Credit Memos, Write-Offs, and Revenue Adjustments Done Right

Three Adjustments That Get Confused

• Credit memos, write-offs, and revenue adjustments are distinct transactions that founders often blur together in the books.
• A credit memo reduces what a customer owes, usually for a billing correction, discount, or service issue.
• A write-off recognizes that a receivable you still believe is valid will simply never be collected.
• A revenue adjustment changes the amount of revenue you recognize, and treating one as another distorts both revenue and receivables.