# Credit Note
A Credit Note reduces customer receivables for returns, price adjustments, or refunds. Use it to reverse all or part of a sale invoice, process payment out, and update inventory when returned goods are credited.
Overview & List View
The Credit Notes list shows all credit notes with customer, date, linked sale invoice or return order, amount, and status. Use quick filters to view Approved, Draft, Cancelled, or Closed credit notes. From the list you can create new credit notes, open existing ones, edit drafts, or delete draft credit notes.
List View
List row actions
| **Action** | **Available when status is** |
|------------|------------------------------|
| Edit | Draft, For Revisal |
| Delete | Draft, For Revisal |
| View | All statuses |
Quick Start — Create a Credit Note
1. Navigate
Go to Sales → Credit Note from the left menu, or create from a Sale Invoice using Credit Note, or from a Sale Return Order using Create Credit Note.
2. Create new credit note
Click New for a standalone credit note, or use an invoice or return order action to pre-fill customer and item details.
3. Fill in details
- Enter Date and Bill Number.
- Choose the Customer and link the Sale invoice or Return Order when applicable.
- Confirm Return Reason (pre-filled when a default is set in User Settings).
- Enable Without Inventory when the credit should not affect stock (for example, damaged goods not received back).
- Add item lines with Qty, Unit, and Rate.
4. Save
- save — keeps the credit note as a Draft.
- Save And Approve — approves and posts the credit note in one step.
- Cancel — closes the form without saving.
5. After approval
- Customer receivable is reduced on approval.
- Inventory is updated on approve unless Without Inventory is enabled or the credit note is created from a return order (stock was already adjusted on receipt note).
- Use Adjust Invoices to set off the credit against the same customer's pending sale invoices (no receipt voucher).
- Use Payment Out to refund the customer when a cash refund is required.
| **Field** | **Description** |
|-----------|-----------------|
| Date * | Accounting date of the credit note. |
| Form Type | Sale type that controls numbering, tax rules, and print layout. |
| Bill Number * | Unique credit note reference. Auto-generated when numbering is configured on the sale type. |
| Return Reason | Why goods are being returned. Pre-filled from the user's default Sale Return Reason in User Settings when set. Reasons with Is Return To Return Center route stock to the user's Sale Return Center. |
| Without Invoice Ref | Creates a credit note without linking to a sale invoice. |
| Sale invoice | Source sale invoice when crediting against a bill. |
| Return Order | Source return order when created from a return workflow. |
| Customer * | Customer receiving the credit. |
| Customer Billing Address | Customer's billing address. Choose from the searchable dropdown of active customer addresses, or open the address list with the zoom button. |
| Shipping Address | Delivery / shipping address. Choose from the searchable dropdown of active customer addresses (search by label, name, lines, area, district, state, country, or pin), or open the address list with the zoom button. |
| Contact person | Customer contact. Enabled after a customer is selected. Only active contacts are listed. See Customers — Contacts. |
| Without Inventory | When enabled, the credit note does not update inventory. |
| Employee | Sales employee responsible for this credit note. |
| Prepared By | Employee who prepared the document. Shown when Show Prepared by field is enabled. |
| Payment Term | Customer payment terms. |
| Due Date | Credit note due date. Shown based on payment term settings. |
| Branch | Branch for the transaction. Shown when multi-branch is enabled. |
| Brand | Brand for brand-wise profit tracking. |
| Billing center * | Billing center for the transaction. |
| Project | Optional project link. |
| Project Task | Task within the selected project. |
| Currency / Currency Exchange Rate | Shown when multi-currency is enabled. |
| Customer Debit Note No. | The customer's own debit note number, recorded for matching against their debit note. Shown on the credit note view when set. After approval, update it from Master Update. |
| Notes | Remarks printed on the credit note. |
| Internal Notes | Internal remarks not shown on print. |
| Customer Debit Note No. | The customer's own debit note number, recorded for matching against their document. Shown on the credit note view when set. Can also be added or changed after approval via Master Update. |
> Many optional header and line fields are controlled by Sale Settings.
