What is a credit note for an invoice?

Credit notes

What is a credit note for an invoice?

A credit note is in fact a negative invoice. It is a way to show your customers that he doesn't need to pay the full amount on the invoice. A credit note can fully cancel an invoice for the same price on the invoice, or possible less than the invoice. The supplier uses a credit note to mention the products, the amount of products and service prices that both parties agreed to. Normally, the credit note refers to the original invoice and the reason that a credit note is made. The credit can be used to refund money to the customer or can be used on future purchases.

What is the difference between an invoice and credit note?

An invoice is a list of goods or services that are provided by the company with a statement of the sum due for these. While a credit note is a promissory note that is offered to customers in exchange for returned orders.

When to send a credit notes?

Credit notes are mostly used when an error occurred on the recently sent invoices. For example incorrect amount charged, or when a customer wants to change an order. In short, a credit note can be used in all circumstances when the invoice has to change or must be reissued.

Your customer can give you a credit note if:

Your customer was not satisfied with your goods or services. The credit note will be used to (partially)refund the amount.
You accidentally charged your customer too much.
You accidentally issued an invoice.
The goods are damaged within the warranty period.