Credit Notes

“I need to issue a Credit Note. What should I do?”

Never delete an invoice or amend an invoice after it has been issued to the client. If the figures need to be changed use a Credit Note.

A credit note is simply a negative invoice. It replicates the original invoice in almost every way, though instead of the word “Invoice” it says “Credit Note”. That tells everybody that all the figures are to be recorded as negative amounts. The date on the credit note is normally the date that you prepared the credit note (not the original invoice), unless there are compelling reasons to use a different date.

Use the next number in your separate, unique number sequence for credit notes. Invoices follow one number sequence, and credit notes have a separate number sequence of their own. They do not need to be inter-related but within each set the document number does need to be unique. Invoice numbers and credit note numbers must be purely numeric, purely sequential and include no letters and no punctuation. If you need to add a reference put that in a separate reference box and do not combine it with the credit note number.

As with an invoice, your credit note must be on your letterheaded paper.

In order to avoid any confusion, ensure the the words “Credit Note” are displayed boldly at the top of the document.

When your bookkeeping is done, and when your client does their bookkeeping, the original invoice and the subsequent credit note will cancel each other out.

We will know what is happening, but only if you follow the system.