A credit memo is the reversal of an invoice. Credit memos are applied to individual invoices to credit customers for work previously billed. They can be issued when you need to adjust the original invoice. A credit memo can have negative amount. For example, you can issue a credit memo to refund incorrect labor charges, overbilling, or incorrect expense billings.
When credit memo is issued, an email is sent to the project manager (or the user with project approval) indicating that a credit memo was issued. This person must decide to adjust the balance in the next invoice or send the customer a check.
Before you can issue a credit memo, the project associated with the invoice must have a status of "Open" or "Hold."
Credit memos are issued in the same currency as the original invoice. If multi-currency is enabled and the credited transaction is subsequently WIP adjusted or transferred to a different project, the re-billed transaction can be invoiced in a different currency if the billing currency of the new project is different from the original project.
Before a credit memo is approved, the system verifies that amount has not exceeded the contract amount if it is enforced for projects with contract or standard billing types.
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