• A credit note may be issued because:
  • a customer returned the goods or rejected the services for any number of reasons
  • the goods were damaged in some way
  • there was a mistake in the price on the original invoice
  • the customer overpaid the original invoice
    
• A credit note is created in a very similar format to Customer Invoices, except it reduces the amount owed to you by a customer, or that you owe to a supplier, i.e. a credit note (credit adjustment note) is effectively a negative invoice.
• A credit note is raised against a customer or supplier, allowing the customer or supplier to be held in credit until a future invoice is raised.

Step 1. To add a customer invoice credit or adjustment

• Click on the Debtors toolbar icon
• Click on the Invoices tab
• Click on the Add button

For this example: Old MacDonald purchased 30 weaner steers but only 26 weaners could fit on the truck. We are giving Old MacDonald a Credit Note (refund) for the 4 weaner steers he did not receive.

• Select the Customer you're giving credit to from the drop-down menu
• Date - select
• Form - select from drop-down menu. e.g. Credit Note
• Ref. - create a reference number. (e.g. original invoice number was INV-003, credit note relating to that invoice CN-003)
• Add Account, Enterprise (if applicable)
• Enter amounts for credit as negative amounts. i.e. put a minus sign in front of the amount
• Click the Print button to preview the whole credit and then click on the printer icon if required
• Click OK to save

How original invoice and credit note appear in the list of Unpaid Invoices:

Step 2. How to apply a credit note to a payment:

• Click on the Cashbook toolbar icon
• Click on the Add button
• Click Yes to the Confirm message: 'Do you want to enter transactions for "Working Account", in company file "Company ABC"?'
• Click on the Receipt (deposit) radial button
• Date - click on drop-down arrow to select date from calendar
• Reference - e.g. DEPOSIT, D/CREDIT
• Click on the Invoice button

1. In the Current Debtor Invoices window, tick the check box in the P column next to the applicable customer Name
   
2. Adjust Amt. Paid (amount paid) accordingly if the amount differs from the actual amount paid
   
3. Click OK button
   

• Click on the OK button to save.
  

Click on the following link for Recording an advance payment from a customer. (i.e. Creating a Credit Note to apply to a future invoice yet to be generated.)