Credit note
A credit note is a document a seller issues to reduce or cancel all or part of an earlier invoice. It references the original invoice and explains the correction, such as returned goods, overbilling, a discount granted later or cancelled work. It adjusts the amount recorded as due; it is not automatically proof that money was refunded.
Why this matters when you invoice
A credit note preserves the audit trail by correcting the original invoice without silently editing or deleting it. It tells the customer exactly what changed.
Where it appears in the workflow
A credit note should identify itself clearly, carry its own reference and date, link to the original invoice, state the reason, and show the credited lines, tax and total.
Credit note example
Invoice IC-1042 included ten units, but the customer returned two. The seller issues credit note CN-008 referencing IC-1042 and credits the price and applicable tax for those two units.
Common mistakes
- Editing the original sent invoice without retaining a clear correction trail.
- Failing to reference the invoice being corrected.
- Calling a credit note a refund when money has not actually been returned.
Use the right document
Open the matching document mode, replace the example content and review the details before export.
This page explains common document usage. Your agreement and applicable local rules determine what applies to a transaction.
Frequently asked questions
Is a credit note the same as a refund?
No. A credit note adjusts the billed amount. A refund is the movement of money back to the customer; one may lead to the other.
Does a credit note need its own number?
Many systems and jurisdictions expect a distinct reference, but the exact numbering requirement depends on applicable rules.