Item Lines — ITEMS
| **Column** | **Description** |
|------------|-----------------|
| Sl.No | Line serial number. |
| Item | Item being credited. Required. |
| Item code, Variant, Description, HSN, MRP, Brand | Optional columns enabled in Sale Settings. |
| Qty | Quantity credited. Required. |
| Unit | Unit of measure. Required. |
| Rate | Credit rate per unit. Required. |
| Batch | Batch for batch-tracked items. See Batch selection. |
| Cost Value | Return cost of the item, used to value the stock coming back into inventory. Shown and required only when Without Invoice Ref is ticked. Auto-fills from the item's Default Return Cost and can be edited per line. |
| Amount, Trade Discount, discounts, Taxable Amount, Taxes, Tax Amount, Total | Calculated based on tax and discount settings. |
> On a normal credit note linked to a sale invoice or return order, the cost comes from the original document, so Cost Value is hidden. On a referenceless credit note there is no source document, so you must provide the cost — set a Default Return Cost on each item to have it filled automatically.
Batch selection
When you pick a batch on a Credit Note line (batch-tracked items), the batch list can prefer batches already sold to that customer.
| **Show toggle** | **What it lists** |
|-----------------|-------------------|
| Customer Batches | Batches previously sold to the selected customer (from their sale invoices), for the selected item. Available after a customer is selected. |
| All Batches | Full batch list. Use when you need a batch that was not sold to this customer. |
- For a normal credit note with a customer selected, the list defaults to Customer Batches.
- For a Without Invoice Ref (referenceless) credit note, the list defaults to All Batches.
- Use quick search in the batch list to find a batch by name.
Actions & Status
View toolbar actions
| **Action** | **Description** | **Available when status is** |
|------------|-----------------|------------------------------|
| Approve | Finalizes and posts the credit note. | Draft |
| Edit | Opens the credit note for editing. | Draft, For Revisal |
| Delete | Permanently removes the credit note. | Draft, For Revisal |
| Clone | Creates a copy of the credit note. | All (if permitted) |
| Print | Prints the credit note. | All |
| Export | Exports the credit note to Excel. | All |
More menu (⋮) actions
| **Action** | **Description** | **Available when status is** |
|------------|-----------------|------------------------------|
| Cancel | Cancels the credit note. | Approved, Closed |
| Revise Credit Note | Creates a revised credit note from a cancelled one. | Cancelled |
| Payment Out | Records a refund payment to the customer. | Approved |
| Adjust Invoices | Sets off the credit note against the same customer's pending sale invoices. Shown for credit pay-mode notes only. See Adjust Invoices. | Approved, Closed |
| Generate Einvoice | Generates a GST or ZATCA e-invoice for the credit note. Shown when not already generated. | Approved, Closed |
| Cancel Einvoice | Cancels a generated e-invoice. | Approved, Closed, Cancelled |
| Add Job Card Allocation | Allocates credit note lines to job cards. | Approved, Closed |
| WorkFlow Request | Starts a company process linked to this credit note. Does not approve the credit note. See WorkFlow Request. | Approved, Closed |
| Add/Update Note | Adds or edits an internal note. | All |
| Update Secondary Status | Updates a custom secondary status. | Approved, Closed |
| Master Update | Updates selected header fields. See Master Update. | Approved, Closed |
| Mark As Closed | Manually closes the credit note. | Approved |
| Undo Close | Reverts a manual close. | Closed (only when manually closed) |
| Print Labels | Prints item labels from credit note lines. | Approved, Closed |
| Export Items | Exports item lines to Excel. | All |
Statuses
| **Status** | **Description** |
|------------|-----------------|
| Draft | Saved but not yet approved. Can be edited or deleted. |
| For Revisal | Sent back for changes. Treated like Draft for edit and delete. |
| Approved | Finalized and posted. Updates accounts receivable and inventory when applicable. |
| Closed | Credit note is closed — typically after refund or manual close. |
| Cancelled | Credit note has been cancelled. Use Revise Credit Note to create a replacement. |
| Multi Level Approval | Awaiting multi-level approval workflow. |
Posting note: Credit Notes post to the ledger on approve. Inventory is updated on approve unless Without Inventory is enabled or the credit note is created from a Sale Return Order (inventory was already adjusted on the receipt note).
