Net of credits

Every revenue measure is invoiced value less credit notes, returns and rebates. A credit belongs to the period it was issued and reduces the customer, product and rep of the original invoice it references. Credits with no reference are uncoded, listed, and a leak in their own right.

DefinitionEvery revenue measure is invoiced value less credit notes, returns and rebates. A credit belongs to the period it was issued and reduces the customer, product and rep of the original invoice it references. Credits with no reference are uncoded, listed, and a leak in their own right.

The credit's period, the original's attribution

Both facts kept: when it was issued, and what it reduces. History is not restated; the right rep carries it.

Gross less credits equals the ledger

At every level of the roll-up.

How it is used

Revenue measures use invoiced value less credit notes, returns and rebates, with each credit placed in the period of the invoice it corrects where the reference allows.

Example

Invoices of $4.30 million and credits of $0.10 million give net revenue of $4.20 million. A $60,000 rebate paid in January relating to the prior year is restated to that year.

Where it goes wrong

Gross invoices used because the credit file is separate. The largest customers, who get the rebates, are overstated most.

Articles that use this term

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