In SAP FI, what does the term "credit memo" refer to?

In SAP FI, a "credit memo" is a document that serves to reduce the amount owed by a customer. This typically occurs when there has been an overbilling or a return of goods, prompting the need to recognize a decrease in accounts receivable. The credit memo essentially cancels out a portion of a customer’s debt, allowing for adjustments in financial records and customer accounts.

Issuing a credit memo allows a business to maintain accurate financial reporting and helps ensure that customers have an updated balance reflecting the corrected amounts owed. This is particularly important for maintaining good customer relationships and facilitating fair billing practices.

The other options do not accurately capture the essence of a credit memo. For instance, a document that increases customer debt would not align with the purpose of a credit memo, which is to decrease debt. Similarly, a report on sales performance or a notification of overdue payments are different documents serving other functions entirely.