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Business Procedures Manual

6.3 Credit Memos

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Proper management and application of credit memos is expected. Failure to properly manage and apply credit memos obviously reduces the institutions limited budget resources.

Vendors issue credit memos for returned goods as well as pricing discrepancies. If a credit memo is anticipated, the institution may hold the original invoice until it receives the corresponding credit memo. The credit memo and the invoice should then be processed together for the net payment amount. If a credit memo is received after an invoice has been paid and the institution does not anticipate additional business with the vendor, the institution should request a refund from the vendor. Institutions should exercise care when dealing with a vendor that will not provide refunds. Obviously, credit memos may be retained and applied in future years if the vendor will not provide a refund.

When refunds are received, they should be credited to the same accounts charged for the expenditure if received in the same fiscal year as the expenditure. If the refund applies to a prior year payment and the payment was funded from state funds, the refund will increase the surplus to be remitted to the state treasury at the end of the fiscal year. Refunds for continuing sponsored grants should be credited to the sponsored grant.

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