What is a Credit Note?

A Credit Note is an accounting document used to reduce the amount owed by a customer, meaning it adjusts the value of a previously issued invoice.

When is a Credit Note used?

• When goods are returned by the customer.

• When an additional discount is agreed upon after the invoice has been issued.

• When canceling an invoice, either fully or partially.

• To correct an error in a previously approved invoice.

What is the impact of a Credit Note?

• It reduces the customer's outstanding balance.

• It appears in reports and tax returns (such as VAT).

• It can be used to settle future outstanding invoices for the same customer.

For more details on how to create a Credit Note, refer this guide:
How to create a Credit Note?