The role of a credit note in invoicing

In this article, you’ll learn:

  • When to use a credit note

  • What information a credit note should include

  • The easiest way to issue a credit note

  • How to register credit notes in your accounting software


Credit notes are typically connected to an invoice and allow complete or partial cancellation of a sale. Because there are strict laws around deleting invoices in many countries, a credit note should be used instead to cancel the sale.


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When a credit note is necessary





What to include in a credit note


Credit notes that also include VAT have a clear set of requirements. Essentially, a VAT credit note should reflect the details of the VAT invoice. Specifically, why it is being issued, the total amount to be credited, the amount before VAT, and the original invoice number and date.

An issued credit note is generally directly linked to an invoice. However, there are situations in which a stand-alone credit note can be issued, which can be applied to an invoice at a later time or can be applied to a different income source.

Issuing credit notes


This automatically links the credit note to the invoice and transfers the information from the original invoice to the credit note template. It can then be edited, if necessary. For example, if it is only a partial credit note, certain lines can be removed and amounts adjusted.

The credit note will then receive its own unique number, allowing you to manage your records effectively and without gaps in your invoice numbers.

Credit notes and bookkeeping


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In summary

Editing, cancelling, or refunding an invoice can be a pain. But credit notes can be simple to issue. Online invoicing software makes this possible by providing templates for credit notes and automatically linking them to the corresponding invoice.

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