recording transactions.
2. Maintain Good Relations between Seller and Buyer
The next benefit of a credit note is to ensure that there is an agreement between the seller and the buyer.
When an agreement has been reached by both parties, the possibility of conflict can be minimized.
Even if an error occurs during the agreement and corrective action is taken, it can be resolved in a professional manner.
In this way, good relations between the two parties can be maintained.
3. Tracking Errors in Sales Easier to Do
One of the reasons why credit notes are so important for business people to make is to make it easier to track errors.
In a sales transaction, it is not uncommon for errors to occur. Even so, that doesn’t mean you can ignore these mistakes.
As a business actor, you certainly don’t want to experience losses due to mistakes and this will happen again and again.
So when an error is identified in a sales transaction, trace it as much as possible and find the cause.
Not only to immediately make improvements, but also to archive them to be used as evaluation and learning materials in the future.
4. Improving Performance for Business Development
With a credit note, you can also do an evaluation. Both in the financial sector and customer service.
Through this evaluation, it will be easier for you to make improvements in all sectors. From there the performance of each section will be further optimized.
Automatically, company productivity will also increase and development will be easier to do.
Credit Note Form
Actually there is no standard format for making credit notes. However, there are several important points that must be included in the memorandum.
Important points that must be included in a credit note are:
- PKP name from the seller
- The PKP name of the buyer or the intended party
- The date the credit note was created
- The number of the credit note
- Description of the type of goods credited
- Number of items credited
- The unit price of the item or the price per item
- The total price of all items credited
- Full name and signature of the seller
Another point that is also included in the credit note is the parties responsible for the issuance of the credit note.
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When the credit note was issued must also be stated clearly.
This is important to do, to facilitate checking activities by interested business owners or administrative staff.
From the explanation above, we can conclude that credit notes are one of the important transaction proofs that must be owned by sellers/business actors.
Not only is it legally strong evidence when there is a dispute regarding the buying and selling transaction that you made, but it can also be used as material for improvement.
With a credit note, you can make corrections to any errors in the original invoice, transaction records or other errors.
Hopefully, as a business actor, you can understand the important function of this credit note and benefit from it for business continuity.