Credit Notes
Written by B3Networks Academy
Updated at March 14th, 2024
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Table of Contents
A credit note is very similar to a sales invoice or bill, except it reduces the amount owed by a customer to you, or that you owe to a supplier. It's raised against a customer or supplier and remains as an awaiting payment until it has been fully applied to an invoice or bill.
A credit note is issued in various situations to correct a mistake:
- An invoice amount is overstated
- Correcting discount rate is not applied
- Goods spoil within guarantee period
- They do not meet the buyer's specifications and are returned. Also called credit memo.
1. Create a Credit note
Credit notes can be added in 2 ways in Finance app, depending on how you need to issue or record the credit. You can:
- Add a new credit note for a customer or supplier
- Copy an existing credit note.
Method 1:
- Go to the Credit Notes tab
- Click + New Credit Note
- Fill in the necessary fields
- Create
Note:
- Users can select custom tax rates: 7%, 8% and 9% (Default tax rate)
- The tax rate is returned to its default of 9% upon deactivating the toggle button
Method 2:
- Go to the Credit Notes tab
- Choose a particular credit note
- Click on the 3 dots icon
- Select Copy
- Fill in the necessary fields
- Edit (optional)
2. Approve a credit note
To approve a Credit Note, click Mark as Sent, and the status is now Sent.
3. Allocate credit of Credit note to invoice(s)
This step must be done in Invoice app.
- Go to the Invoice app
- Select the Invoice tab
- Choose a particular invoice
- Click on 3 dots icon
- Choose Allocate:
- Enter the amounts in the Amount to Credit fields for each unpaid invoice you want to credit. You can apply the full credit amount or just some of it.
- You can click the invoice links to drill into the transactions. A list of invoices is also available for you so that you can pick up some invoices to allocate credit to.
Note:
- Credit note can be allocated to the UNPAID invoice only.
If you want to use the credit note CN-0001 to offset a PAID invoice IN-0011. Follow the instructions below:
- Remove the payment of IN-0011.
- The invoice IN-0011 becomes unpaid.
- Allocate the credit note CN-0001 to that invoice.
