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A Credit Memo is a financial tool used to adjust a customer’s balance in cases where they have been overcharged, issued a refund, or given a discount on an invoice. In the catering world, credit memos can be a helpful way to manage customer accounts, especially when handling large events, deposits, or last-minute order changes. 


When to Use a Credit Memo

Credit memos can be applied in several catering-specific situations, including:

  • Event Cancellations or Adjustments: If a customer reduces their headcount or removes an item from their catering order after an invoice has been paid, a credit memo can be issued to use on a future catering order.
  • Refunds on Deposits: If a deposit was collected but the customer cancels within an allowed refund window, a credit memo can be applied instead of processing a refund through their payment method.
  • Loyalty or Customer Satisfaction Adjustments: When offering a discount or compensation for an issue with service or food quality, a credit memo can be used to adjust the final amount due.
  • Prepaid or Overpaid Balances: If a customer overpays an invoice or their corporate account has a balance from a previous order, a credit memo can be issued and applied toward future catering orders.


Here's a step-by-step guide on how to issue a Credit Memo or use a Credit memo for a customer:


Create a New Credit Memo

Step 1: Access Credit Memos

    1. Navigate to the Accounting tab.

    2. Click on the Credit Memos Link.       

Step 2: Find your Customer to apply the Credit Memo for

    1. Search by Name: Start typing the customer's name, and a dropdown will appear with matching names.    

    2. Select the Customer: Click on the name of the customer you're applying the credit to. 
    3. Click on Continue to proceed.               

Step 3: Enter Credit Memo Details

    1. On the next page, you'll be asked to enter a short description explaining why the credit is being issued.

    2. Enter the credit amount to be applied in the Total section. Review Your Credit Memo: Double-check the description and credit amount to ensure everything is correct.

    3. Once you have completed the details, click on Save Changes and Proceed to Next Step.


Step 4: Choose What to Do with the Credit Memo 

On the next page, you will see various options for what you can do with the Credit Memo, such as applying it to open invoices or keeping it for future use.

Apply this credit to an open invoice: 


    1. If selected, you will be asked to apply the Credit Memo to an Invoice. If the customer has several open invoices, make sure to locate the invoice where you wish to apply the credit. 


    2. Next, confirm that you want to apply the selected credit to the invoice.  

    3. Once confirmed, you will get a message that it's been applied to the selected invoice.

Issue a Refund: 

We highly recommend avoiding this option, as it does not generate a valid refund for your customer and will not appear in the Refund section of your Sales Journal. If you need to issue a refund, we suggest following the steps outlined in this article: Processing Refunds for in CaterZen


Keep this Credit for Future Use: If you select this option, the customer has the option to use it for a future order (provided that the payment option - pay with system credit is enabled) or you can apply the credit memo for the customer. A credit memo is a flexible option that allows customers to apply unused funds to future catering events rather than processing an immediate refund. This is especially useful for repeat catering customers, corporate accounts, or customers who host multiple events throughout the year. Instead of requiring an immediate refund, which may disrupt cash flow, a credit memo ensures that customers return for their next catering need, reinforcing long-term relationships and encouraging repeat business. For example:
  • A company places an order for a corporate luncheon but later needs to reschedule. Instead of refunding the full amount, a credit memo is issued and automatically applied when they book their new event the following month.
  • A wedding customer reduces their guest count after a deposit has been paid. Rather than refunding the difference, a credit memo is provided, allowing them to use the credit toward additional catering services, such as a rehearsal dinner or brunch the next day.

    1. Choose Keep this Credit for Future Use from the options then click on Proceed.  


    2. After choosing to keep the credit for future use, you will get a notification that it has been saved. 

    

    3. Now, this Credit Memo is available for your customer to use on a future order. When your customer is ready to apply their credit to a new order, follow the steps below to locate the Credit Memo and apply it to a new invoice.


Print/Fax/Email: Send a copy of the Credit Memo to the Customer.

    1. Choose Print/Fax/Email from the options then click on Proceed.     
    2. The next page will allow you to choose which action you would like. 
    
  • Print/Download – Allows you to print or download the Credit Memo for record-keeping or sharing.
  • Fax – Enables you to enter a fax number and send the Credit Memo directly. 
  • Email – Allows you to send the Credit Memo via email. By default, it will populate the customer's email address, but you can enter a different email if requested.


Finding Existing Credit Memos


Step 1: Search by Customer Name OR Search by Date Range the Credit Memo was Created: If you prefer, you can search by the relevant date range instead.


Step 2: After clicking Continue, you will see a list of Credit Memos for the selected date range. The list will display key details, including Customer Name, Amount, Issued Date, and Status.
  • A credit has been applied if the Status shows "Applied to Invoice #..."
  • Any unused credits will display as "Unused"
  • Additionally, you can either View/Print, Edit, Choose what to do with the credit, or Delete the Credit Memo from this page.

Best Practices for Using Credit Memos in Catering

  • Communicate Clearly: Inform customers when a credit memo is issued and how it will be applied to their future orders.
  • Use Credit Memos for Business Growth: Offering a future credit can be a great customer service tool for maintaining long-term catering relationships rather than issuing immediate refunds.


By effectively using credit memos in your catering business, you can streamline accounting, enhance customer satisfaction, and ensure smooth financial transactions. Credit memos not only help resolve financial adjustments but also encourage future business, making them a win-win for both you and your customers.