Introduction - Credit Notes

A credit note reverses value on an invoice that has already been sent.

Raising a credit note, applying it to an invoice, and refunding the rest.

It is the correct answer to almost every question that starts "I need to change an invoice but it has gone out", because it corrects the amount without breaking the numbering sequence auditors rely on.

The Credit Notes screen. A table lists credit notes with columns for Date, CN number, Customer, Reference Number, Invoice Number, Balance, Sales Person, Amount and Status. Every row shows an Open status with Balance equal to Amount. — An Open credit note still has balance to apply. Applying it to an invoice brings the balance down.

When to credit

Situation	Right action
Invoice is still a draft	Just edit it. No credit note needed.
Invoice sent, wrong amount	Credit note for the difference, or full credit plus a new invoice.
Invoice sent, entirely wrong	Void it if nothing was paid, otherwise credit it in full.
Goods came back	Raise a Return, which produces the credit for you.
Customer will not pay a valid invoice	That is a bad debt, not a credit note. Handle it in Accountant.

What crediting actually does

A credit note reverses revenue and tax in the period it is dated, not in the period of the invoice it corrects. That is why a credit raised in April against a March invoice moves revenue between two months rather than restating March.

Invoice sentRevenue and tax posted
Credit noteValue reversed, dated today
Apply or refundOffset, or money back

Credit note against return

The question is only ever whether physical goods are coming back. A credit note moves value. A return moves value and stock, and produces the credit note itself. Raising a credit note for goods that came back leaves your stock figures wrong.