Home Sell What is a Credit Note

What is a Credit Note

Last updated on Nov 30, 2024

What is a Credit Note?

A credit note is a financial document that reduces or eliminates a customer's payment obligation, commonly used for returns, refunds, or billing adjustments.

Credit Note Workflow

1. Creation

  • Access Sales module through left sidebar

  • Select Credit Note tab

  • Click Add Credit Note button

  • Enter required information

  • Save in Draft status

2. Processing

  • Review credit note details

  • Update status to Open

  • Apply credit to invoices or process refund

  • Monitor remaining balance

3. Final Stage

  • Complete application of credit

  • Process refund if needed

  • Mark as Void if cancelled

Navigating Credit Notes

Accessing Credit Notes

  • Sales > Credit Note tab

  • View comprehensive list of credit notes

  • Access individual records through list view

Overview Dashboard

  • Status indicators: Draft, Open, Void

  • Financial summary showing total and remaining credit

  • Customer information and reference numbers

  • Creation and modification dates

  • Advanced filtering and sorting options

Creating and Managing Credit Notes

Adding New Credit Note

1. Basic Information

  • Customer name (required): Select from active customer list

  • Credit Note number: System-generated, editable

  • Reference number: Optional external reference

  • Credit Note date: Date of issuance

  • Currency: Default to company currency

2. Item Details

  • Item selection: Choose from product/service catalog

  • Quantity: Number of units being credited

  • Rate: Price per unit

  • Discount options: Percentage or fixed amount

  • Tax rates: Applicable tax categories

  • Line item subtotal: Automatic calculation

  • Add multiple items using New Item button

3. Additional Information

  • Terms and conditions: Standard or custom text

  • Customer notes: Specific instructions or explanations

  • Internal notes: Team communication

  • Attachments: Supporting documentation

4. Summary and Charges

  • Subtotal calculation: Sum of all line items

  • Shipping charges: Additional delivery costs

  • Tax calculations: Itemized tax amounts

  • Adjustments: Manual modifications

  • Total amount: Final credit value

Status Management

  • Draft: Initial creation, editable

  • Open: Active credit note, ready for application

  • Void: Cancelled transaction, non-editable

Credit Application Process

  • Select target invoices

  • Enter application amounts

  • Track remaining credit balance

  • Record application history

  • Generate application receipts

Advanced Features

  • Bulk credit note creation

  • Automated tax calculations

  • Multi-currency support

  • Credit note templates

  • Approval workflows

  • Audit trail tracking

Troubleshooting Guide

  • Validate required fields before saving

  • Check customer credit limits

  • Verify tax calculations

  • Ensure proper date selections

  • Confirm exchange rates for foreign currencies

  • Review approval requirements

Best Practices

  • Document reason for credit note

  • Maintain supporting evidence

  • Follow consistent numbering

  • Regular reconciliation

  • Clear communication with customers

  • Proper record retention

Important Notes

  • Credit notes cannot exceed original invoice amount

  • All applications must be documented

  • Void operations are permanent

  • Regular backup recommended

  • Monitor credit aging reports