Issuing credit notes and refunds
Create credit notes for returns or corrections and apply them against open invoices.
When to use a credit note
Use a credit note to reduce what a customer owes — for returns, post-sale discounts, or to correct an over-billing. Issuing a credit note reverses the original revenue (and tax) in your ledger.
- Go to Credit Notes, then New Credit Note, and select the customer (and optionally the original invoice).
- Add the lines being credited. If goods are coming back, mark lines to restock so inventory and COGS are restored.
- Post the credit note to record the ledger reversal.
- Apply the credit note balance to one or more open invoices, reducing their balances.
Applying a credit note to an invoice settles the balance without posting new revenue — the reversal already happened when the note was issued.