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Credit notes reduce what a customer owes. Use a credit note when an invoice needs an adjustment, refund, discount correction, or other customer credit.

Use credit notes for customer-facing accounting adjustments where the history should remain clear. Do not use them as a shortcut for fixing a draft invoice that can still be corrected before sending.

Create a Credit Note

Open Finance > Credit Notes.
Select Create Credit Note.
Choose the customer.
Add the issue date and credit note number.
Add line items that explain the credit.
Review the total credit amount.
Save the credit note.

Line items should explain the reason for the credit in language the customer and finance team can both understand.

Before Creating

Review the original invoice, payment history, refund status, tax treatment, and customer conversation. If the invoice is still a draft, correct the invoice instead of creating a credit note.

Confirm whether the credit should reduce a balance, document a refund, correct a tax issue, or explain a commercial adjustment. The line items and customer note should match that reason.

Apply a Credit Note

Apply the credit note to the related invoice or customer balance when the credit should reduce what is owed. Confirm the invoice and amount before applying.

After applying, open the invoice and confirm the remaining balance, payment status, and customer-facing total are correct. For partial credits, keep the remaining amount clear so future reminders do not confuse the customer.

If the credit note is related to a refund, handle the refund from the payment or gateway process too. A credit note explains the accounting adjustment; it does not by itself prove money was returned.

Apply credits carefully when the customer has multiple open invoices. Check the invoice number, customer, balance, currency, and remaining amount before saving.

When to Use a Credit Note

Use a credit note for:

An overcharge.
Returned or canceled work.
A goodwill credit.
A partial refund.
A pricing correction after an invoice was issued.

Before Saving

Check customer, invoice, tax treatment, reason, total amount, and internal notes. If the credit is connected to a refund, make sure the refund process is handled from the payment record too.

Use clear line-item wording such as “Service adjustment for April invoice” or “Credit for cancelled onboarding session.” Avoid vague labels like “Correction” when the customer or accountant will need to understand the change later.

Audit Trail

Keep credit notes attached to the correct customer and invoice. This helps reports, exports, and customer conversations show why the balance changed.

Review finance reports after applying a large credit. Confirm revenue, tax, payment collection, and customer balance reports reflect the adjustment in the expected period.

If an accounting integration is connected, confirm how credit notes are handled by the provider before relying on synced accounting totals.

Customer Communication

After applying a credit, send or download the credit note when the customer or accounting team needs documentation. Include enough notes to explain whether the credit was applied to a balance or paired with a refund.

Credit Note Checklist

Before sending or applying:

confirm customer and invoice
confirm credit amount and currency
confirm tax treatment
confirm whether a refund is also required
use clear customer-facing line-item wording
review remaining invoice balance after applying

Create and Apply Credit Notes