Help / Sales

Issue a credit note and refund a customer

Give credit for returned goods or a goodwill discount against a posted invoice, and pay a refund if needed.

A credit note reduces what a customer owes you after an invoice has been posted. It is always raised against one posted invoice. Credit notes cannot be created from a blank form.

Issue a credit note

1. Open the posted invoice and click Issue Credit Note. (From the Credit Notes list, the Issue from an Invoice button takes you to your invoices.)
2. Set the Credit Note Date and add Notes (optional), for example the reason for the return.
3. Under Select Lines to Return, each invoice line shows Original Qty, Already Returned, Remaining and Unit Price. Type a Return Qty for each line you are crediting. You cannot enter more than Remaining.
4. For a discount that is not tied to a line, use Goodwill Credit (optional, not tied to a specific line): enter a Description and an Amount.
5. Click Create Credit Note (Draft).

You must select at least one line or add a goodwill credit, otherwise you see "Select at least one line to return, or add a goodwill credit."

Post the credit note

A credit note draft cannot be edited, only posted or deleted. Open it and click Post Credit Note. Posting books the opposite of the invoice:

• Debits Sales Returns for the subtotal and debits the tax accounts, reversing the tax collected.
• Credits Accounts Receivable for the total, which reduces the customer's balance in their ledger.
• For tracked items, puts the returned quantity back into stock and reverses the cost of goods.

Legasum checks again at posting that you are not returning more than was sold, and that all credit notes together never exceed the invoice total ("Cannot post credit note: it would bring the total credited against invoice ... to ..., more than the invoice total of ...").

Refund the customer

A posted credit note shows Credit Remaining. If you pay money back, click Record Refund, which opens Record Refund to Customer. Fill in the amount, date, Cash / Bank Account, payment mode and reference, then click Record Refund. Refund Applied and Credit Remaining update. The button shows only while credit remains.

Void a credit note

Open a posted credit note and click Void to reverse it and take the returned goods back out of stock. Voiding needs permission to delete in Sales.

Good to know

• The invoice must be Posted. For a draft invoice, just edit it.
• A credit note reduces the customer's ledger balance, but it does not change the invoice's own Paid and Balance Due, and it is not netted off in the Receivables Ageing report. Check the customer's Ledger tab for the true position.
• A credit note can be credited at no more than the price the line was invoiced at.
• To void an invoice that has credit notes, void or delete the credit notes first.
• If your company requires approval for posting credit notes, the request goes to the Approvals page.