InventoryHelp docs
Skip to the article

Introduction - Credit Notes

A credit note is money owed back to a customer, whether or not any goods came back with it.

Correcting a sent invoice with a credit note, and choosing between applying it and refunding it.

It is the correcting document on the sales side. An invoice that was wrong is never edited once it has gone to the customer; a credit note is raised against it instead, so both halves stay on the record.

The Credit Notes screen with its Credit Note action, listing credit notes against UK trade customers with their numbers, dates, the invoices they correct, their status and their amounts in pounds.
Each credit note names the invoice it corrects, which is what keeps the pair readable a year later.

Credit note or sales return

These two are confused constantly, and the difference is simply whether anything physically came back.

Credit note

money only

  • YesReduces what the customer owes
  • NoPuts stock back on the shelf
  • YesRight for an over-invoice or a goodwill discount

Sales return

goods, then money

  • YesReduces what the customer owes
  • YesPuts stock back on the shelf
  • YesRight when the goods are coming back

Raising a credit note for goods that are physically returning is the mistake worth avoiding: the customer is credited and your count stays wrong, so the units you are holding never reappear.

When a credit note is the right document

SituationWhy a credit note fits
The invoice priced it wrongNothing moved. Only the amount was wrong
A goodwill discount after the factThere is nothing to return
Goods were damaged and the customer kept themNo stock is coming back
A duplicate invoiceCancel the value, keep the audit trail
A credit note record showing its number and status, the customer, the invoice it was raised against, the credited lines and the total, with an activity panel at the right.
A credit note is a balance in the customer's favour until it is applied or refunded.

Was this document helpful?