# Credit the Customer

The last step of a return is a credit note, generated for you from what was actually received.

From that point it behaves like any other credit: apply it to an open invoice, or refund it.

![The four steps of a sales return: open a delivered order, choose Create Return to pull its line items in, set quantities to adjust how much comes back and the warehouse it returns to, then create the return.](https://www.sorviai.com/help/returns/return-steps.png)

*Step four issues the credit. Restocking the goods is a separate choice made at the same moment.*

## Generate the credit

- **Open the received return**

  Choose **Create Credit Note**.
- **Check the lines**

  They come from what was received, not from what was authorised. Damaged units are credited too unless you decide otherwise.
- **Check the tax**

  Credited in proportion to the value, using the rates on the original invoice.
- **Issue it**

  The credit is now open and can be applied or refunded.

> **Note:**
>
> **The credit follows the receipt**
>
> This is why receiving accurately matters. The credit is built from received quantities, so a receipt entered wrongly credits the customer wrongly.

## Apply or refund

Applying offsets the credit against an open invoice. Refunding sends money back. If the original invoice was already paid, there is nothing to offset, so a refund is usually what the customer is expecting.

| Original invoice | Usual outcome |
| --- | --- |
| Still unpaid | Apply the credit to it. Their balance drops. |
| Paid in full | Refund, or hold the credit against their next order. |
| Partly paid | Apply what fits, refund or hold the rest. |
| Customer is leaving | Refund. Do not leave a credit nobody will use. |

## Restocking charges

If you charge for restocking, credit the full value and raise a separate invoice for the fee. Reducing the credit instead hides the charge inside a correction, which the customer will query and you will struggle to explain.