Creating a Credit Note in Different Situations
In the following instructions:
Charge invoice refers to the original invoice sent to the customer
Credit note refers to an invoice used to cancel or refund the original charge invoice
Scenarios for Credit Notes
Full credit of an unpaid charge invoice
Full credit of a paid charge invoice with refund
Partial credit note for a charge invoice
Credit note for other reasons with refund to customer
1. Full Credit of an Unpaid Charge Invoice
Go to Sales → Invoices and locate the charge invoice
Click the three-bar menu next to the invoice and select Create credit note from this
Enter the credit note date (default is today)
Answer Yes to “Should this credit note be linked to the charge invoice in the ledger?”
Click Create credit note
The credit note:
Reduces your revenue for that month
Removes the original invoice from the unpaid invoices tab
Appears in the Uninvoiced tab, where you can send it or download as PDF by choosing I will print and mail it myself
2. Full Credit of a Paid Charge Invoice with Refund
Go to Sales → Invoices and find the charge invoice
Select Create credit note from this
Enter the credit note date
Answer No to the ledger connection question
Click Create credit note
The system creates a negative credit invoice, but it won’t link to the original. The credit note remains in unpaid status.
Refund to the customer:
Go to Sales → Invoices → Unpaid
Select the credit note and click the eye icon
Under Payments, log the refund as:
Returned to customer, the amount, and the date
Click the + button to save
3. Partial Credit Note for a Charge Invoice
Go to Sales → Invoices and click New Invoice
Select the customer and enter a title like "Credit Note for Reason X"
In the invoice row, enter:
A description
A negative amount
Correct VAT percentage
Click Save and proceed to send. Choose I will print and mail it myself
Link the credit note to the original invoice:
Go to Sales → Invoices → Unpaid
Select the credit note, click the eye icon, and choose Link credit note to charge invoice
4. Credit Note for Other Reasons with Refund
Go to Sales → Invoices and click New Invoice
Select the customer and enter a title like "Credit Note for Reason X"
In the invoice row, add a description and a negative amount
Enter the correct VAT percentage and click Save and proceed to send
Choose I will print and mail it myself
Refund to the customer:
Go to Sales → Invoices → Unpaid
Select the credit note, click the eye icon
Under Payments, log the refund as:
Returned to customer, the amount, and the date
Click the + button to save