Credit notes (sales returns)

A credit note records goods a customer returned, or a price reduction you gave after invoicing. It is always based on an approved invoice. It reduces the customer's balance, reverses the sale and its tax, and puts returned goods back into stock.

Go to Sales › Credit Note, or open an approved invoice and click Create Credit Note.

Creating a credit note

1. Click Add and choose the Invoice No the return is for (or start from the invoice). The customer, project, currency and lines are taken from the invoice. If you change the currency, the lines are converted (each keeps its base-currency value); every amount shows its base-currency value under it.
2. The quantities shown are what is still left to return on that invoice. Lower them for a partial return, or remove lines that aren't returned.
3. Each line goes back into the warehouse (and batch) it was sold from.
4. Set the Credit Note Date, add Notes, and Save as Draft or Save as Approve.

Rules

• Only approved invoices can be returned.
• You can't return more than was sold minus what was already returned ("A return quantity is more than what is left to return on the invoice."). When everything has been returned you'll see "Everything on this invoice has already been returned."
• Returned lines must belong to the selected invoice.

What happens to the money

The credit note lowers the customer's balance: it shows on their statement and in the customer balance reports. The credit note page shows its amount as Credit Remaining.

The credit note does not change the Balance Due of the original invoice, which keeps its own payment status. Keep this in mind when you look at open invoices for a customer who has credit notes; the customer statement shows the true balance.

What it posts

Dr each line's sales account and tax payable; Cr accounts receivable and discount allowed. Returned stock comes back at the cost it left with: Dr inventory / Cr cost of goods sold.