Skip to main content

Credit Notes (Sales Returns)

A Credit Note is issued to a customer when goods are returned or when you need to reduce the amount they owe after an invoice has been raised. It is also called a Sales Return.

When to Use a Credit Note​

  • A customer returns goods (full or partial return).
  • You offered a discount or adjustment after the invoice was issued.
  • You need to void or partially cancel an invoice.

Creating a Credit Note​

  1. Go to Transactions > Sales Returns.
  2. Click New Sales Return.
  3. Select the Customer.
  4. Add the Items being returned, with quantities and the price at which they were originally sold.
  5. Confirm the Tax details — tax is reversed automatically based on the item and customer's GST treatment.
  6. Add a Notes field to record the reason for the return.
  7. Click Save. The Credit Note is now available to apply to open invoices.

Applying a Credit Note to an Invoice​

You can apply the credit directly to an outstanding invoice:

  1. Open the Credit Note.
  2. Click Apply to Invoice.
  3. Select the invoice(s) you want to apply the credit to.
  4. Enter the amount to apply (it can be split across multiple invoices).
  5. Click Save. The invoice outstanding amount is reduced accordingly.

Alternatively, apply a credit from the Invoice side:

  1. Open an Invoice.
  2. Click Apply Credit.
  3. Select the open Credit Note.

Credit Note Status​

StatusMeaning
OpenCredit note created, not yet applied
AppliedFully applied to one or more invoices
Partially AppliedSome amount applied, balance remaining

Impact on GST​

Credit Notes with GST reduce your GSTR-1 outward supply figures in the period they are raised, as required for GST return filing.