A Credit Note allows us to correct or void invoices or record items returned by our customers. These can reduce the invoice’s account receivable or record a customer credit balance for future purchases.
Creating credit notes
To create a new credit note,
Create a credit note
- In the main menu, go to Sales, then click on Credit Notes.
- In the Credit notes list, click on the (+) Button.
- In the dialog screen, choose an invoice to create the credit note form and click create.
- In the header, on the right, choose if you need to exclude taxes and select the credit note type.
The Exclude Taxes option is used to exclude any sales taxes when the credit note has been created on a different fiscal period then the invoice or when you have already paid those taxes.
The credit note Type option sets the credit note transaction type; this could be Damaged goods, Void Invoice, Returns, or Discount on sale.
Note: If you’re creating a credit note for a paid invoice, the discount on sale option won’t be available.
In the Content section, you’ll see a list of items copied from the original invoice.
- Click on the Content Tab,
- Remove all the items except for the returned items.
- Set the return quantity in the quantity column field for each item.
- Once done, let’s click on Save.
 Remove Items: When creating a credit note from an invoice, Cashflow pulls in all the items in the original invoice. You need to retain the items being returned and remove the other items.
Note: If the credit note is for a Discount on sale or to Void an invoice, you don’t need to remove these items.
If we’re creating a credit note from a non-paid invoice, Cashflow will automatically apply the credit note to this invoice and reduce the accounts receivable.
However, If the invoice has already been paid, the credit note will remain open and can later be applied to a future invoice, thus generating an account payable to this customer.
Applying credit notes to unpaid invoices
To apply a credit note to an unpaid invoice,
Apply a credit note to unpaid invoice
- In the main menu, go to Sales, then click on Invoices.
- Choose the invoice to apply the credit note to, click on the options menu, and then click on the Apply Advance option.
- In the Apply Advance window, choose the credit note from the document list by clicking on the checkbox.
- In the amount column set the amount to apply to this invoice.
- Once done, click on Save.
 Amount Column: By clicking on the checkbox for a particular credit note you enable its amount column. In this column, you can set the amount to apply to the invoice from the remaining available credit note balance.