Credit memo
Also called: credit note · supplier credit
A credit memo reduces an invoice you've been issued — for product that didn't arrive, arrived damaged, or was billed at the wrong price. Credits are routinely promised at the door and never issued, and almost nobody checks, so the money quietly stays with the supplier.
Why they go uncollected
- The credit is promised verbally to whoever received the delivery, and never written down.
- It's issued against a later statement, so it never appears where anyone is looking.
- The person who noticed the problem isn't the person who pays the invoice.
The fix is a two-column log: credits expected, credits received. Anything unmatched after 30 days gets chased.
Worked example · A year of uncollected credits
- Deliveries per year
- 156
- Deliveries with a discrepancy
- 11%
- Average credit value
- $34
- Credits actually collected
- 40%
- Left with the supplier
- $350/year
Small in isolation, and it is entirely free money that costs about two minutes per occurrence to claim. The bigger version of this problem is the unchallenged price increase, which compounds — see price creep.