The purpose of a Credit Memo (C/M) is to add new credits to a student account thus reducing the amount of money due to the company. For example, if after a student has been billed for an entire month of classes we learn that the student will only be able to attend 2 classes, we need to prorate the month and credit their account for the classes they are not expected to pay for.

A credit memo differs from a normal payment in that a credit memo removes charges that have already been entered on the account.