Issue a credit note

A credit note credits a customer's or supplier's account and debits the ledgers you list, with no goods and no money. For a customer it lowers what they owe; for a supplier it raises what you owe. Lines with a vatable amount reach the VAT reports.

Accounting Journals and notes
4 min read
Updated October 20, 2026

For Accountant

On this page

What it does
Issue one
What the screen checks
After saving
Common questions

What it does

A credit note changes one party's account without goods or money. The party is credited; the ledgers you list on the note are debited. Typical uses:

a discount or rebate you give a customer after the invoice (the customer owes less; a discount or sales-adjustment ledger is debited),
a price correction in the customer's favour,
an extra charge a supplier raises on a bill you already entered (you owe more; an expense ledger is debited).

If goods came back, make a return instead (Take goods back with a sales return, Return goods to a supplier). See Which voucher do I use? for the choice between the notes and the other vouchers.

Open Credit note (menu Credit Note). The list shows the Voucher no, Date, Ledger and Credit amount.

Issue one

Choose Add
Who
Accountant
Where
Credit note > Add. With more than one credit note series, choose the series first.
What changes
Credit note opens.
Fill the header
What changes
Date, Party (a customer, a supplier or an account that is both), Currency, Sub ledger, Agent, Project/Business Unit and a Reference Voucher (the bill the note is about; it is a reference only and does not clear the bill).
Add the lines
What changes
Add a line for each ledger to debit: the General ledger (not a customer or supplier), its balance, the Amount and a Narration. When the line's ledger is your company's sales or purchase VAT ledger, the line also asks for the Vatable amount (the amount the VAT is on).
Needs
An amount above 0 on every line.
Save
What changes
"Credit note (number) saved successfully."

What a credit note changes

Area	Change
The party's account	Credited: a customer owes less, you owe a supplier more
The ledgers on the note	Debited, by their own amounts
An invoice	Nothing is cleared: the note names the bill as a reference only
Stock	Nothing
VAT reports	A line with a Vatable amount can appear in them (The VAT purchase reports, The VAT sales reports)
IRD	Nothing: only invoices, returns and cancels are sent

Worked example: a rebate to a customer after the invoice

ABC Traders owes 56,500 on an invoice (50,000 plus VAT of 6,500, with VAT at 13%). You agree a rebate of 5,000, and the VAT on it, 650. The credit note has Party ABC Traders, the invoice number in Reference Voucher, and two lines:

General ledger	Amount	Vatable amount
Sales discount (your discount or sales-adjustment ledger)	5,000
Your company's sales VAT ledger	650	5,000

Area	What changes in this example
ABC Traders' account	Credited by 5,650: ABC Traders now owes 50,850
Sales discount	Debited by 5,000
Sales VAT ledger	Debited by 650
The invoice	Its Due amount stays 56,500: the note only names it
Customer statement	Shows the note as a credit of 5,650 (A customer's statement and balance)

What the screen checks

Check	Message
The date is before the fiscal year starts	The financial year for this transaction date has already been closed, so you are not allowed to make a transaction on this date.
No lines	Please provide data details to save the transaction.
A line of 0	Transaction with zero (0) value not allowed.
A foreign currency has no rate	Please set the rate for the currency selected.

After saving

Edit works until the note is approved (where approval is on) or its year is locked; Delete until its year is locked, and an approved note is not deleted: reverse it with a debit note (Change or delete a saved voucher). The note is on the party's statement as a credit (A customer's statement and balance, A supplier's statement and balance).

Common questions

How does a credit note count on the ageing reports?

On a customer it counts like money received: the customer ageing applies it to the oldest bills first, so the ageing can show the invoice settled while the invoice list still shows its Due amount. On a supplier it counts like a new bill you owe, from the note's date (What we owe: outstanding and supplier ageing).