What Is a Credit Note? When & How to Issue One

What Is a Credit Note?

A credit note (also called a credit memo) is a document issued by a seller to a buyer that reduces the amount the buyer owes. It is essentially the opposite of an invoice — it records that money is owed back to the buyer rather than to you.

When Should You Issue a Credit Note?

• You overcharged the client on an invoice
• The client returned goods or didn't receive what was invoiced
• You offered a discount after invoicing
• The original invoice had an error (wrong amount, wrong items)
• A project was cancelled after partial payment

A credit note is preferable to simply deleting or editing an old invoice — it keeps a clean audit trail.

What to Include in a Credit Note

• The words "Credit Note" clearly at the top
• A unique credit note number
• The date of issue
• Reference to the original invoice number
• Your details and the client's details
• Itemised list of items being credited
• Total credit amount (including tax if applicable)

How to Create a Credit Note

You can create a free credit note using Facture Generator. Select "Credit Note" as the document type, reference the original invoice number in the notes field, and enter the items being credited.

Credit Notes vs. Refunds

A credit note doesn't automatically mean a cash refund. It can be applied as a credit toward a future invoice, or it can result in an actual refund — the choice is agreed upon between you and the client. Always communicate clearly which applies.