Credit memo transactions

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Credit memos can be uploaded to Zuora Revenue as transactions (File Upload > Transactions/Cost) for data processing. There are multiple types of credit memos that are supported by Zuora Revenue. When you upload credit memo lines to Zuora Revenue, use the Line Type field to distinguish different types of credit memos.

Credit memo types

The following types of credit memos are supported.

Line Type	Description
CM	The normal credit that provides a discount to the customer against a sales order or invoice. The transaction price will be adjusted and accounted for allocations for the CM transactions. Depending on the reference document to which the credit memo is linked, the CM transactions can have the following categories: SO based CM: The discount amount is based on the sales order line but the value remains in deferred status until the invoice is collected. Invoice based CM: The discount amount is based on the billing document. Standalone CM: The credit memo is created without any reference document.
CM-C	The invoice cancelation in case of the rebill scenario. The transaction price will not be adjusted for the CM-C transactions if there is no invoice overage.
CM-R	The return of quantity against a sales order or invoice. The transaction price will be adjusted for the CM-R transactions. Depending on the reference document to which the credit memo is linked, the CM-R transactions can have the following categories: SO based CM-R: The cancelation is based on the sales order line. Invoice based CM-R: The cancelation is based on the billing document.

Line Type

Description

The normal credit that provides a discount to the customer against a sales order or invoice. The transaction price will be adjusted and accounted for allocations for the CM transactions.

Depending on the reference document to which the credit memo is linked, the CM transactions can have the following categories:

SO based CM: The discount amount is based on the sales order line but the value remains in deferred status until the invoice is collected.
Invoice based CM: The discount amount is based on the billing document.
Standalone CM: The credit memo is created without any reference document.

CM-C

The invoice cancelation in case of the rebill scenario. The transaction price will not be adjusted for the CM-C transactions if there is no invoice overage.

CM-R

The return of quantity against a sales order or invoice. The transaction price will be adjusted for the CM-R transactions.

Depending on the reference document to which the credit memo is linked, the CM-R transactions can have the following categories:

SO based CM-R: The cancelation is based on the sales order line.
Invoice based CM-R: The cancelation is based on the billing document.

Credit rules

When you upload credit memo transactions to Zuora Revenue, the Credit Rule (CREDIT_RULE) field specifies how the credit memo amount is to be knocked off from the transaction price. The following credit rules are supported in Zuora Revenue:

Prorate
LIFO (Last In First Out)
Fixed duration

Prorate (P)

Set the CREDIT_RULE field to P to apply this credit rule. Based on this rule, Zuora Revenue will prorate the credit memo amount equally over the remaining period of the associated invoices or sales orders.

For example, the current open period is Jan-19. An invoice is scheduled for six months.

INV #	INV Line #	Invoice Amount	Jan-19	Feb-19	Mar-19	Apr-19	May-19	Jun-19
100	1	$1200	$200	$200	$200	$200	$200	$200

A credit memo of $150 is input to Zuora Revenue to adjust line #1 of the #100 invoice. The amount of $150 is prorated equally during the six months and Zuora Revenue will do the following catch-up for this credit memo.

CM #	CM Line #	Invoice Amount	Jan-19	Feb-19	Mar-19	Apr-19	May-19	Jun-19
100	1	$150	($25)	($25)	($25)	($25)	($25)	($25)

LIFO (L)

Set the CREDIT_RULE field to L to apply this credit rule. Based on this rule, the reversal adjustment starts from the last period backward until the credit memo amount is completely consumed.

For example, the current open period is Jan-19. The following invoice is scheduled for six months.

INV #	INV Line #	Invoice Amount	Jan-19	Feb-19	Mar-19	Apr-19	May-19	Jun-19
100	1	$1200	$200	$200	$200	$200	$200	$200

The following credit memo of $200 is input to Zuora Revenue to adjust the invoice based on the LIFO credit rule. This credit memo consumes the value from the last period, Jun-19, and it does not impact any other periods.

CM #	CM Line #	CM Amount	Jun-19
110	1	$200	($200)

If the credit memo amount is $450, the reversal adjustment is as follows. The amount of $450 can be completely consumed from the Jun-19 period backward until the Apr-19 period.

CM #	CM Line #	CM Amount	Apr-19	May-19	Jun-19
110	1	$450	($50)	($200)	($200)

Fixed duration (F)

Set the CREDIT_RULE field to F to apply this credit rule. 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.

For example, the current open period is Jan-19. An invoice is scheduled for six months.

INV #	INV Line #	Invoice Amount	Jan-19	Feb-19	Mar-19	Apr-19	May-19	Jun-19
100	1	$1200	$200	$200	$200	$200	$200	$200

The following credit memo of $200 with start date and end date is input to Zuora Revenue. The credit memo amount will be consumed during the specified duration as follows:

CM #	CM Line #	CM Amount	Start Date	End Date	May-19	Jun-19
110	1	$200	01-May-2019	30-Jun-2019	($200)	($200)

Credit memo impact on SO values

The following table explains whether each type of credit memos has an impact on different values of the SO line and whether reallocation occurs.

CM Type	Ext. List Price	Ext. Sell Price	Allocatable Price	Quantity	Billed Amount	Reallocation
CM (Invoiced based)	No	No	Yes	No	Yes	Yes
CM (SO based)	No	No	Yes	No	Yes*	Yes
CM (Standalone)	N/A	N/A	N/A	N/A	N/A	Yes
CM-C	No	No	No	No	Yes	No
CM-R (Invoiced based)	Yes	No	Yes	Yes	Yes	Yes
CM-R (SO based)	Yes	No	Yes	Yes	Yes*	Yes
*Note: The SO based credit memos can impact the billed amount only if the invoice has been collected.

