Posted in Payables. Tags: Oracle R12, Payables, Supplier Balance.

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AP: Entering DR and CR Memos

February 5, 2009 Atif Siddiqui
Before getting into the transactions, lets see what are Debit Memos and Credit Memos.
In Oracle Payables both of them are used to reduce the invoice amount. This reduction can be of any
reason and from either side i.e. the organization using Oracle Payables (Payer) or the Supplier (Payee)
it is going to pay.
There is a concept that if an invoice amount needs to be increased then a CR memo is entered and if it
needs to be decreased then DR memo is entered. However this concept doesnt apply in Oracle
Payables. Here in Payables the difference between CR and DR memo is of initiation i.e. a Credit
Memo is given by the supplier if it finds any discrepancy the amount invoiced and debit memo is
given by the customer if they identify any discrepancy.
Debit Memo: A negative change in invoiced amount identified by customer and sent to supplier.
Credit Memo: A negative change in invoiced amount identified by supplier and sent to customer
Moving on,
There are two possible scenarios in Payables for entering a CR or DR memo
1.

The invoice is paid

2.

The invoice is not paid

In first scenario where invoice was overcharged and has been paid to the supplier; a CR/DR memo will
create a Refund i.e. receiving amount in the bank.
In second scenario where the invoice is overcharged but open or not paid; a CR/DR memo will reduce
the payment amount.
Here are the steps for entering the invoice for Scenario 1
1.

Create an invoice if you want to test this scenario, lets say invoice number INV-001 with
amount 15000/-

2.

Create CR/DR memo for same supplier in INV-001

3.

Give it a number say INV-001DR1 with amount -3000/-

4.

Scroll the invoice header section to the Match Action column and select Invoice from the
drop down.

5.

Dont give the Invoice Line or Distribution amount.

6.

Click on Corrections button.

7.

Enter invoice number to be corrected i.e. INV-001 and click Find.

8.

Click on Select and enter the amount to be corrected say -2000 or the total amount -3000.

9.

Click Correct.

10.

With this, the Invoice Line and Distributions will be copied to CR/DR memo with the respective
correction in Distribution lines.

11.

Now perform the validation.

12.

Create Accounting is optional.

13.

Now pay the CR/DR memo; you can use the Pay in Full option or the Payment window.

14.

Select the bank account in which you are receiving the refund from supplier.

15.

Enter the check number, which is used by supplier to pay the refund amount.

16.

Save the Transaction.

17.

The accounting in this case will debit your bank account and Credit the Liability.

Accounting Entry for Refund:

CR/DR Memo
Liability

DR

Expense

CR

CR/DR Memo payment

Bank

DR

Liability

CR

Here are the steps for entering the transaction in Scenario 2

1.

The Invoice for this scenario will also be created already.

2.

Enter the CR/DR memo with the reduction amount.

3.

Go to payment window.

4.

Select the Supplier and every other detail.

5.

Select the bank account and document number you are paying from.

6.

Click Enter/Adjust Invoice and select the Standard Invoice for which the amount should be
reduced in the first line and the CD/DR memo in the next line. You will that the Total will be
reduced which will your payment amount.

7.

Save the transaction.

Thats All. :)

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