Way back in Round 11 we looked at credit memos on the purchasing side — what happens when a vendor owes you money. Today we flip it around. A customer was overbilled, goods showed up damaged, or you promised a goodwill discount after the invoice went out. Now you owe them a credit.
Yesterday’s Round 18 showed how GP splits invoice entry across three windows. No surprise: the credit side inherits the same split. And Business Central pulls the same trick it always does — it starts from the document you already posted, instead of asking you to retype it.
How You Do It in Dynamics GP
Step 1: Pick your window (again). If the credit is a dollar amount — a billing error, a freight concession, a goodwill gesture — you use Receivables Transaction Entry, per Microsoft’s Receivables Management documentation. If the customer is physically returning items, that’s a different document entirely — the SOP Return, which we’ll cover properly in Round 20. Today we stay with the money-only credit memo.
Step 2: Enter the credit from scratch. In the navigation pane, choose Sales, open the Receivables Transactions list, and choose the credit memo option. GP opens the Receivables Transaction Entry window with Credit Memos as the document type. Now you type everything: customer ID, date, description, and the credit amount. There’s no button that says “start from the invoice I’m crediting.” You keep the original invoice open on a second screen — or on paper — and key the numbers in again. If the credit touches different accounts than GP’s defaults, you open the distributions and fix those too.
Step 3: Mind the batch rules. Here’s a quirk that catches people: GP lets you put invoices and debit memos in recurring batches, but credit memos can’t go there. They must be entered individually or in single-use batches. It’s a small rule, but it’s one more thing your AR clerk has to remember.
Step 4: Post, then apply — in another window. Posting the credit memo puts it on the customer’s account, but it isn’t connected to anything yet. To tie it to the invoice it offsets, you open Apply Sales Documents, pick the customer, pick the credit, and mark the invoice(s) to apply it against. Skip this step and the credit floats on the account — and month-end statements get confusing fast.
Four steps, two windows, and the invoice you’re crediting never once appears on your screen.
How You Do It in Business Central
BC’s philosophy, covered in Microsoft’s sales returns and cancellations guide, is that a credit almost always exists because of an invoice — so start from the invoice.
Route 1: Create Corrective Credit Memo. Open Posted Sales Invoices, select the invoice, and choose Create Corrective Credit Memo. BC builds the entire credit memo from the posted invoice — customer, lines, prices, everything. Crediting only two of the five lines? Delete the other three. Partial credit? Change the quantity or amount. The header already points back at the original invoice.
Route 2: Copy Document. Building a credit that spans older invoices, or starting fresh? Create a new Sales Credit Memo and use Copy Document to pull in any posted invoice’s lines. Same idea: the system types, you edit.
Apply it while you’re there. On the credit memo itself, the Applies-to Doc. No. field links the credit to one invoice, or Apply Entries spreads it across several — with a running balance at the bottom showing when everything nets to zero. The application happens as part of posting, not as a separate chore afterward.
Post and Send. One action posts the credit memo and emails the customer their credit document as a PDF. And because the credit was built from the invoice, posting reverses the original entries precisely — right down to item charges, so your value entries return to exactly where they were before.
One quick reminder from Round 18: if the invoice is unpaid and simply wrong, you may not need a credit memo at all — BC’s Correct and Cancel actions on the posted invoice create and apply the corrective credit automatically.
Side by Side
| Dynamics GP | Business Central | |
|---|---|---|
| Starting point | Blank Receivables Transaction Entry window | The posted invoice itself |
| Invoice data reuse | Retype it manually | Create Corrective Credit Memo / Copy Document |
| Partial credits | Type the right amounts carefully | Edit copied lines or quantities |
| Applying to the invoice | Separate Apply Sales Documents window, after posting | Applies-to field or Apply Entries, during entry |
| Batch rules | No recurring batches for credit memos | No special rules |
| Sending to the customer | Print / Word templates | Post and Send emails a PDF |
| Reversal accuracy | Depends on what you typed | Exact reversal, including item charges |
| Simple fix for unpaid invoice | Void and re-enter | Correct / Cancel does it automatically |
Why BC Comes Out Ahead
GP treats a credit memo as a brand-new transaction that happens to offset an old one. That works, but every manually keyed number is a chance for the credit to disagree with the invoice — wrong amount, wrong account, or posted and never applied. Ask anyone who has cleaned up an AR aging full of floating credits.
Business Central treats a credit memo as the mirror image of an invoice, because that’s what it is. The system copies the document, keeps the link, applies it as you post, and emails the customer — and the reversal is exact by construction, not by careful typing. Fewer keystrokes, fewer disagreements, cleaner statements.
Thinking About the Switch?
Aisling Dynamics helps GP teams keep their receivables tidy, and helps companies move to Business Central when credits should build themselves. If your AR aging has a few floating credit memos on it right now, meet our team, browse the GP vs. BC hub, or contact us at (251) 293-0555.
Come back tomorrow for Round 20: full sales returns — when the goods actually come back, GP’s SOP Return document vs. BC’s Sales Return Orders with exact cost reversing.