Examples are provided below for each type to help you understand the impact of different credit memos.

Invoice based CM

Invoice based CM lines are uploaded to Zuora Revenue with the ORIG_INV_LINE_ID field specified. In this example, the following sales order line is input to Zuora Revenue.

Type	SO #	SO Line #	Unit List Price	Unit Sell Price	Ext. List Price	Ext. Sell Price	Quantity
SO	SO-123	1	$70	$50	$1050	$750	15

After this SO is collected, it has been billed by the following invoice line.

Type	INV #	INV Line #	Invoice Amount	Quantity
INV	INV-123	1	$750	15

Zuora Revenue will update the BILLED_DEF_AMT and BILLED_REC_AMT values on the SO line to display how much has been billed and released for this line.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price	Billed Amount
SO	SO-123	1	$1050	$750	15	$750	$750

Then, the following credit memo is collected with the transaction type being CM and linked to line #1 of the original INV-123 invoice.

Type	CM #	CM Line #	Quantity	CM Amount	Orig. Invoice Line Id
CM	CM-123	1	15	$-200	INV-123.1

In this case, Zuora Revenue will reduce the allocatable price and trigger reallocation.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price	Billed Amount
SO	SO-123	1	$1050	$750	15	$550	$550

SO based CM

SO based CM lines are uploaded to Zuora Revenue with the ORIG_SO_LINE_ID field specified. In this example, the following sales order line is input to Zuora Revenue.

Type	SO #	SO Line #	Unit List Price	Unit Sell Price	Ext. List Price	Ext. Sell Price	Quantity
SO	SO-123	1	$70	$50	$1050	$750	15

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.

Type	CM #	CM Line #	Quantity	CM Amount	Orig. SO Line Id
CM	CM-123	1	15	$-200	SO-123.1

In this case, Zuora Revenue will reduce the allocatable price and trigger reallocation.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price
SO	SO-123	1	$1050	$750	15	$550

Standalone CM

The standalone CM line is input to Zuora Revenue without the original SO Line Id or Invoice Line Id specified such as the following. The standalone CM will not change anything because it is not linked to any sales order or invoice line.

Type	CM #	CM Line #	Quantity	CM Amount	Orig. SO Line Id	Orig. Invoice Line Id
CM	CM-123	1	2	$-200

CM-C

The CM-C transaction line is used to cancel an invoice. 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.

In this example, the following sales order line is input to Zuora Revenue.

Type	SO #	SO Line #	Unit List Price	Unit Sell Price	Ext. List Price	Ext. Sell Price	Quantity
SO	SO-123	1	$90	$70	$900	$700	10

After the SO line is collected, it has been billed with the following invoice.

Type	INV #	INV Line #	Invoice Amount	Quantity
INV	INV-123	1	$700	10

Zuora Revenue will update the BILLED_DEF_AMT and BILLED_REC_AMT values on the SO line to display how much has been billed and released.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price	Billed Amount
SO	SO-123	1	$900	$700	10	$700	$700

Then, the following CM-C line is collected to cancel line #1 of the original INV-123 invoice.

Type	CM #	CM Line #	Quantity	CMC Amount	Orig. Invoice Line Id
CM-C	CM-123	1	10	$-700	INV-123.1

In this case, Zuora Revenue will not update the Sell Price or the Allocatable Price. Only the billed amount will be updated. No reallocation is triggered because the CM-C transaction is to indicate that the SO line can be re-billed again.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price	Billed Amount
SO	SO-123	1	$900	$700	10	$700	$0

Invoiced based CM-R

Invoice based CM-R lines are uploaded to Zuora Revenue with the ORIG_INV_LINE_ID field specified. In this example, the following sales order is input to Zuora Revenue.

Type	SO #	SO Line #	Unit List Price	Unit Sell Price	Ext. List Price	Ext. Sell Price	Quantity
SO	SO-123	1	$90	$70	$900	$700	10

This SO line has been billed with the following invoice.

Type	INV #	INV Line #	Invoice Amount	Quantity
INV	INV-123	1	$700	10

Zuora Revenue will update the BILLED_DEF_AMT and BILLED_REC_AMT values for this SO line to display how much has been billed and released.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price	Billed Amount
SO	SO-123	1	$900	$700	10	$700	$700

Then, the following credit memo is collected for line #1 of the INV-123 invoice as the CM-R transaction type.

Type	CM #	CM Line #	Quantity	Ext. List Price CM	Ext. Sell Price CM	Orig. Invoice Line Id
CM-R	CM-123	1	5	$-350	$-350	INV-123.1

Zuora Revenue will update the list price, quantity, and the allocatable price at SO level. Reallocation will be triggered.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price	Billed Amount
SO	SO-123	1	$550	$700	5	$350	$350

SO based CM-R

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.

Type	SO #	SO Line #	Unit List Price	Unit Sell Price	Ext. List Price	Ext. Sell Price	Quantity
SO	SO-123	1	$90	$70	$900	$700	10

Then, the following credit memo for this SO line is collected in Zuora Revenue.

Type	CM #	CM Line #	Quantity	Ext. List Price CM	Ext. Sell Price CM	Orig. SO Line Id
CM-R	CM-123	1	5	$-350	$-350	SO-123.1

Zuora Revenue will update the list price, quantity, and the allocatable price at SO level. Reallocation will be triggered.

Type	SO #	SO Line #	Ext. List Price	Ext. Sell Price	Quantity	Allocatable Price
SO	SO-123	1	$550	$700	5	$350