Adjust Invoices
Adjust Invoices sets off an approved credit note against the same customer's pending sale invoices. It does not create a receipt voucher or a new journal — the credit note already credited the customer, and the sale invoice already debited the customer.
Use this when Customer A has an open sale invoice and an open credit note, and you want to apply the credit to the invoice. For a cash refund, use Payment Out. To collect cash and apply a credit note in one step, or to offset documents across different customers, use a Receipt Voucher.
When it is available
- The credit note is Approved or Closed.
- Payment mode is Credit (the action is hidden on cash / bank / wallet notes).
- Your role can open the action from the credit note more menu (⋮).
How to apply
- Open the credit note and choose Adjust Invoices.
- The form shows credit note number, date, customer, remaining balance, and optional notes.
- In the Sale Invoices table, pick a pending invoice for that customer (same currency, approved, with balance). Date and invoice balance fill in. Amount defaults to the invoice balance — change it if you are applying only part of the credit.
- Add more invoice lines if you are splitting the credit across several bills.
- Click Adjust to save. Cancel closes without saving.
Example: Sale invoice balance 450, credit note balance 250. Adjust 250 against the invoice. The credit note closes; the invoice remains open with 200.
When the full credit is applied, the credit note status becomes Closed. A partial apply leaves it Approved with the remaining balance.
How to remove an adjustment
- Open Adjust Invoices again (available on Closed notes as well).
- Click X on the invoice line you want to undo.
- Click Adjust to save.
Removing an allocation restores the credit note and sale invoice balances. A fully applied (closed) credit note becomes Approved again.
Where it appears
- Credit note Payments tab — each allocation as a sale invoice adjustment.
- Sale invoice Payments tab — each allocation as a credit note adjustment.
Limits
- Only invoices of the same customer and same currency.
- You cannot apply more than the credit note balance or the invoice balance.
- Cancel the credit note or the sale invoice only after you remove the allocations (same as unlinking a receipt voucher first).
Master Update
Master Update lets you change selected header fields on an approved or closed credit note without editing item lines. Open the three-dot menu and select Master Update.
| **Field** | **Can be updated?** | **Notes** |
|-----------|---------------------|-----------|
| Date * | Yes | Cannot be set before the accounts closing date. |
| Payment Term | Yes | |
| Due Date | Yes | Credit note due date. |
| Customer Debit Note No. | Yes | The customer's own debit note number. |
| Employee | Yes | Sales employee in charge. |
| Prepared By | Yes | Shown when prepared-by is enabled in Sale Settings. |
| Branch | Yes | When multi-branch is enabled. |
| Brand | Yes | When brand-wise tracking is enabled. |
| Project | Yes | |
| Customer, sale invoice, item lines, totals | No | Edit the full credit note (Draft / For Revisal) or cancel and revise. |
Click Confirm to save or Cancel to close without saving.
View Tabs & Side Panels
When you open a credit note in full view (not in a small modal), the right side shows tabbed panels. Click the expand icon on a tab to open the same data in a larger modal.
Top panel
| **Tab** | **What it shows** |
|---------|-------------------|
| Summary | Linked documents — payment vouchers, return orders, and related follow-up transactions from this credit note. See Sale Transaction Summary. |
| Journal Info | Accounting journal entries posted by this credit note. Requires journal access. |
Middle panel
| **Tab** | **What it shows** |
|---------|-------------------|
| Payments | Payment vouchers, refunds, and sale invoice adjustments recorded against this credit note. |
| RP | Returnable packaging (RP) movement with the customer — record In and Out quantities per RP Item on this credit note. Shown on Approved or Closed credit notes when returnable packaging is enabled and you have customer RP access. See Customer RP. |
RP tab — returnable packaging
Use the RP tab on an approved Credit Note to record packaging returned by the customer.
