# Introduction - Credit Notes

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

**Video coming soon:** 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.](https://www.sorviai.com/help/inventory/credit-notes/credit-notes-list.png)

*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)

- Yes: Reduces what the customer owes
- No: Puts stock back on the shelf
- Yes: Right for an over-invoice or a goodwill discount

**Sales return** (goods, then money)

- Yes: Reduces what the customer owes
- Yes: Puts stock back on the shelf
- Yes: Right 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

| Situation | Why a credit note fits |
| --- | --- |
| The invoice priced it wrong | Nothing moved. Only the amount was wrong |
| A goodwill discount after the fact | There is nothing to return |
| Goods were damaged and the customer kept them | No stock is coming back |
| A duplicate invoice | Cancel 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.](https://www.sorviai.com/help/inventory/credit-notes/credit-note-detail.png)

*A credit note is a balance in the customer's favour until it is applied or refunded.*

> **Note:**
>
> **Never edit a sent invoice**
>
> It is tempting when the error is small. The customer already has a copy with a number on it, so the two documents stop matching and the conversation becomes about which version is real.