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Credit and Debit Memo Policy

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					                               Credit and Debit Memo Policy
The following sample outlines a set of policies and procedures for issuing credit and debit
memos, including product and container deposit returns and head-office billings.

Prepared By: ______________
Approved By: ______________
Revision Date: ______________
Effective Date: ______________

PURPOSE:
The purpose of this policy is to establish the guidelines for issuing credit and debit memos,
including product and container deposit returns and head-office billings.

SCOPE:
This policy applies to all employees responsible for the initiation, recording, and authorization of
all types of customer account credits and debits. Customer Service Supervisors and Managers
are responsible for ensuring compliance with this policy.

POLICY:
It is the policy of Company X that customer orders shall be entered, fulfilled, and invoiced
accurately and timely to minimize the need for adjustments to customer accounts. When
adjustments are required, they should be processed accurately and timely and be authorized by
appropriate levels within the organization. Deviations from this policy must be approved in writing
by the V.P. of Distribution.

PROCEDURES:

Customer Credit and Debit Transactions
Whenever possible, credits or debits resulting from billing errors should be addressed according
to the guidelines set forth in the work instructions on Invoice Changes and Cancellations.
Corrections to credits and debits created under this policy should only be made through
document reversal and re-issue or rejection. If an original document correction is not possible,
credits and debits may be issued as follows:

            Situation                                       Order Type
            Price corrections                               Credit or Debit Memo
            Railcar detention billing                       Debit Memo
            Tank truck demurrage                            Debit Memo
            Freight charges                                 Debit Memo
            All miscellaneous (head-office) billings        Debit Memo
            Diversion                                       Return
            Product Return                                  Return
            Weight Correction                               Return or Goods Issue
                                                            Reversal
            Approved Payment Discrepancies                  Credit or Debit Memo
            Container Deposit Returns                       Container Deposit Return

Only Customer Service Representatives (CSR), Customer Service Supervisors, and Customer
Service Managers are authorized to create or modify transactions in SAP for these order types.
Once created and invoiced, each credit or debit must be input into the Payment Discrepancy
Tracker (PDT) system for authorization (see PDT work instructions).

Credits and debits may only be applied to existing customer invoices and payments by personnel
in the Credit Department.


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Source: www.knowledgeleader.com
Head-Office Billings
Charges to be passed to a third party or between Company X companies that are not sales
related should follow the head-office billing process. Requests for head-office billings must be
submitted to CSRs on a company-standard head-office billing request form unless the billing is
less than $500 and originates within the Customer Service Department. CSRs are responsible for
creating these billings in SAP upon receipt. Authorization for a CSR to create a head-office billing
is as follows:

         Source                       Authorization Required
         External to Customer          Head-office billing request form signed by requestor
         Service                       Requestor must send notification of billing request to
                                         V.P. Controller by e-mail
         Customer Service              Greater than $500: Head-office billing request form
         Department                      signed by Customer Service Supervisor or Manager
                                       Up to $500: Written backup for billing

Product Returns
In the event that a customer rejects product, the return shall be handled according to the reason
for the return. The potential reasons for a product return and the required actions for handling
each are:

     Reason for Return        Required Action
     Product Quality           Immediately contact Technical Services by phone to assist
                                 with the situation
                               If product is ultimately rejected, accept return with full
                                 refund to customer (including transportation costs)
                               Initiate a customer concern report (CCR)
     Product Quantity          Evaluate Company X and customer measurements to
     Discrepancy                 determine if discrepancy is reasonable (Business Director
                                 responsibility)
                               Issue refund to customer for agreed upon product quantity
                                 discrepancy in the form of a credit memo (CR order type)
     Partial Return            Accept return
     (abnormal heel)           Customer Service Supervisor or Manager shall determine
                                 refund amount (if any) considering restocking fees and
                                 administrative costs of processing the return
     Repackaged                Accept return
     Chlorine                  Issue refund only if container is defective or faulty
     Other reason –            Accept return with full refund to customer (including
     Company X                   transportation costs)
     Responsibility            Initiate a CCR
                               Attempt to recover any lost transportation costs if carrier is
                                 at fault
     Other reason –            Accept return
     Customer Error            Refund cost of product less additional unbilled
                                 transportation and handling costs

In cases where the returned product is usable by another customer, the product should be most
efficiently diverted to that customer to minimize transportation costs. If the returned product is
deemed not usable by Technical Services, appropriate shipping plant personnel should be
notified.

Container Deposit Returns


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Source: www.knowledgeleader.com
Some product is shipped to customers in reusable containers for which a deposit was collected.
Deposits shall be refunded upon receipt of the container from the customer, provided the
container is in usable condition. No deposit refunds will be given for containers returned in
unusable condition.




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Source: www.knowledgeleader.com

				
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