It may happen that you need to cancel a sales invoice, and/or refund part of your income to a client. This can be easily done by issuing Credit Notes. In this article, we explain how this works and what to do in the app.

What is a Credit note?

A credit note is an official legal document which you would provide to your client, in order to confirm that credit is being applied to their account.

When do you need to issue a Credit note?

  • Purchase returns / rejected service

  • Overpayment on the original invoice

  • Price under/over statement on the original invoice

  • Goods damage in transit

It is a method to release/issue full or partial refunds for invoices that have paid out already or when there is a need to cancel all invoice in full or partly.

Why do you need to issue a Credit note?

The reason behind issuing a credit note is to keep your accounting records in order, without deletion of any previous invoices or documents. For example: If your client return goods back to you against which the invoice and payment is already issued, rather than deleting the invoice and paying back off the record, a credit note is issued against the invoice to offset the impact. A credit note also offsets the VAT portion of your invoice.

In practical terms, a Credit note adds a negative income into your accounting, and will reduce your income.

Your accounting will look like so:

  • Original invoice = +100€

  • Credit note for partial refund = -50€

  • Total income = +50€

What should be included in Credit Note?

  • The date of issuance

  • Credit Note number (CN), to enable tracking and search-ability

  • Payment Terms

  • Customer reference number

  • Contact details (Company name, address and VAT number if necessary)

How to create a credit note in the app?

  • From the revenue screen, simply click the "+" button > Create credit note

  • Add the details of your credit note

  • Finalize the document and send it to your client

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