Create a credit note
A sales credit note reduces what a customer owes you. You raise one when you need to give value back to a customer — for example after a return, when you have over-charged them, or as a goodwill adjustment. Issuing a credit note reverses part of the original sale in your accounts (it reduces your income, your output VAT and your accounts receivable).
A credit note is not the same as a refund of cash. It reduces the customer's balance; if you have already been paid, the credit stays on the customer's account and you can apply it to another of their invoices. Sales Scribe cannot yet record paying a credit back to the customer from your bank account — if you agree a cash refund, it is paid outside Sales Scribe for now.
Before you begin
- You need at least one active customer. See Add a customer.
- Your Accounting Settings must be configured (the AR control, sales revenue and output VAT accounts) so that the credit note can post when you issue it. See Configure your accounting settings.
- If you charge VAT, set up your tax rates first. See Manage tax rates.
Anyone signed in with an organisation selected can create a credit note.
Steps
- Go to Sales → Credit Notes and select New Credit Note.
- Choose the Customer. The Currency fills in automatically from the customer's preferred currency — you can change it if you need to.
- (Optional) Choose a Related Invoice if the credit corrects one of the customer's invoices — for example goods returned from it. The list shows that customer's issued invoices only. Choosing one sets the credit note's Currency and Amounts are to the invoice's.
- Set the Date (and a Due Date if you use one). The credit note is posted to your accounts on this date — not on the day you issue it — so it counts in that month's figures and VAT period, and a date inside a locked period will be refused.
- If you chose an invoice, its lines are listed under Lines from invoice, each with how many were invoiced, its unit price, its tax rate as the invoice charged it, and how many are Left to credit (what earlier issued credit notes against the invoice have not already credited — a draft credit note does not count until it is issued).
- Tick each line you are crediting and set how many in Credit — up to what it has left. The credit is worked out from what the invoice charged for that line, including any invoice-level discount, at the invoice's tax rate even if the rate has changed since.
- Copy lines from invoice ticks every line that has anything left, at all of it.
- A line with nothing left shows Fully credited and cannot be ticked. If every line has been credited in full, the page says so.
- Tick Returned on a line whose goods have come back and should go back into stock (stocked products only) — issuing the credit note puts the stock back and reverses its cost.
- Other credits. Anything the invoice's lines do not cover — a goodwill gesture, a refund of delivery, an agreed discount — is added under Other credits — not on the invoice with Add another credit. (With no invoice chosen, this is the whole form, under Line Items.) Check the Amounts are selector first: Tax exclusive (unit prices are net, VAT added on top) or Tax inclusive (unit prices are gross and the VAT is extracted). For each line:
- Optionally pick a Product — this fills in the description, unit price and tax rate for you. Or just type a Description.
- Enter the Quantity and Unit Price, and choose a Tax Rate if VAT applies.
- For a stock item that you track and resell, you can tick Restock so that issuing also puts the stock back. The ledger accounts used are shown under Posting. A credit note made only of the invoice's lines can never come to more than the invoice did; another credit is how you credit more.
- Add any Notes for the customer.
- Select Create Draft.
[Screenshot required: Create Credit Note page showing Customer, Related Invoice, Currency and a line item]
The credit note is saved as a Draft. A draft has no effect on your accounts and can be freely edited or deleted.
Issue the credit note
A draft is not yet part of your records. When you are ready:
- Open the credit note and select Issue.
- Check the Issue Credit Note dialog, then select Issue Credit Note. Under Where the credit goes it shows, in amounts, how much will come off the related invoice and how much will stay on the customer's account — worked out from what the invoice still owes as you open the dialog.
Issuing generates the permanent credit note number, records the reversal in your accounts, and locks the credit note so it can no longer be edited.
If the credit note has a related invoice, issuing also applies it to that invoice — as far as the invoice still owes:
- The invoice still owes more than the credit: all of the credit comes off the invoice.
- The invoice owes less (it is part paid): the credit settles what the invoice still owes, and the rest stays on the customer's account, to apply to another of their invoices. The confirmation says how much went where.
- The invoice is already paid in full: the whole credit stays on the customer's account. The Create page tells you this as soon as you choose the invoice.
What happens next
Once issued, the credit note:
- Records a reversing entry in your general ledger — it reduces your revenue, reduces the output VAT you owe, and reduces your accounts receivable (what the customer owes).
- Has its currency and exchange rate fixed, and its branded PDF archived, so later changes to your branding never alter it.
- Can now be applied to an invoice, emailed to the customer, downloaded as a PDF, or voided if it was raised in error.
To change an issued credit note you cannot edit it — you void it and create a new one.
Troubleshooting
- "Credit note total must be greater than zero." — Add at least one line with a quantity and unit price before issuing.
- A line has tax but no tax rate. — If a line has a tax amount it must have a Tax Rate assigned. Choose one, then issue.
- "This credit note is in … and the invoice is in …" — A credit note against an invoice is in the invoice's currency. Choosing the invoice sets it; if you changed it afterwards, change it back.
- "You can credit at most … of …" — That line has less left to credit than you asked for: other issued credit notes have already credited part of it. Credit no more than it has left.
- "This credit note comes to …, more than invoice … charged" — Credit less of the invoice's lines, or — if more is owed than the invoice charged — add the difference as another credit.
- "The invoice line chosen is not part of the invoice this credit note credits" — The related invoice was changed after lines were picked. Choose the invoice again and pick its lines.
- Issuing says your accounting configuration is incomplete. — Set the required ledger accounts under Settings → Accounting, then issue. See Configure your accounting settings.
- You see a generic message with a reference code. — Note the reference and what you were doing, then contact support. See I see a generic error with a reference.