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Automated Credit Notes

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When and how to issue a credit note / credit memo.

A credit note, also known as a credit memo, is a financial document which are used by companies supplying their goods and services to B2B customers to specify a reduction in the amount which needs to be paid i.e. an invoicing error, problems with goods and services supplied or a cancellation/termination of purchase.


When issuing a credit note, the supplier is essentially agreeing to return a partial or full sum of money to the buyer depending on the initial terms of agreement if the transaction has already taken place.

For instance, if a Supplier Invoices for Goods valued at £1000 but later finds their business customer wishes to cancel the order and has not yet paid the outstanding balance then the supplier can simply issue a credit note equalling that amount (although there may be deductions for delivery of product etc) to the business customer which effectively nullifies the original Invoice. If however the original balance of £1000 has been paid during that time then the Supplier would simply issue a credit note and refund the agreed amount, again less any costs incurred by the supplier in delivering the products and/or services.

Or, let’s suggest the Supplier accidentally overcharged their business customer by 20% in the case of the above example. A partial credit note for the negative sum of -£200 would be issued to the business customer which would then effectively correct the outstanding balance and the customer would simply pay the £800 difference. If however the business customer had paid their original invoice in full i.e. £1000 then the supplier could simply refund the £200 difference or discount the £200 from a future Invoice if agreed by the business customer (if you collaborate on a monthly basis for example).


A Credit Note is essentially a legal document that allows Companies to lawfully amend an invoice, without having to delete or alter it. As all invoices must be kept for audit purposes, the credit note allows companies to keep an accurate accounting records without amending any of the document history whilst notifying/promising to the business customer that an amount of money will be either returned or be adjusted in a subsequent transaction.

Invoicey can help make the process of issuing credit notes to customer a seamless task. Firstly, our Invoice Booster enables you to check for potential invoicing errors before you send the final draft to your business customer to prevent having to issue a credit not and cause more administrative work.


A credit note should include all necessary information for admin and recording purposes for both you and your customer. Including:

  • Date of credit note issue

  • Credit note number

  • Customer reference number

  • Payment terms

  • Contact details

  • Reason for issuing the credit note


In the event however that a credit note is required then you can simply generate a credit not in seconds using data inputted from the original invoice to readily autocomplete the relevant credit note fields ready to be sent directly to your business customer. You can then flag the original invoice as void or partially paid and link it to a credit note to make the accounting process much simpler when filing accounts later down the line.

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