Customer Credit Notes

What is it and what is it for?

Each credit note reduces a customer's open balance. You can create it on its own or, most commonly, generate it from another document: a credit invoice, a cash receipt, or a customer return authorization (RA). When the credit note points at the invoice it affects, the system can automatically apply it against that invoice's balance, reducing it right away.

When the credit note does not come from an already-approved return authorization, the system returns the merchandise to stock and reverses the cost of sale for every item with inventory. When it comes from an already-approved return instead, the stock movement is handled by that return, and the credit note only affects the customer's balance and the accounting. In both cases, saving it posts the general-ledger entry (if your company uses the Accounting module): debit to the sales-returns account and credit to the customer's account, with the corresponding tax, withholding and inventory reversals.

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How to record a credit note step by step

1. Open the list and click New. You need the "add" level of the credit-notes permission; if you don't see the button, ask your administrator for access.
2. Choose how you'll generate it. You can start from a blank form, or open it from the matching button on the detail page of a credit invoice, a cash receipt, or a customer return authorization; in these three cases the system automatically copies the customer, currency, subsidiary/location and the item lines still pending to credit.
3. Select the customer (if you started blank) and, if applicable, the affected invoice. Pointing at the affected invoice lets you apply the note directly against its balance.
4. Fill in the item or service lines to credit, with quantity, price and discount. If the note doesn't come from an already-approved return, these lines put the merchandise back into stock.
5. Fill in the fiscal data when your country uses fiscal documents (NCF) for this document type.
6. Save, or use Save and apply credit if your company enabled automatic application and the note has an affected invoice: the system validates the data, saves the document and, if applicable, signs it electronically and applies it against the invoice right away.

Key fields

Validations when saving

• Customer required and not void; a prospect is automatically promoted to a customer.
• Open accounting period for the note's date.
• Exchange rate greater than zero and consistent with the company's functional currency.
• Location and subsidiary must be consistent with each other.
• At least one item or service line, with discount between 0% and 100% and no mixing of empty lines with lines that have quantity/price set.
• Valid affected invoice when one is entered: it must exist, not be void, and belong to the same customer, subsidiary and currency as the note. If your company requires it, the note's items must also exist on that invoice.
• Only one active credit note per invoice, if your company enabled that restriction (a second note can't be applied while the first one isn't void).
• Sufficient balance on the affected invoice for automatic application, if your company validates the invoice's balance when applying credits.
• Credited quantity cannot exceed what's pending, when the note comes from a return authorization.
• Unique fiscal document (NCF) and automatic numbering configured, when your country requires it; it cannot repeat against invoices, debit memos, returns or receipts of the same subsidiary.
• Notes and affected invoice required in Ecuador and Guatemala (Ecuador also requires the transaction type).
• Maximum number of lines per document.

Managing the document

From the details of an already-saved credit note you can, depending on your permissions:

• Apply it against the affected invoice, if it wasn't applied automatically when saved.
• Void it, indicating a reason; a voided note can no longer be edited, and it can't be voided while active records are still applied to it.
• Delete it, if it doesn't yet have an electronically signed fiscal document and no active records are linked to it.
• Duplicate it to create a new note from its data.
• Print, email or share a public link to the note, including by WhatsApp.
• View the associated accounting entry, if your company uses the Accounting module.
• Sign it electronically, in countries where the credit note is a signable fiscal document.

Additional features depending on your setup

• Save and apply credit: if your company enabled automatic credit application, the save button offers signing it (if applicable) and applying it against the affected invoice in a single step.
• Show the affected invoice's balance: displays the invoice's outstanding balance next to the affected-invoice field, if your company turned on this visual aid.
• Invoice modification reasons: adds the reason field when your company has it enabled.
• Division on lines: division column on items and on the accounting entry, depending on the modules and features your company has active.
• Sales territory: additional filter on reports and batch printing, if your company has it active.
• Multiple sales reps: Sales Reps tab on the form, if your company uses that feature.
• Batch generation from promotion invoices: available only on the Enterprise plan with the corresponding module active and the feature enabled; lets you reverse subscription invoices without an active note in bulk.
• Early-payment discount: some companies automatically generate a single-line credit note to apply an early-payment discount on an invoice, available on the Enterprise plan with the corresponding module active.
• Batch printing: available on the Enterprise plan and for Partner-type users, or if your administrator enabled the feature.
• Electronic invoicing: in countries where the credit note is signable, the list shows the pending-to-sign tab and the detail lets you sign it; an already-signed note can't be voided or deleted outside its fiscal cancellation rules.

Availability and permissions

• Access is controlled by the "Customer Credit Notes" permission of the user group, with separate levels for view, add, edit, delete and void.
• Reprinting an already-printed document, or using batch printing, requires the additional reprint permission for credit notes.
• Changing the note's sales rep or fiscal sequence requires separate edit permissions, apart from the general permission.
• Available on every AdmCloud plan, starting with the Billing plan. On the Enterprise plan, it requires the Sales module to be active.
• With subsidiaries enabled, each note is tied to a subsidiary.
• The fiscal sequence / NCF field only appears if your country handles fiscal documents for this document type.
• Batch generation from promotion invoices and the extra-feature version of batch printing are only available on the Enterprise plan, once your administrator enables the feature.

Tips and common mistakes