Example: Retailer A returns 45 of 50 milk crates — enter In = 45 on Milk Crate, Save and Approve. Process RP Deposit Refund for the returned crates; adjust deposit on the 5 short crates.
Example: Ice cream outlet closes — Credit Note RP tab In = 1 on Deep Freezer with serial number SN-0042, then refund deposit.
Full documentation: Returnable Packaging (RP).
Bottom panel (all transactions)
| **Tab** | **What it shows** |
|---------|-------------------|
| History | Activity log — who created, approved, edited, or cancelled the credit note and when. |
| Attachments | Files uploaded to this credit note. |
| Secondary Status | Custom secondary status history and updates, when secondary status is configured. |
Best Practices
- Link credit notes to the original Sale Invoice or Sale Return Order for accurate audit trails.
- Use Without Inventory only when returned goods are not physically received back into stock.
- Generate e-invoice for credit notes when GST or ZATCA compliance requires credit note reporting.
- Use Adjust Invoices to set off a credit note against the same customer's open invoices — no receipt voucher needed.
- Use Payment Out when refunding cash or bank payments to the customer.
- Review open credit notes regularly using the Open Credit Notes Report.
FAQ
When does a credit note update inventory?
Inventory posts on approve for standalone credit notes. Credit notes from a return order or with Without Inventory enabled do not update stock again.
What is the difference between Credit Note from invoice vs from return order?
An invoice credit note can adjust price or quantity directly. A return order credit note follows receipt of goods and avoids double inventory movement.
Can I apply a credit note to an open sale invoice without a receipt voucher?
Yes, when both documents belong to the same customer. Use Adjust Invoices on the credit note. See Adjust Invoices.
When should I use Adjust Invoices vs Payment Out vs a receipt voucher?
Adjust Invoices — same customer, credit vs invoice, no cash. Payment Out — you are refunding money. Receipt Voucher — you are collecting cash and applying a credit note together, or offsetting documents across different customers.
Can I refund the customer after approving a credit note?
Yes. Use Payment Out on an Approved credit note to record the refund voucher.
Why is Journal Info not visible?
You need journal access. The tab appears only when your role includes access to the Journal screen.
Why is the RP tab not visible?
The RP tab appears on Approved or Closed credit notes when returnable packaging is configured and your role has customer RP access.
Why does the batch list show Customer Batches vs All Batches?
Customer Batches limits the list to batches sold to that customer so returns are easier to match. Switch to All Batches when you need any batch. Referenceless credit notes default to All Batches.
What is a referenceless credit note?
A credit note without a sale invoice or return order link. The system warns this is not advisable; use only for agreed adjustments with finance approval.
Why does a referenceless credit note ask for a Cost Value?
Without a source document, the system has no cost for the returned goods. The Cost Value tells it what value to bring the stock back in at. Set a Default Return Cost on the item (Inventory > Item > Sale tab) so this fills automatically; you can still edit it per line.
What does Without Inventory mean?
Damaged or expired returns that do not put stock back into inventory. You must confirm that stock will not be affected.
Why must the credit note date be after the invoice date?
When linked to a sale invoice, the credit note date cannot precede the original invoice date.
Why can I not cancel this credit note?
Remove invoice adjustments first (Adjust Invoices → X on the line → Adjust). Also cancel linked receipt voucher adjustments, returnable packaging entries, and e-invoice (if generated) before cancelling the credit note.
Can I add or change the customer's debit note number after approval?
Yes. Open the credit note, choose Master Update, and enter Customer Debit Note No. You do not need to cancel or revise the credit note.