A credit note is very similar to a sales invoice or bill, except it reduces the amount owed to you by a customer, or that you owe to a supplier. It's raised against a customer or supplier and remains in awaiting payment until it has been fully applied to an invoice or bill.
A credit note is issued in various situations to correct a mistake, such as when (1) an invoice amount is overstated, (2) correct discount rate is not applied, (3) goods spoil within guaranty period, or (4) they do not meet the buyer's specifications and are returned. Also called credit memo.
Step 1. Create a Credit Note
Credit notes can be added in 2 ways in Finance app, depending on how you need to issue or record the credit. You can:
- Add a new credit note for a customer or supplier
- Copy an existing credit note.
1.1. Create a new Credit Note to a customer
Choose New Credit Note
Fill in the necessary fields and Create
The Credit note can be found in the list
1.2. Copy an existing credit note
Step 2. Approve a credit note, click Mark as Sent and the status is now Sent
Step 3. Allocate credit of Credit note to invoice(s) - done at Invoice app
Click Invoice Options, then select Credit Invoice.
Enter the amounts in the Amount to Credit fields for each unpaid invoice you want to credit. You can apply the full credit amount or just some of it. You can click the invoice links to drill into the transactions. A list of invoices is also available for you so that you can pick up some invoices to allocate credit to.
NOTE
Credit note can be allocated to the UNPAID invoice only. If you want to use the credit note CN-0001 to offset a PAID invoice IN-0011. Follow the instructions below
Remove the payment of IN-0011
The invoice IN-0011 becomes unpaid
Allocate the credit note CN-0001 to that invoice