Lesson 2 of 5
Credit memo requests
10 min
Sometimes the customer keeps the goods but was charged too much. A discount was forgotten, a scale price was wrong, or the customer accepted a damaged unit in exchange for a reduction. No goods move, so a return order is the wrong tool. SAP's answer is the credit memo request: a sales document that asks for a credit and, once approved, is billed as a credit memo.
- Credit memo requestSales document (type CR in the standard system), usually with reference to the invoice
- Billing blockProposed automatically so the request is reviewed before any credit is created
- ApprovalAn authorized person checks the claim and removes the block, or rejects the request
- Credit memoOrder-related billing creates the credit memo (billing type G2 in the standard system)
- Journal entryCredits the customer account and reverses revenue and tax
Creating the request
In SAP GUI, the request is created with VA01 using the credit memo request type (CR in the standard system), normally with reference to the invoice that was wrong. In Fiori, the Manage Credit Memo Requests app lets an internal sales representative create, change and display requests, and the My Sales Overview page has a card for blocked credit memo requests. The order reason is again important: "price too high", "discount not applied" or "goodwill" tell the approver and later reports why money was given back.
For Contoso, Great Lakes Fleet Services was billed $210 per alternator on invoice 90001877, but its contract price is $200. Maria creates a credit memo request with reference to the invoice for 50 pieces at $10 each, order reason "price too high". The expected credit is $500 plus the matching sales tax, if tax applied on the original invoice.
Approval and release
Approval can be as simple as an authorized user removing the block in VA02, or reviewing the list of sales documents blocked for billing (V.23) and releasing them. Many companies add a flexible workflow so that requests above a value threshold go to a sales manager in My Inbox. Whatever the mechanism, the rule should be written down: who may approve, up to what value, and what evidence they need to see.
- Is the claim supported by the original invoice and the contract or price agreement?Yes → continue · No → reject the request with a reason for rejection
- Is the requested value within the approver's limit?Yes → approve · No → route to the next approval level
- Is the order reason correct and specific?Yes → remove the billing block · No → correct it first, because reports depend on it
- Has the block been removed?Yes → the request appears in the billing due list · No → nothing will be billed
Billing the credit
Once the block is gone, the request is due for billing. It is order-related billing: there is no delivery, so the credit memo is created directly from the request in VF01, from the billing due list in VF04, or in the Create Billing Documents app. Many companies schedule billing runs so that released requests are billed automatically, which means a released request can turn into a credit memo without anyone touching it again.
A rejected request is closed by entering a reason for rejection on its items. That keeps it out of the billing due list and out of open-document reports, while preserving the record that a claim was made and refused.
| Situation | Right document | Goods move? | Result |
|---|---|---|---|
| Goods come back for a refund | Return order | Yes, into returns stock | Credit for returns after approval |
| Price or quantity billed too high, goods kept | Credit memo request | No | Credit memo after approval |
| Price or quantity billed too low | Debit memo request | No | Debit memo after approval |
| Several price errors on one invoice | Invoice correction request | No | Net credit or debit per item |
| Invoice created in error entirely | Cancel the billing document | No | Cancellation document reverses the posting |
Notice the last row. If an invoice should never have existed, for example it was created twice, the right fix is usually to cancel it (VF11 in SAP GUI, or the cancel function in Manage Billing Documents), not to issue a credit memo. A cancellation reverses the original posting exactly and reopens the predecessor for billing, which a credit memo does not do.
What would you do?
Dan, the finance process owner, notices that 30 credit memos last month had order reason "Other". Priya is planning regression tests for the credit memo process. What should she add?
- Use a credit memo request when the customer keeps the goods but was over-billed.
- The request carries a billing block by default so the credit is approved before it exists.
- Approval may be a manual block removal (VA02, V.23) or a workflow in My Inbox.
- Credit memos are order-related billing documents; rejected requests are closed with a reason for rejection.
- If an invoice should not exist at all, cancel it rather than crediting it.
Check your understanding · not graded
Lesson check
1. Which document fits a customer who kept the goods but was charged too much?
2. How is a credit memo created from an approved request?
3. How should a rejected credit memo request be closed?
4. An invoice was created twice by mistake. What is usually the right correction?