Credit note

What is a credit note?

You made a mistake in the price calculation of the last invoice to a customer. That can happen. Is it tempting to quickly adjust that invoice and send the customer an amended version? That is not the right approach and can cause quite a few (VAT) problems. Work with a credit note instead.

A credit note reduces the debt a customer owes you as a result of a previously sent invoice or invoices. The amount of the credit note obviously depends on the situation. It can cancel part of a previously issued invoice, or neutralise the full invoice amount.

There are various situations in which you as a business owner issue a credit note:

• An order via your webshop is returned and the customer expects a refund;
• An agreement with the customer following a problem with a delivery, for example minor damage or an unexpectedly long delivery time;
• A simple calculation error or typo in the invoice amount;
• ....

The credit note formalises the correction, so that your records and those of the customer contain a clear trail. You are free to decide whether the amount of the correction is refunded or offset against other invoices. Do make a clear agreement about this, though, to avoid any resentment.

Elements of a credit note?

Roughly the same formal requirements apply to a credit note as to issuing an invoice. Pay attention to the following points:

• Use a separate number series, easily recognisable and of course without gaps
• On the credit note, clearly refer to the original invoice to which it relates
• Clearly and explicitly state ‘credit note’ on the document

Why a credit note?

Firstly, because by law you may not offset, i.e. deduct the amount to be refunded from a subsequent invoice.

Numbering and accounting

Do not destroy the incorrect invoice, because every invoice bears a unique number and must be recorded in the accounts! As stated earlier, the numbering of invoices and credit notes runs continuously, without gaps or duplicates. In onFact, you can copy an invoice to a credit note with one click: with minimal effort, you keep your numbering continuous.

Clear agreements with the customer

It happens that you unintentionally invoice the wrong party, for example the private individual while the company is the client. That is possible:

• If you credit the private individual and issue a new invoice to the company
• It is wise to only deliver the credit note to the private individual after the invoice to the company has been paid, because if your customer's company disputes the new invoice, you have little to go on in the event of non-payment.

Save yourself difficulties and administrative work. Ask clearly in advance who the client is and who will be the debtor to whom the invoice is sent. Make sure this information is in writing (email) ...

And if the amount increases?

The error can also increase the amount owed by the customer. In that case, the supplier/creditor sends a debit note with the amount still to be paid.