Module 34 · Advanced · 8 min read

Credit notes and corrections

You will be able to: Choose between amend, credit note and cancel; Make a credit note with the reason and the money choice; Decide whether returned parts go back to stock.

  • Read not done yet
  • Self-check: not taken not done yet
  • Lesson complete not done yet

A posted invoice opens read-only. One button, Correct this invoice, asks What went wrong? in plain words, takes a required reason, and uses the flow that already exists for it. The reason is kept in the audit trail and printed as the credit note's remark.

What went wrongWhat happens
Wrong item or quantityAmend: you change the lines and the invoice keeps its number
Customer returned something or wants money backCredit note or refund, chosen line by line
Issued by mistakeCancel: the invoice is reversed by the posting engine

Credit and refund

The Credit / refund sheet lists the invoice lines, lets you tick lines and quantities or choose the whole invoice, and asks for a reason from a short list: Not satisfied, Wrong work, Price correction, Goodwill or Other. You then choose what happens to the money.

  • Paid back through cash, card or bank transfer, with a reference for card or transfer.
  • Taken off what he owes, which reduces the open invoice.
  • Kept as credit on his account.

A preview shows the exact credit, VAT and amounts before anything posts. For stock lines you choose whether the unused parts go back to the store, at the cost they left, or stay out because they are damaged or used, in which case their cost stays written off. A credit note may wait for a manager to approve it if the approval rules require it. A credit note needs an invoice that stands and is open in every state, including after delivery.

An unused oil filterAn invoice has engine oil 180.00, an oil filter 45.00 and labour 50.00, a net of 275.00, VAT 13.75, total 288.75. The customer returns the unopened filter. The credit note is 45.00 plus VAT 2.25 = 47.25. The filter returns to stock at the cost it left, the sales return and VAT output are reversed, and the 47.25 is paid back in cash, taken off what he owes, or kept as credit, whichever the cashier chose.
Watch outA discount after tax recomputes net and VAT together. A credit note for part of such an invoice carries the discount in proportion to the lines taken, so the customer is credited exactly what he paid for those lines.

Try it in the demo

  1. Open the Garage demo at https://garage.zeyto.app and open a posted invoice.
  2. Press Correct this invoice and read the three answers and their one-line hints.
  3. Open Credit / refund and tick a line to see the preview. Close without saving.
Open the live demo

Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.

Key takeaways
  • Correct this invoice offers amend, credit note or cancel, with a required reason.
  • A credit note records a reason and a money choice: refund, reduce owed or keep as credit.
  • Restocked parts return at the cost they left; scrapped parts do not.
  • Cancelling an invoice is for mistakes; returns use a credit note.

Check yourself

4 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.

1. A customer was invoiced the wrong quantity of one line. Which Correct this invoice answer fits?

2. A returned oil filter of 45.00 was sold with 5% VAT. What is the credit note total?

3. Which are possible destinations of the money on a credit note?

Select all that apply.

4. Unused parts on a credit note are put back in the store. At what cost?

Previous: Counter day close and cash over and shortNext: Receivables, hand-over and the gate pass

Practice questions for this module · Printable study sheet