Q. (cont.) For example, the vendor billed us $1,000 but should have only billed us $800. Should we ask for a revised invoice for $800, or process the $1,000 invoice and ask for a $200 credit memo to apply? Additionally, if an invoice is billed to us in error and does not belong to our company, is it a best practice to request a credit memo to offset the invoice, or should we dispose of the invoice?
A. It may depend on particular circumstances, but for the most part the right thing to do is request a corrected invoice. It is more work, but everything is then nice and clean. Everyone knows there was an error – and agrees upfront before the invoice is even entered.
In the case of an invoice sent to our company in error, we would scan it and return it to the vendor via email with a note "not ours," so that they would know and could bill the correct vendor. (We tried to be nice to our vendors, because we wanted them to be nice to us, though it would be reasonable to just trash it.)
Now if an incorrect invoice is from a discount vendor that you use all the time, and if you want to collect every single discount, you might key the invoice and request a credit to offset it – because you know the credit will be used quickly in the normal course of business.
The discount due date should change based on the date of the re-issued invoice, but we find often that the re-issue has the same date as the incorrect original, which means you can spend more time/effort/money hassling over the discount which they might say was unearned, than you will have requesting the credit memo and entering it.