Glossary · Reading the business
Credit memos
In short
These are documents issued by a seller to a buyer, reducing the amount the buyer owes, often for returns, allowances, or billing errors. They impact revenue reporting.
What it means in a deal
Review credit memos during Due diligence to understand the frequency and reasons for customer adjustments. High volumes could indicate product quality issues, customer service problems, or aggressive revenue recognition practices that inflate the seller's reported income on the Profit and Loss Statement. Dig into the Audit trail.
Related terms
Common questions about Credit memos
- What if my personal credit report shows a recent late payment on a minor credit card?
- Does having many recent credit inquiries on my personal credit report affect SBA 7(a) loan approval chances?
- Does the sunset of the SBSS score impact the requirement for a credit memo or documented credit analysis for 7(a) Small Loans?
- Can a credit card cash advance be used for my down payment?
- What is the 'credit elsewhere' test for an SBA 7(a) loan?
- What credit score is generally needed for an SBA 7(a) loan?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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