Credit note
What is a credit note?
A credit note reduces what a customer owes. It is the opposite of an invoice.
It is sent when goods are returned, when goods arrive damaged, or when the invoice charged too much.
An invoice is never rubbed out or changed. It is corrected with a credit note.
Example
A café is invoiced £240.00 in total for flyers. Some are misprinted, and the printer sends a credit note for £60.00 in total. The café now owes £180.00.
Why it matters
It changes what is owed, so it goes into the books. A credit note carries VAT in the same way as the invoice it corrects.
Practise it
Practise it nowWhen to issue a credit note
Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].