Film Accounting Glossary
Credit memo
What is a credit memo?
Also called credit note, or vendor credit.
A credit memo is a vendor document reducing an amount previously invoiced, issued for a return, an overcharge, a damage adjustment, or a rental that was cut short.
It has to be posted against the original account so the cost report shows the net cost rather than the gross. Unapplied credit memos are a common source of a production overstating its own spend, particularly across equipment and vehicle rentals.
Example
A vendor invoices $19,800, then issues a $2,300 credit for a vehicle returned four days early. Posted against the original account the line reads $17,500. Left unapplied, the show reports spending $2,300 it never spent.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Accounts payable, matched back to the original invoice and purchase order. Common enough on equipment and vehicle rentals to be worth a dedicated wrap-time sweep.
Common mistake
Filing the credit and never applying it to the account. The production then carries cost it did not incur, and nobody notices because the number is smaller than the invoice.
Related questions
- What is a credit memo on a rental invoice?
- A vendor document reducing a previous charge, issued for an early return, an overcharge, a damage adjustment, or equipment that was never delivered.
- Why do unapplied credits overstate cost?
- Because the original gross invoice stays on the account. Until the credit is posted against it, the report shows spend the production got back.