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A credit invoice (or a credit note) is a statement detailing a refund or credit to an invoice. For example, you may issue a credit invoice if a customer asks for a refund or if you decide to give a customer a credit for any reason. When you issue a credit invoice, the software uses the information from the credit invoice to update your clients’ account, alter your accounts receivables and adjust your sales tax records accordingly.
To be more specific, credit invoice should be issued in the following more common scenarios:
When the original invoice amount is incorrect, and needs to be amended before payment is made (for example, if the total is for £800 but was meant to be £80, you could issue a credit invoice for £720).
When a customer has requested a refund after they have paid the invoice.
When a customer has partially paid an invoice but has requested to pay less than the full amount (for example, if something didn’t meet their expectations, or if they disagree with the amount of VAT).
When a customer requests a discount after an incorrect amount is issued on a service. For example if after you issue a credit invoice to correct the invoice amount to £80, the customer requests 25% off for poor service. A refund would then need to be issued for £20.
Basically, any major change to the amount on the invoice requires issuing a credit invoice (credit note).
Credit invoice is creating like regular invoice with one major exception: All amounts on the invoice are the negative.
There are three possibilities of making Credit invoie:
By clicking on "credit invoice" button adding partial refunds or a hole invoice done by hand.
By right clicking on existing invoice to open hidden menu and select "Convert to Credit Invoice" (making the positive numbers negative and all showing on the credit invoice automatically).
By right clicking on existing invoice to open hidden menu and select "Convert to Return Invoice with stock update". Works same like above but item quantity will return to your stock. This option is useful for returned invoices and is available only when stock control feature is enabled.
Credit Invoice sum in the overview of the reports is also negative and is deducted instead of added from the total amount.
Credit invoice numeration
Credit Invoice has own numeration, but if you want you can link it with regular invoice number sequence.
To do that go to Configuration/Documents/Credit Invoice and check Credit numeration linked to Invoice Numeration option.