Credit memos, credits, and refunds can be confusing at times. To overcome this challenge, know the differences between these transactions, and how to record them properly.

Credit memo A posting transaction you can apply on a customer's invoice as payment to reduce the open balance of the invoice.
Delayed credit A non posting transaction you can later include as a line item on a customer's invoice. This transaction only affects the customer's balance once it is added to an invoice.
Refund A posting transaction used to reimburse a customer's money.