What is a Credit Note?
A credit note is a document a seller gives to a buyer to show that the buyer is being credited for a certain amount. This usually happens because the buyer returned some goods, the seller made a mistake in the original invoice, or there was some other reason the buyer is owed money.
It’s like getting a store gift card when you return something, but it can also be used to reduce the amount you owe on future purchases.
When to Create a Sales Return/Credit Note
You should create a sales return or credit note in these situations:
- Damaged Goods: The customer receives products that are broken or damaged.
- Incorrect Items: The customer receives the wrong items or the wrong number of items.
- Quality Issues: The products do not meet the quality standards promised.
- Excess Inventory: The customer wants to return extra items they don’t need.
- Pricing Errors: The customer was charged too much.