What is a credit note

A credit note plays a crucial role in rectifying errors on invoices or purchase documents.

Credit note definition

A credit note is generated when an issued invoice requires complete or partial reversal, typically due to errors in invoicing or purchasing processes. This document, which is necessary to keep proper financial records, serves as proof that the original invoice is no longer valid.

When should I create a credit note?

Did you submit an invoice that was incomplete or inaccurate? You may send a credit note, then. It is also possible that you want to add a discount, and therefore need to send a new invoice, or that you have sent it to the wrong recipient.

When to create a credit note?

There are several occasions where it may be appropriate to credit all or parts of an invoice. Here are some examples:

  • Inaccurate product information or amount charged: A credit note is required to repair errors in product details or amount invoiced on an invoice.
  • Addition of discounts: It becomes required to create a credit note and issue a new invoice in situations when you want to apply a discount retrospectively.
  • Sending to the wrong recipient: If an invoice is mistakenly sent to the wrong recipient, a credit note must be generated, followed by the correct invoice to the intended party.

How to create a credit note?

  1. Look up the invoice you want to credit from the invoice list.
  2. Go to the invoice details.