Raise a credit note

A credit note reduces what a client owes on a sent invoice without changing the invoice. It is a separate document with its own number (for example CN-012), priced the same way as the invoice: same prices, VAT rate and FF&E rate.

Before you start

• You need permission to edit finance.
• The invoice must be Sent, Overdue, Part paid or Paid. A draft is edited, not credited.
• If the invoice is in Xero, make sure it has synced.

Steps

Check it before you raise it. A credit note can't be edited or deleted afterwards, and the invoice can't then be voided or deleted. If you get one wrong, bill the difference with a top-up invoice or a new invoice.

1. Open the invoice and click Credit note at the top.
2. In Raise a credit note, each of the invoice's items is listed with what was Billed and what the project Needs now. If the procurement schedule shows the client was billed for more than they now need, the Credit column is filled in for you.
3. Change the quantity to credit on any item.
4. For a wrong price, a discount or goodwill, click Add an amount, say what it is for and enter the figure. Enter it including or before VAT, the same way the invoice's prices are. The sheet tells you which.
5. Enter the Reason (printed on the credit note), for example "Client now needs 9, not 10".
6. Check the total at the bottom: before VAT, VAT and total, and how much comes off what the client still owes.
7. Click Raise credit note.

What happens next

• The credit is taken off what the client still owes on the invoice. The invoice footer shows it under Credited in Xero and the Amount due drops.
• If the credit is more than the client still owes (for example the invoice was already paid), the difference is owed back to them. You'll see "is owed back to the client — record the refund when it's paid". Record the refund once you have paid it.
• If the invoice is in Xero, the credit note is created in Xero first and applied to the invoice there. If Xero refuses, nothing is recorded here.
• The credit note appears in a Credit notes panel on the invoice, with who raised it and a PDF button.
• The credit note is recorded in the invoice's History.
• Your client isn't told. Techstyles doesn't email credit notes, so download the PDF and send it yourself.

Good to know

• If the credit covers everything still owed on a Sent or Overdue invoice with no payments, the invoice becomes Void.
• You can't credit more than is left on the invoice, or more of an item than was billed.
• The FF&E fee is credited on items you credit, not on free amounts.
• If the panel shows "In Xero, but not applied to the invoice", open Xero and apply the credit note to the invoice there.
• The footer label reads Credited in Xero whether the credit note was raised here or in Xero.