Credit Notes

A credit note is a document issued to a client that reduces the amount they owe. It is the reverse of an invoice — while an invoice creates a financial obligation, a credit note reduces or cancels it. Credit notes are used to handle returns, pricing corrections, damaged goods, or any situation where a client is owed a refund or adjustment.

Each credit note is linked to the original invoice it adjusts. You can issue a full credit (reversing the entire invoice) or a partial credit (adjusting specific lines or amounts).

Key Concepts

• Credit Note — A formal document reducing a client’s outstanding balance, linked to a specific invoice.
• Credit Note Line — An individual item on the credit note, referencing the original invoice line being adjusted.
• Partial Credit — A credit note that covers only some of the items or amounts from the original invoice.
• Full Credit — A credit note that reverses the entire invoice amount.

Creating a Credit Note

To create a new credit note:

1. Navigate to Sales > Credit Notes in the sidebar.
2. Click New Credit Note.
3. Fill in the details:
   • Credit Note Number — A unique identifier (e.g., CN-2026-0012).
   • Invoice — Select the original invoice being adjusted.
   • Client — The client receiving the credit (should match the invoice’s client).
   • Reason — A brief explanation of why the credit is being issued (e.g., “Returned goods”, “Pricing error”, “Damaged in transit”).
   • Issue Date — The date the credit note is issued.
   • Currency — The currency (should match the original invoice).
   • Notes — Any comments visible to the client.
   • Internal Notes — Private notes for your team.
4. Click Create to save the credit note in Draft status.

Managing Credit Note Lines

After creating a credit note, add the items being credited:

1. Find your credit note in the list and click the Lines action.
2. Click Add Line for each item:
   • Invoice Line — Select which original invoice line is being credited.
   • Product / Variant — The product being credited.
   • Description — A description of the credit.
   • Quantity — The quantity being credited (e.g., 50 units returned out of 200 invoiced).
   • Unit — The unit of measure.
   • Unit Price — The credit per unit (typically matches the original invoice price).
   • Tax Rate — The applicable tax rate (should match the original line).
   • Notes — Line-specific notes.
3. The system automatically calculates line totals and tax amounts.

Lines can only be added or modified while the credit note is in Draft status.

Credit Note Workflow

A credit note moves through the following statuses:

1. Draft

The credit note has been created but not finalized. You can add, edit, or remove lines.

2. Pending

Click Mark as Pending to indicate the credit note is ready for internal review before being sent.

3. Sent

Click Send to Partner to record that the credit note has been communicated to the client.

4. Approved

Click Approve to confirm the credit. Once approved, the credit is applied to the client’s account.

5. Rejected

If the credit note is not valid (e.g., the return was not accepted), it can be rejected with a reason.

Reversal and Cancellation

• Reverse — Reverse a credit note that was issued in error. The reversal is recorded for audit purposes.
• Cancel — Cancel a credit note before it has been sent or approved.

Credit Note Totals

Important Notes

• Each credit note must be linked to an existing invoice and client.
• Credit note lines can only be edited while in Draft status.
• Approved credit notes affect the client’s outstanding balance and should be issued carefully.
• Use credit notes instead of deleting or modifying invoices — this maintains a clear audit trail.
• If goods are being physically returned, coordinate with the warehouse team to process the return alongside the credit note.