In such cases, you can issue credit memos to your customers with the credit amount. In the same transaction line in Example 1, multiple invoices with various F.EX Rates are created, then followed by a credit memo that directly reduces the order. Multiple FX gain/loss amounts are generated overtime and now the Contract Liability account is not clearing in the Functional Currency even though balance in Transactional Currency is $0.

This is to ensure that accounting E2E are using the same exchange rate. This course describes the common billing complexities of subscription-based businesses and explains how billing is handled within Zuora. You can send memo PDFs automatically to your customers by configuring the memo notifications. When a certain memo event is triggered, the generated memo PDF is sent to your specified email addresses. After a memo is posted, you can email your customers a specific version of the memo PDF from the Zuora UI and REST API.

The transaction price will be adjusted and accounted for allocations for the CM transactions. Similar to Example 5, after the return order (RORD), a credit memo is transacted, but using a different F.Ex Rate to the invoice F.Ex Rate of 1.07. Then, the following credit memo line is collected with the transaction type being CM and linked to line #1 of the original SO-123 sales order line. When you create a credit or debit memo for usage charges, the quantity must be a positive value. If you leave it empty on the Zuora UI, it will be set to 1 as the default value. In the following video, Nick Harlow, Director of Product Management at Zuora, describes how to use the credit and debit memo features within Zuora’s advanced AR functionality.

  1. For many companies, payment operations and AR management can be a cumbersome, lengthy, and error-prone process.
  2. In such cases, you can issue a prorated credit to your customer.
  3. We’re excited to announce these new capabilities as part of the Spring ‘18 launch.
  4. SO based CM lines are uploaded to Zuora Revenue with the ORIG_SO_LINE_ID field specified.

Then, the following credit memo is collected with the transaction type being CM and linked to line #1 of the original INV-123 invoice. The following table explains whether each type of credit memos has an impact on different values of the SO line and whether reallocation occurs. If credit memos are generated during the bill run, you can set to email the credit memos upon posting. After credit and debit memos have been generated, you can either download or email the memo PDF documents.

Download or email memo documents

In this case, Zuora Revenue will not update the Sell Price or the Allocatable Price. No reallocation is triggered because the CM-C transaction is to indicate that the SO line can be re-billed again. After the zuora credit memo SO line is collected, it has been billed with the following invoice. The standalone CM line is input to Zuora Revenue without the original SO Line Id or Invoice Line Id specified such as the following.

Billing Document Template Configuration

You can use the memos to adjust invoices at a line item level and provide your customers with memo documents to track billing changes. In the same transaction line in Example 3, after the return order (RORD), a credit memo is transacted using the same F.Ex Rate as the invoice F.Ex Rate of 1.07. Since the invoice and the credit memo are transacted with the same F.Ex Rate, there is no FX gain/loss generated, and the Contract Liability account is also cleared. This video is designed for anyone interested in learning how to issue a credit or refund to customers using credit and debit memos.

For many finance teams, the only system “flexible enough” to handle each one of these one-offs is the handy dandy Microsoft Excel. However, that means AR data is limited and siloed in multiple sources – it will be almost impossible to scale as a company grows. This feature is only available if you have Invoice Settlement enabled. The Invoice Settlement feature is generally available as of Zuora Billing Release 296 (March 2021). This feature includes Unapplied Payments, Credit and Debit Memos, and Invoice Item Settlement. If you want to have access to the feature, see Invoice Settlement Enablement and Checklist Guide for more information.

This credit memo consumes the value from the last period, Jun-19, and it does not impact any other periods. Use this data source to export the applied and unapplied portions of credit memos. A credit memo can be applied to more than invoices and debit memos. You can export this data source to see how much of the credit memo is applied to invoices and debit memos, and how much is unapplied.

For many companies, payment operations and AR management can be a cumbersome, lengthy, and error-prone process. The reason comes down to the manual attention and time it takes to effectively “settle” invoices. The transaction price will be adjusted for the CM-R transactions. The transaction price will not be adjusted for the CM-C transactions if there is no invoice overage. For example, your customer pays $500 in advance for an annual service on January 1.

How to Issue Bulk Credits & Adjustments for Customers Who Cant Pay Webcast Recording, Slides & FAQ

You’ll need the Invoice Settlement feature enabled in your Zuora tenant in order to have access to the above-mentioned functionalities. If you don’t have this feature enabled and would like to do so, submit a Zuora Support here. Please keep in mind that if you enable invoice settlement after configuring and using your tenant for a while, support will need to go through a migration process. If the cancelation is not on an overage invoice, this type of transaction line is treated as a future rebill and does not impact any allocation. CM-C lines are uploaded to Zuora Revenue with the ORIG_INV_LINE_ID field specified.

The standalone CM will not change anything because it is not linked to any sales order or invoice line. After this SO is collected, it has been billed by https://1investing.in/ the following invoice line. To create a memo from a charge through the Zuora REST API, see POST Credit Memo from Charge and POST Debit Memo from Charge.

Then, the following credit memo for this SO line is collected in Zuora Revenue. SO based CM-R lines are uploaded to Zuora Revenue with the ORIG_SO_LINE_ID field specified. In this example, the following sales order is input to Zuora Revenue.

Create a custom memo template

In many countries, credit and debit memos are actually required by law for adjusting invoices. Credit and debit memos are a widely adopted and well-understood billing construct that makes it easier to audit a company’s billing and verify the correctness of receivables accounting. Based on this rule, the reversal adjustment starts from the last period backward until the credit memo amount is completely consumed. You want to give your customers a percentage or fixed amount discount on the price of a product or service only for a certain period of time.

You can create your custom credit memo and debit memo templates based on your company’s requirements. Zuora supports credit memo merge fields and debit memo merge fields to display certain information you want your customers to see. Occasionally, a vendor might want to issue an ad hoc charge or credit, for example, a customer loyalty credit. They provide another mechanism for organizations to manage their customer relationships and billing operations. For example, give your customer one-month of free service or a discount for a month. Credit and debit memos provide a detailed justification of the amount stated on the memo.

Credit memos and debit memos are used to manage invoices and account balances. You can create credit memos to reduce invoices and account balances, and create debit memos to increase the amount customers owe you. Based on this rule, the credit memo amount is consumed based on the specified start date and end date. If no start and end dates are provided for the credit memo, the credit memo amount is amortized based on the percentage of the billed amount for the period. The following credit memo of $200 is input to Zuora Revenue to adjust the invoice based on the LIFO credit rule.